16 June 2020
The Overseas Investment Office is urging the business community to ensure they are up to speed with law changes for overseas investment coming into effect today.
Group Manager Vanessa Horne says the changes to the Overseas Investment Act will impact on overseas investors looking to invest in or purchase New Zealand businesses or land.
“Overseas investment is a big contributor to New Zealand’s economy,” says Vanessa Horne. “The global economic impact of COVID-19 will see some businesses looking to overseas markets to access capital in a bid to recover, grow and secure a future for their business and their staff.”
Vanessa Horne says New Zealand welcomes overseas investment that supports the economy, helps create jobs and gives Kiwis access to the latest technology. “The key is to make sure we’re attracting and encouraging responsible overseas investors who want to invest in a way that also brings benefits to New Zealanders.”
The law changes coming into force today are designed to balance the important role overseas investment will play in supporting New Zealand’s economic growth and recovery, while also seeking to ensure New Zealand’s interests are protected, she says.
There are four broad changes to the Act:
- A new temporary notification scheme requires investors to tell the Overseas Investment Office about investments in more than 25% of a New Zealand business or more than 25% of a New Zealand business’ assets. Increases to existing shareholdings beyond 50% or 75% or to 100% must also be notified. Most investors will know within 10 working days if their transaction can proceed. A small number of transactions may be called in for closer inspection against a national interest assessment, and those investors should know within a further 30 working days if their investment can proceed. This temporary scheme will be reviewed every 90 days and only remain as long as necessary to protect national interests through the economic aftermath of COVID-19.
- A separate national interest assessment has also been introduced for some transactions that are already screened under the Act. This assessment is to ensure investment in strategically important assets is in line with New Zealand’s national interests.
- The existing rules have been simplified so that some low risk transactions no longer need consent. These changes especially help listed companies and investments that adjoin sensitive land.
- The Office has been given stronger enforcement powers to act against investors who do not follow the law. The focus is to ensure that promises made by investors to produce benefits to New Zealand are realised.
Vanessa Horne says it is the responsibility of both business owners and investors to make sure the proposed transaction is in line with the law before it is legally completed. Investment advisors, accountants, and lawyers can play an important role in ensuring business owners and investors have timely and accurate advice to make good decisions.
“We know that post COVID-19, overseas investment will be integral in supporting New Zealand’s economic recovery. Overseas investment improves productivity and employment, it enhances export opportunities, and it brings with it new ideas, innovations and relationships.
“These changes to the law are about helping businesses access the capital they need, while ensuring there is sufficient government scrutiny of proposed transactions to protect New Zealand’s economy and security.”
In keeping with the desire to support productive investment and protect New Zealand against investment risk, the law changes provide the Overseas Investment Office with stronger powers to enforce the rules.
“The changes will give the Office, as the regulator, increased ability to take action against those who break the rules, which includes seeking injunctions through the courts. The maximum fines available have been increased to $500,000 for an individual and $10 million for corporates. The Office also has a range of new tools to manage investors who pose significant national security and public order risk.
“All of this is focused on protecting New Zealand’s taonga for future generations,” says Vanessa Horne.
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