19 August 2016

Issue 1

He mihi mahana kia koutou katoa.
Naumai, haere mai ki te PeriOIOdical tuatahi!

Warm greetings all and welcome to the first issue of the OIO’s quarterly newsletter, The PeriOIOdical!

This issue covers:

The OIO Quality Programme: Quality Investors, Quality Investments, Quality Service.

Quality, Quality, Quality – this is our mantra and will guide all our development work going forward.

Our priorities at the OIO are:

  • Upgrading our process for assessing applications for consent
  • Dealing with the bulge of applications received prior to the fees increase
  • Strengthening communication with you and other stakeholders
  • Building our monitoring and enforcement work including communicating our approach; and
  • Supporting Treasury to progress work on regulatory changes

Several of you offered suggestions and help in response to our July email. Thank you for those. We're pleased to report that we have secured the services of a number of senior people to help with the applications bulge, and that overall our permanent and temporary staff numbers have increased from 18 in mid-June to 30 as at 17 August, with at least three more new recruits expected by the end of August.

Work on the go

Applications in progress peaked at over 100 in July and we are pleased to report that as at this Tuesday (16 August), we have reduced that number to 80.

A month ago we expected it would take approximately 25 working days to allocate all the applications we had at that time, in fact it took 27 working days – a month later that had reduced to 22 working days.

Several of you offered suggestions and help in response to our July email. Thank you for those. We're pleased to report that we have secured the services of a number of senior people to help with the applications bulge, and that overall our OIO staff numbers have increased from 18 in mid-June to 30 as at 17 August (note includes change resources), with at least three more new recruits expected by the end of August.

As our newly hired staff get up to speed and we implement improvements to our processes, we expect to have less work in hand, and new work to be allocated more quickly. As we explained at the seminars we will be decreasing OIO processing time by at least 20%.

Whilst reducing OIO processing time is our immediate goal, what matters most is the overall time that gaining consent takes, not just the time when the OIO is working on the case. Our process redesign will be focussed on reducing the overall time from application to decision, and keeping you better informed along the way.

Guidance for drafting benefit claims

We have recently provided additional guidance on our website on the benefit factors to assist applicants to draft quality applications for consent. The updates include guidance on how we assess each individual benefit factor and the information that we recommend is included when making a claim under each factor. The guidance is intended to help applicants present a high quality application that can be assessed efficiently and to limit the amount of further information that is requested from applicants during the assessment process.

We have been fast tracking our existing work on providing better guidance to applicants in response to feedback we received at the recent workshops. The updated information on the benefit factors is the first stage of this process.

New regulation 37 exemptions

Two new regulation 37 exemptions have been added to the register of exemptions – APN News and Solid Energy.

View the register of exemptions

APN News & Media Limited was granted an exemption on behalf of its shareholders for the acquisition of 100% of the shares of NZME Limited. The purpose of the exemption was to allow the separation of APN News & Media Limited’s New Zealand business, NZME Limited, from its Australian business.

Solid Energy and its wholly owned New Zealand subsidiaries were granted an exemption from the definition of “overseas person” for a period of five years. Solid Energy would otherwise be considered an overseas person because of the issue of redeemable preference shares to banks that are overseas persons. All the ordinary voting shares in Solid Energy are held by the Crown.

Update on exposure draft of regulations

The Treasury will shortly release an exposure draft of regulations implementing the exemptions to the screening regime announced in May. The consultation document is expected to be released at the end of August/early September.

Pre-application discussion guidelines

We are available to meet with applicants, together with their solicitors, prior to the submission of an application for consent. Staff members are also available to provide information by phone on how to prepare an application.

Pre-application meetings are intended to assist applicants to prepare a clearly reasoned application that contains all the required information. They are also an opportunity for applicants to explain their business plans and commercial rationale as well as to ask any questions they have about the application process. We have received positive feedback from those who have recently attended pre-application meetings and we encourage all applicants and their lawyers to consider a meeting before submitting their application.

Please contact us early in the process if you would like to arrange a pre-application meeting. To book a meeting please contact the OIO (oio@linz.govt.nz) with a brief description of your intended investment, the meeting attendees and a proposed agenda.

See more information about pre-application discussions

Handy tip: how to help establish good character

As part of the assessment process, we carry out open source background checks into the ‘individuals with control of the relevant overseas person’. Adverse information found by us but not explained by applicants may result in the return of an application at the quality assurance stage or delay its assessment.

Solicitors acting for applicants can speed up the assessment process by:

  • identifying the ‘individuals with control’;
  • discussing the ‘good character’ requirements with their clients early and ensuring all matters potentially relevant to our good character assessment are disclosed at the outset; and
  • carrying out their own checks into the ‘individuals with control’ online, using key words such as “fraud”, “investigation”, “allegation” and “complaint”, and including full explanations of any adverse results in the application.

The good character criteria apply to the “relevant overseas person” and the “individuals with control of the relevant overseas person”. Section 15 of the Act explains how to identify the relevant overseas person and the individuals with control of the relevant overseas person.

Read guidance on what should be disclosed to us in relation to ‘good character’.

Farm land advertising: what you need to know

The Act requires farm land to be advertised on the open market and be genuinely available for acquisition by New Zealanders for at least 20 working days prior to an overseas person submitting an application for consent.

We review farm land advertising during our quality assurance review and return applications where the requirements have not been met. The farm land must be correctly re-advertised if the applicant wishes to re-submit the application and this can significantly delay the consent process.

Advertising is subject to particular scrutiny where:

  • advertising occurs after an overseas person and vendor have entered into an agreement for sale and purchase (if the vendor cannot accept an alternative offer from a New Zealander then the land is not genuinely available for acquisition);
  • we have received a public complaint about the advertising process;
  • land has been advertised in an unusual way (e.g. the advertisement of a large farm privately in the classified section of a small newspaper is unlikely to meet the advertising requirements); and
  • we have required the farm land be re-advertised.

We recommend that vendors advertise farm land comprehensively and before entering into an agreement for sale and purchase with an overseas person. This will help ensure that the market is tested for New Zealand interest and that advertising complies with the requirements - ‘do it once and do it right’.

Read further information on farm land advertising

Did you know?

More walking tracks in Queenstown

Soho Properties owns the stations that span the area between Wanaka and Arrowtown, including Motutapu and Mt Soho Stations, and Glencoe and Coronet Peak Stations. One of the conditions of consent recommended by the OIO was to ensure there was public access across these stations. Radio New Zealand recently reported that as a result there are 11 walking and biking tracks being developed in the area.

Read the RNZ article

More jobs expected for Gore

Mataura Valley Milk recently announced China Animal Husbandry Group’s investment in their new Gore dairy processing plant. The new plant is expected to create new jobs, grow added value dairy exports, and inject significant income into the Southland economy. Conditions of the OIO’s consent to this investment require the development of the plant and the creation of these jobs.

Read the article on Scoop

May Wang and Jack Chen jailed in Hong Kong

May Wang and Jack Chen, two individuals behind a 2009/10 attempt to buy the Crafar Farms, have been jailed in Hong Kong for offences relating to the transaction. Mr Chen and Ms Wang were convicted of conspiracy to defraud and money laundering, and sentenced to seven years and nine months in jail and eight years in jail respectively.

Our investigation led us to refer the matter to the Serious Fraud Office. The Serious Fraud Office’s investigation, in conjunction with Hong Kong’s independent Commission Against Corruption, led to the convictions.

Read our final investigation report (PDF 555KB)

Out and about

ADLS webinar

Pedro Morgan and Jenna Reid presented a webinar for the Auckland District Law Society on Thursday 18 August. The webinar was to help you to determine whether your clients require consent under the Act, and help you to advise them of the consequences of this. It also looked at common mistakes and how you can avoid them.

The webinar was recorded and is available online. Any lawyer advising overseas clients will benefit from viewing the webinar, including those who already have some knowledge of the Overseas Investment Act, particularly property lawyers, commercial lawyers, general practitioners and immigration lawyers. Real estate agents, accountants and immigration advisors may also benefit from viewing the webinar.

Please visit the Auckland District Law Society’s website to view the webinar.

New Zealand Institute of Forestry 2016 Conference (31 August)

Cameron Pentecost and Samantha Naidoo of the OIO are facilitating a workshop on day one of the New Zealand Institute of Forestry’s conference in Dunedin on Wednesday 31 August. The workshop focuses on how the elements of the Act apply, and are interpreted, in respect of forestry applications, and aims to clarify the OIO’s processes and current views on certain aspects of the industry. A great deal of the workshop will focus on the various benefit factors in the Act and regulations, and how forestry applicants can tailor their benefit claims that are likely to be accepted. We are also looking to get more first-hand knowledge of the issues most important to the industry and how the OIO can accommodate these in our processes.

Visit the New Zealand Institute of Forestry website