28 November 2019
The New Zealand Redwood Company, the largest grower of redwood trees in the country, has been granted a forestry standing consent under the Overseas Investment Act.
The Overseas Investment Office (OIO) has strict oversight of any transactions undertaken by investors granted forestry standing consents, including the New Zealand Redwood Company.
Ministers decide on applications for forestry standing consents. Associate Finance Minister David Clark and Land Information Minister Eugenie Sage approved the application last month.
Applicants must meet rigorous criteria to be eligible for a forestry standing consent. Only quality investors with a proven track record, detailed business plans, and processes to ensure they comply with conditions of the standing consent can be granted one.
The scope of this standing consent is targeted and directly informed by the New Zealand Redwood Company’s business plans. It allows the New Zealand Redwood Company to acquire up to 4,000 hectares of land to be used for forestry, with comprehensive oversight from the OIO.
Under the standing consent, the New Zealand Redwood Company can only acquire land in the Manawatū-Whanganui region, and undertake up to 10 transactions before the standing consent expires on 31 October 2023.
The New Zealand Redwood Company has a long-term business plan to plant about 100 hectares of redwoods each year for 35 years in the Taumarunui area.
Its forestry business is unique in New Zealand, and it has been granted several consents under the Overseas Investment Act in the past.
The OIO carefully assessed the application. It vetted the investor’s character, business experience, and processes for complying with restrictions on land area and type, and transaction limits.
As with all forestry standing consents, tight restrictions have been placed on the consent. The applicant must notify the OIO once each transaction has been settled, at which time additional conditions may be imposed.
If any conditions are breached the OIO can take enforcement action against the applicant.
In September 2019, the first forestry standing consent was granted since new rules for overseas investment in the forestry industry were introduced a year ago.
Standing consents are available under the special forestry test. They are only granted to investors who demonstrate a strong track record of complying with New Zealand’s overseas investment laws.
At the end of each month the OIO publishes decision summaries for applications decided in the preceding month. Join our mailing list to receive monthly updates about new decisions.
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