What does the national interest assessment apply to?
Some overseas investment consent applications are subject to a national interest assessment. Depending on the transaction, either we or the Minister of Finance reviews these transactions to determine whether they are contrary to New Zealand’s national interest.
While this assessment is only mandatory for transactions that meet certain criteria, both LINZ and ministers may use their discretion to call in other transactions.
Transactions notified under the temporary emergency notification regime
The national interest assessment also applies to transactions notified under the emergency notification regime (ENR), which ceased on 7 June 2021, but still applies to any relevant transactions that were entered into before this date. The assessment process for these is described further down this page.
Transactions notified under the temporary emergency notification regime
Transactions subject to mandatory national interest assessment
Transactions that are subject to mandatory national interest assessment involve either:
- land or assets used for strategically important business, including:
- critical direct suppliers to an intelligence or security agency
- businesses involved in military or dual-use technology
- ports or airports
- electricity, water, or telecommunications businesses
- important financial institutions, or organisations involved in financial market infrastructure,
- media businesses with significant impact
- businesses involved in an irrigation scheme, or
- certain levels of investment by an overseas investor that are made by, or associated with, a foreign government, for example, the acquisition of a controlling interest in an asset.
Identifying transactions of national interest
Transactions which must meet the national interest test will undergo an initial national interest risk assessment to identify whether they are transactions of national interest. For all other transactions, we will undertake a similar preliminary assessment as part of the application process.
A transaction may be a transaction of national interest if:
- it falls within the mandatory criteria detailed in section 20A of the Act, or
- the Minister of Finance exercises discretion to call in the transaction under section 20B of the Act, or
- after completing an initial national interest risk assessment under s 19A, we consider the transaction may include a risk to New Zealand’s national interest.
Overseas Investment Act 2005, section 20A
Overseas Investment Act 2005, section 20B
Ministerial directive letter - 24 November 2021
Treasury’s foreign investment policy and national interest guidance
National interest assessment
The starting point for the national interest assessment is that overseas investment is in New Zealand’s national interest. There is a high bar to taking mitigation action, particularly to prohibit a transaction. The Minister of Finance has broad discretion as to whether a transaction is contrary to the national interest.
For the national interest assessment, we consider the positive impacts, risks, and risk mitigations for the transaction – including advice about the options, and trade-offs between those options.
When the national interest assessment is required in addition to other overseas investment tests we run the investment assessment and the national interest assessment in parallel to minimise any additional time needed to prepare advice and get decisions from the different decision-makers.
Decision makers
Most decisions relating to the national interest test and national interest assessments are automatically delegated to LINZ, but some must be decided by the Minister of Finance.
Only the Minister of Finance can:
- identify any transaction as a transaction of national interest under s 20B;
- determine whether a transaction may be contrary to the national interest if it is escalated under s 20B; and
- decline consent, or determine a transaction is contrary to New Zealand’s national interest under s 19D.
In all other cases, decisions to undertake a national interest assessment, refer a transaction to the Minister, or determine the national interest test is met are made by LINZ.
Assessment reports
We prepare either 1 or 2 assessment reports depending on the transaction:
- the investment assessment report is prepared for the relevant consent ministers or delegated decision-maker. This is prepared if the application must meet other ‘core’ tests for its application pathway, other than the national interest test. For example, whether the investor and benefit tests for a sensitive farm land application have been met
- the national interest assessment report is prepared for the relevant decision maker. This separate report sets out the national interest assessment and is provided after it has been determined that the investment assessment has met the core tests, if applicable.
We don’t provide national interest assessments to investors for comment before they are sent to the decision maker. This is due to the sensitivity of the considerations and information they contain.
However, in most cases information that is prejudicial to an investor will be tested with the investor before we submit our assessment to the decision maker. Additionally, we may seek further information from the investor beyond that which is provided in the notification, to ensure that the decision maker is sufficiently well-informed.
Cross-government consultation on national interest assessments
A standing committee – which includes participants from across government – meets to contribute towards and review national interest assessments. The committee looks across the government system to obtain and use a wide range of information.
This cross-government perspective ensures that the decision maker has the information necessary for decision-making on national interest, including national security and associated risks.
What the decision maker considers
When determining whether a transaction is contrary to New Zealand’s national interest, the decision maker will consider a range of factors, depending on the investment.
The decision maker must consider:
- the risk of the overseas investment transaction to the national interest, including its impact on national security or public order
- whether an identified risk to the national interest can be adequately managed by another regulatory regime
The decision maker may also consider:
- investor risk factors
- whether a national interest risk may be adequately managed by a condition imposed on the investment, and
- whether a risk that is contrary to the national interest may be offset by the benefits of the transaction (the existing benefits test serves as a guide for this).
The decision maker will also be guided by the relevant directions in the Ministerial Directive Letter.
After the decision maker has considered the transaction
After LINZ has considered the transaction, we may
- grant consent or confirm the national interest test is met,
- impose conditions on the transaction to mitigate any national interest risks before granting consent or confirming the national interest test is met, or
- refer the application to the Minister of Finance for decision if we have reasonable grounds to consider that the transaction is contrary to New Zealand’s national interest.
After the Minister of Finance has considered the transaction, they may:
- grant consent or confirm the national interest test is met,
- impose conditions on the transaction to mitigate any national interest risks before granting consent or confirming the national interest test is met,
- prohibit the investment if they consider it is contrary to New Zealand’s national interest under section 20C of the Act, or
- give a disposal order requiring the disposal of the whole or any part of sensitive assets that have already been acquired under section 93 of the Act.
Overseas Investment Act 2005, section 20C
Overseas Investment Act 2005, section 93
National interest decision summaries online
The national interest assessment decision is noted on the consent decision summary, which is published on our website.
Transactions notified under the temporary emergency notification regime
The national interest assessment process for transactions notified under the temporary emergency notification regime (ENR) is, for the most part, the same as that for consent applications. Any differences are described below.
Note: The ENR was replaced by the national security and public order (NSPO) notification regime on 7 June 2021, but still applies to any relevant transactions that were entered into before this date.
Stage 1: Preliminary assessment
For transactions notified under the temporary emergency notification regime:
- we assess the information provided by investors in their online notification form against national security, public order, and economic risk factors
- we provide the results of our assessment to the responsible minister – currently an Associate Minister of Finance
- the responsible minister determines whether to call in the transaction for a national interest assessment.
Stage 2: National interest assessment
For transactions notified under the temporary emergency notification regime, only the report to the Minister of Finance is required.
After the Minister of Finance has considered the transaction
If the Minister of Finance considers that there are potential risks to the national interest, then conditions or risk mitigations can be applied to enable the transaction to proceed.
They may make a:
- direction order, which allows the transaction to proceed either unconditionally or subject to conditions
- prohibition order, which bans the transaction from proceeding
- disposal order requiring the investor to sell any assets already acquired under the transaction, or
- recommendation that a person be put into statutory management to manage national security and public order risks, including by removing the overseas person’s access to or control over sensitive assets.
National interest decision summaries online
Decisions to grant direction orders without conditions are not published.
Decisions to grant a direction order with conditions, or to issue a prohibition or disposal order, may be published, unless the minister or delegated decision-maker is satisfied on reasonable grounds that good reason for withholding the decision would exist under the Official Information Act. For example, for national security or commercial sensitivity reasons.