History of the Overseas Investment Office

Learn about the history of the Overseas Investment Office (OIO) and the former Overseas Investment Commission (OIC).

The Overseas Investment Act 1973 and the Overseas Investment Regulations 1995

Until 24 August 2005, the Overseas Investment Commission (the Commission) administered the Overseas Investment Regulations 1995 (the Regulations) [1], which came into force on 15 January 1996.

The Commission was established by the Overseas Investment Act 1973 (the 1973 Act) and comprised four members; two from the private sector and one each from the Reserve Bank and Ministry of Commerce. The Reserve Bank of New Zealand provided the Secretariat for the Commission.

Under the Regulations, an "overseas person" was required to obtain consent under the Regulations to acquire or take "control" of 25 percent or more of certain New Zealand assets. The asset classes were:

  • businesses or property worth more than $50m [2];
  • land over 5 hectares, or worth more than $10m;
  • any land on most off-shore islands; and
  • certain sensitive land over 0.4 hectares (for example on specified islands, containing or next to reserves, historic or heritage areas which exceed 0.4 hectares, the foreshore or lakes).

The Commission also administered sections 56 and 57 of the Fisheries Act 1996. An “overseas person” was required to obtain either an exemption under section 56 or a permission under section 57 to acquire or continue holding quota, an interest in quota, annual catch entitlement or provisional catch history.

The Commission operated in accordance with a Notice of Overseas Investment Policy, Delegation and Criteria dated 6 July 2000 [3] which conveyed the government’s general policy approach to overseas investment.

Overseas Investment Act review

A review of the 1973 Act was undertaken in 2003. The review of the 1973 Act led to introduction of the Overseas Investment Act 2005 (the 2005 Act), which came into force on 25 August 2005.

The 2005 Act

The 2005 Act made the following changes.

Legislative changes

  • The purpose of the overseas investment legislation was clarified.
  • The addition of new criteria and factors, including the requirement that sensitive land investments must generally be of “benefit to New Zealand”.
  • Clarification of “sensitive land” types, including the removal of the $10m monetary threshold that applied to land under the 1995 Regulations.
  • The requirement to offer special land (a subset of sensitive land) back to the Crown.
  • There was an increase in the significant business assets threshold from $50m to $100m.
  • The overseas investment fisheries provisions (in sections 56 to 58 of the Fisheries Act 1996) were redrafted and the language aligned to the 2005 Act.
  • Improved monitoring and enforcement tools.

Administrative changes

  • The disestablishment of the Commission.
  • The transfer of the regulatory function to Land Information New Zealand (LINZ).

As a result of the transfer of the regulatory function to LINZ, a new regulatory unit within LINZ, the Overseas Investment Office (OIO), was created.

A new Directive Letter, dated 1 August 2005, was issued, in accordance with section 34 of the 2005 Act. This Directive Letter came into effect on 25 August 2005 and conveyed the government’s general policy approach to overseas investment.

Strategically important infrastructure – changes to the Overseas Investment Regulations 2005 (2005 Regulations)

On 4 March 2008 the 2005 Regulations were amended by adding a new factor to be taken into account by Ministers considering overseas investment proposals under the 2005 Act. The factor (Regulation 28 (h)) was "whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land”.

On 11 April 2008 Ministers released their decision on the Canada Pension Plan Investment Board’s proposed investment in Auckland International Airport Limited.

2009 Review

On 17 March 2009, the government announced it would review the 2005 Act and the 2005 Regulations. On 27 September 2010, the Minister of Finance, Hon Bill English, announced the completion and conclusions of the review.

A new Directive Letter dated 8 December 2010 was issued [4] that provided more clarity about the Government's policy on overseas investment in sensitive assets. This provided advice to the OIO about which factors in the “benefit to New Zealand” test are likely to be more or less important in assessing particular types of investments. The letter clarified that the Government’s overall approach to overseas investment in sensitive New Zealand assets is to achieve a balance between ensuring those assets are adequately protected while facilitating overseas investment that provides benefits to New Zealand.

The Government also agreed to make several changes to the 2005 Regulations. These included two new factors under the “benefit test to New Zealand” test used to assess investments in sensitive land:

  • A new "economic interests" factor allowing ministers to consider whether New Zealand's economic interests are adequately safeguarded and promoted. This will improve ministerial flexibility to respond to both current and future economic concerns about foreign investment, such as large-scale ownership of farmland.
  • A new "mitigating" factor enabling ministers to consider whether an overseas investment provides opportunities for New Zealand oversight or participation - for example, by appointing New Zealand directors or establishing a head office in New Zealand.

These two additional factors came into force on 13 January 2011.

Exemptions for some Australian investors – further changes to the 2005 Regulations

On 1 March 2013 a new Schedule 5 was inserted into the 2005 Regulations. The schedule implemented certain obligations in the Protocol on Investment to the New Zealand-Australia Closer Economic Relations (CER) Trade agreement, which was signed on 16 February 2011. Schedule 5 provides that some Australian non-government and Australian government investors could qualify for increased thresholds for significant business asset acquisitions (these increased thresholds are currently $501m for Australian non-government investors and $105m for Australian government investors).

Footnotes

[1] SR 1995/292
[2] Prior to 9 December 1999, the threshold was $10m (refer SR 1999/389)
[3] This replaced a previous letter dated 19 November 1999.
[4] That letter came into effect on 13 January 2011.