The purpose of the new investor test is to determine whether investors are unsuitable to own or control sensitive New Zealand assets. The new investor test will come into effect on 22 March 2021.
The new investor test
The new investor test (the test) will apply to the same consent pathways as the existing test. The test clarifies the types of behaviour and history we consider show that the overseas investor is a potential risk to New Zealand.
The test is made up of 2 groups of factors: character and capability.
The test character factors include:
- convictions resulting in imprisonment,
- corporate fines both in New Zealand and overseas,
- being ineligible to come to New Zealand.
The test capability factors include:
- prohibitions on being a director, promotor, or manager of a company,
- penalties for tax avoidance or evasion,
- unpaid tax of $5 million or more.
Changes to the investor test were included in the Overseas Investment (Urgent Measures) Amendment Act 2020.
See the full list of test character factors - section 18A(4)(a) and (b) of the Act.
See the test capability factors - section 18A(4)(c)-(f) of the Act.
When will the new investor test come into effect?
The new investor test will come into effect on 22 March 2021. The new investor test will apply if:
- you have applied for consent before 22 March 2021 and you have not entered into a transaction to buy the asset concerned,
- you apply for consent on or after 22 March 2021.
The existing investor test will apply if you have applied for consent before 22 March 2021 and you have entered into a transaction to buy the asset concerned.
Who needs to meet the new investor test?
The relevant overseas person and all individuals with control of the relevant overseas person must meet the new investor test.
People who are not overseas persons do not need to meet the test.
We decide who the relevant overseas person and/or individuals with control of the relevant overseas person are for each application.
What information do I need to provide?
When you apply for consent, you will be asked if any of the investor test factors are established. If you answer ‘Yes’ to any factor, you will need to provide sufficient evidence with your application to show why this does not make you unsuitable to own or control sensitive New Zealand assets. We will consider the context in which the situation occurred and your action afterwards.
You will meet the test if, either:
- none of the investor test factors are established
- if one or more of the investor test factors are established, the decision-maker is satisfied that this does not make you unsuitable to own or control sensitive New Zealand assets.
Background checks may uncover other events
When we do our background checks we may find events in your history that don’t trigger an investor test factor, but we consider to be serious in nature. If so, we may raise these to be considered by the Minister under national interest assessment rules described at section 20B of the Act.
- Other transactions of national interest
- Foreign Investment Policy and National Interest Guidance (Treasury document)