Treasury has today released its Consultation Document: Reform of the Overseas Investment Act 2005 – Facilitating productive investment that supports New Zealanders' wellbeing.
The Consultation Document addresses Phase Two of the Government's two-step overseas investment reform programme, off the back of Phase One reforms introduced last year.
While Phase Two is not a first principles review of the legislation (ie, considering whether an overseas investment regime is required in New Zealand at all), the Consultation Document indicates the Government's interest in addressing burdensome and inconsistent aspects of the regime so that it can better encourage and support investment in New Zealand while still ensuring that investment results in benefits for New Zealand.
In its discussion with stakeholders, Treasury has identified a number of key issues raised by investors and sets out a range of options for each. Issues or options that may be of particular interest include:
- Narrowing the range of transactions that require consent where land adjoins sensitive land or is merely leased;
- Reducing the application of the Act to New Zealand listed companies;
- Clarifying exemptions for portfolio investors;
- Enabling incremental changes in ownership that do not cross key control thresholds;
- Streamlining the investor test (assessing the character and capacity of investors);
- Considering a standing consent for repeat investors;
- Allowing decision makers to take into account the "national interest". The possibility of adding benefit factors around water rights and Māori cultural values is also flagged; and
- Addressing perceived problems with the counterfactual test.
Russell McVeagh has been closely involved in the first round of consultation and it is pleasing to see that Treasury has adopted a significant number of changes which we suggested during our whiteboard sessions with Treasury (a large number of which are listed above). We see this as a positive step towards a more streamlined and fit for purpose regime and, as a firm, will continue to work closely with Treasury on the next stage of the process.
Treasury is seeking feedback by written submission or attendance at public meetings in Auckland, Wellington and Christchurch. The consultation period closes on Friday 24 May 2019.
You can access the full Consultation Document here and a summary here. More information about the consultation process (including public meeting information) can be found here.
Russell McVeagh are able to assist with any engagement on consultation with Treasury, or to prepare submissions on the proposed changes.
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