This page summarises recent changes to the overseas investment rules, including those not yet in force.

Overview

On Monday 24 May 2021, the Overseas Investment Amendment Act 2021 received Royal Assent. This Act amends the Overseas Investment Act 2005. The earliest changes will come into force on Monday 5 July 2021.

On 7 June 2021, the Emergency Notification Regime (ENR) was replaced by a more targeted National Security and Public Order notification regime (NSPO).

The changes will:

  • remove the need for consent for lower risk transactions
  • better manage higher risk transactions and assets of significance to New Zealanders
  • simplify application requirements for investors.

National security and public order notification regime replaces temporary emergency notification regime

Now that the economic risks of COVID-19 have diminished, a new national security and public order (NSPO) notification regime replaces the temporary emergency notification regime (ENR). The NSPO requirement focuses on a narrower range of overseas investment transactions that pose significant national security and public order risks.

The ENR and NSPO rules that apply depend on the date a transaction is entered into regardless of when the transaction is notified:

  • if your transaction is entered into before 7 June 2021, the temporary emergency notification regime applies
  • if your transaction is entered into on or after 7 June 2021, the NSPO notification regime applies.

Contact the Overseas Investment Office to confirm which rules apply if you are uncertain
  

Transition from ENR to NSPO

Ways the rules will apply

National Security and Public order (NSPO) notification regime

The NSPO regime applies to transactions entered into on or after 7 June 2021 in ‘strategically important businesses’ that: would not otherwise require consent under the Act but potentially pose a risk to national security and public order.

These include investment in ‘critical direct suppliers’:

Critical direct suppliers

The Ministers have issued a Ministerial Directive and Delegation Letter about how the Government’s policy approach to NSPO.

Supplementary Ministerial Directive Letter (May 2021)

Information to find out if you need to notify us of your transaction and how to do so is available here

Treasury have also updated their Foreign Investment Policy and National Interest Guidance to cover NSPO

Temporary emergency Notification Regime discontinued

Transactions entered into before 7 June 2021 that required a notification under the temporary emergency notification regime must still be notified

Changes to who and what requires, and how consent applications are assessed

The new rules come into force in phases. Some changes come into force on 5 July 2021, and others will come into force in the coming months. The tables below show when the different changes are coming into force.

Consent application transitional arrangements: which rules will apply

The date an application is received by Overseas Investment Office determines whether the new rules apply to that application, regardless of when the transaction is entered into:

  • if an application is received before 5 July 2021 then the existing rules apply (namely, the rules not changed by the Overseas Investment Amendment Act 2021)
  • if an application is received on or after 5 July 2021 the new rules apply.

The farm land advertising rules that apply will depend on the date the transaction is entered into, rather than the date of the application. Transactions entered into on or after the new rules come into force later this year will be subject to the new rules. The new rules are likely to come into force in November or December 2021. Until that time the existing farm land advertising rules apply.

If you are uncertain which rules apply:

Changes to the who and what requires consent, and other technical changes coming into force on 5 July 2021

Removing lower risk transactions

Ways the rules will apply

Increases in interests in sensitive land that do not cross ownership or control limits will no longer require consent.

Transactions that result in an ‘overseas person’ increasing their ownership or control interest will only require consent if they cross an ownership or control threshold:

  • if your existing interest is less than 25%, your threshold is 25% or more
  • if your existing interest is more than 25% but less than 50%, your threshold is 50% or more
  • if your existing interest is more than 50% but less than 75%, your threshold is 75% or more
  • if your existing interest is more than 75% but less than 100%, your threshold is 100%.

Transactions where the investor is no longer defined as an ‘overseas person’.

The new rules remove certain widely-held bodies corporate that are both NZ-incorporated and NZ-listed from the definition of ‘overseas person’.

Managed investment schemes, too, may not be ‘overseas persons’ under the Act if they are:

  • New Zealand listed;
  • are 50% or more invested on behalf of New Zealanders; and
  • where at least 25% of its products invested on behalf of overseas persons are widely held

Lease transactions in sensitive land that are less than 10 years will no longer need consent.

Temporary ‘interests in sensitive land’ now only include interests for a term of 10 years or more (except for land that is solely residential land, where the term remains at 3 years).

Scope of national interest assessment is refined.

The threshold of non-New Zealand government ownership of investors triggering a national interest assessment will move from more than 10% to more than 25%.

Certain foreign government investors (such as pension funds) may apply for an exemption from the definition of ‘non-New Zealand government investor’.

 

Simplifying application requirements for investors

Ways the rules will apply

Repeat investors who have passed the new investor test will not need to satisfy the investor test each time they apply for consent (provided there are no substantial changes since the last time they obtained consent).

Investors may apply at any time to complete the new investor test.  

Repeat Investors will have a streamlined investor test assessment (provided there are no substantial changes to the individuals with control or entities involved, that would make the investor unsuitable to own sensitive New Zealand assets).

Investors will also be able to apply for a standalone assessment of the investor test in preparation for future transactions.

 

New requirement for applicants

Ways the rules will apply

Tax information required for Inland Revenue monitoring and compliance

Applicants will be required to provide tax information when applying for consent to acquire significant business assets

Changes to how applications are assessed, and other technical changes coming into force approximately 6 to 12 months after 24 May 2021

Simplifying application requirements for investors

Ways the rules will apply

The benefit to New Zealand test is simplified and strengthened

21 specific factors across the Act and the Regulations will be reduced to 7 broad factors.

The current ‘with and without’ counterfactual is replaced with a comparison of ‘before and after’ the investment.

The current process of determining what would occur with the assets without the investment as compared to the investment, will now be a comparison of the current state of the assets against what is likely to occur with the assets.

Proportionality in assessment is enshrined in the Act.

Formerly only in the Minister’s directive letter to the OIO, the requirement to take a proportionate approach to whether the benefit to New Zealand test is met is now set out in the Act.

The introduction of statutory timeframes

Each consent application pathway will have prescribed timeframes for decision making.

 

Managing higher risk transactions and assets of significance

Ways the rules will apply

The assessment of consent applications for farm land

Higher benefit thresholds will be required to be met for consent applications involving farm land.

Rules for farm land advertising tightened

Local advertising must occur before an overseas transaction is entered into, and some of the requirements for this advertising will be amended.

Changes to consent applications involving fresh water and marine areas (formerly ‘special land’)

Overseas investors must offer any fresh and marina areas to the Crown if acquiring a freehold interest.

Greater recognition of sites of cultural importance to Māori

The scope of protection will be expanded to further sites of significance for iwi, hapu and whanau

Other recent changes

March 2021 – New investor test was introduced

The new investor test sets out 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 12 factors covering character and capability.

Investor test

June 2020 - National interest assessment was introduced

A new national interest assessment requirement was introduced on 16 June 2020. This assessment only applies to some transactions, and is intended to be used rarely.  It applies to transactions involving: strategically important businesses, an overseas government investor, or an area of specific national interest.  The assessment will make sure that overseas investments in sensitive and high-risk assets are not contrary to New Zealand’s national interests.

National interest assessment

Legislation and guidance documents

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Last Updated: 4 June 2021