Friday May 28 2021

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: New Zealand




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) will be 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.

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’.

 

Click on the above link for further information.