Find out if you need to apply to the Overseas Investment Office for consent to purchase sensitive New Zealand assets.
You may need to apply to the Overseas Investment Office (OIO) for consent if you are an overseas person, or an associate of an overseas person, and you wish to acquire:
- sensitive land or an interest in sensitive land (eg. by buying shares in a company that owns sensitive land), or
- business assets worth more than $100 million, or
- fishing quota or an interest in fishing quota.
You are an overseas person if you are neither a New Zealand citizen, nor ordinarily resident in New Zealand. A company, a partnership, a joint venture or a trust can also be an overseas person. You will also require consent if you are an associate of an overseas person. You will require expert legal advice to know whether you or the entity that is going to acquire the sensitive assets is an overseas person or an associate of an overseas person.
Associates under the Overseas Investment Act
An associate of an overseas person or organisation may require consent under the Overseas Investment Act, even if he or she is a New Zealand citizen or resident who ordinarily resides here. For example, a New Zealand citizen or company acting at the direction of an overseas person, or jointly with the overseas person, for the purpose of the investment will be an associate of that overseas person and may need to obtain consent to hold an interest in certain property. An associate may also be another overseas person or organisation.
The definition of who can be an associate is set out in section 8 of the Act. It is intended to capture a wide range of relationships and behaviour, including any attempt to use a third party to circumvent or avoid the requirements of the Act. Its anti-avoidance role has been recognised by the courts. It requires looking at who actually owns and/or controls the investment. In doing this, both direct and indirect control need to be considered.
There does not need to be a legally enforceable arrangement or direction for an associate relationship to exist.
Specifically, an associate relationship can arise where:
- - a person is controlled or subject to direction
A person may be an associate if he or she is subject to the control or direction of another person. The same applies to an entity (such as a company or trust) that is subject to the direction or control of an overseas person or organisation.
- - a person is the agent, trustee or representative or subject to a person’s direction, control or influence
A person may be an associate if he or she is an agent, trustee or representative for another person, or subject to another person’s direction, control or influence in relation to an overseas investment.
The clearest example of such an associate relationship is where a person holds assets on trust (the trustee) for another person (the beneficiary). In such a situation both the trustee and the beneficiary must get consent, even if one of them is a New Zealander.
The person does not need to act only on the direction of the overseas investor for everything he or she does in relation to the investment, but if directions are given and the person must follow them, an associate relationship is likely to be established. Similarly, if the person is subject to the influence of the overseas investor (such as feeling obliged to follow any plans or views of that investor), then an associate relationship may exist.
- - acts jointly or in concert
If parties act together for a common investment purpose, for example, by way of an agreement or promise, an associate relationship may exist.
There must be some communication between the parties and the conduct will need to be more than coincidental. The associate relationship can be established by inference as well as direct evidence.
The most obvious example of acting jointly is where an alliance or type of joint venture agreement exists. However, there does not need to be a formal arrangement. It is not necessary either that the parties are bound to commit to the common purpose or always act together. Nor does there need to be any legally enforceable commitment and a party may be free to change their mind about a matter.
- -arrangement or understanding
A person may be an associate if he or she participates in an overseas investment as a consequence of any arrangement or understanding with another person.
The concepts of arrangement and understanding are broad and can encompass a wide range of behaviour. An arrangement or understanding between parties will ordinarily involve an element of reciprocal commitment or consensual dealing, even though there may be no legally enforceable agreement or formal documentation of the arrangement. The relationship may sometimes be inferred by circumstantial matters.
An associate relationship may involve multiple people where, through a series of relationships, it can be established that an overseas person ultimately controls the investment.
Land will be sensitive if it comes within the types of land and area thresholds detailed in Part 1 of Schedule 1 of the Overseas Investment Act 2005. While determining whether land is sensitive can sometimes be straightforward, often significant legal and land expertise is required, particularly if there are nearby waterways.
The Ministerial Directive Letter determines which benefit factors are of high relative importance when assessing the benefits of overseas investments in sensitive land.
Applicants for consent must satisfy a number of criteria, including the core “investor test” criteria. In addition, consent to acquire sensitive land will only be granted if:
- the transaction will, or is likely to, benefit New Zealand, or alternatively
- the relevant overseas person intends to reside in New Zealand indefinitely.
Some types of land (such as farm land) also have specific consent criteria.
Applicants for consent to acquire fishing quota must satisfy a “national interest” test.
Determining if consent is required and applying for consent generally requires significant legal and land expertise. Seek assistance from a professional adviser as early as possible to help ensure a smooth transaction.
The OIO cannot give legal advice or consider draft applications.
The OIO administers the Overseas Investment Act 2005 and the Overseas Investment Regulations. Regulation 33 of the Regulations outlines certain transactions that are exempt from the consent requirement. The OIO also administers sections 56 to 57J of the Fisheries Act 1996 relating to acquiring fishing quota.
This website provides general information only. The OIO and LINZ do not assume any responsibility for giving legal or other professional advice and disclaim any liability arising from the use of the information. If you require legal or other expert advice you should seek assistance from a professional adviser.
 UBNZ Asset Holdings Ltd v Plateau Farms Ltd HC Auckland, Harrison J,CIV-2010-404-3236 11 July 2010 at