Introduction to the series
The Overseas Investment Amendment Bill (No 2) (Bill) was introduced on 20 March 2020 and sets out the proposed Phase II amendments to the Overseas Investment Act (Act). In this 4-part series, we discuss the changes introduced by the Bill.
As indicated by Treasury in November last year, the Bill introduces a new national interest test and call-in power to better manage risks to New Zealand from overseas investment and bring our regime in line with comparable jurisdictions. These new powers are balanced by a range of liberalising amendments intended to attract overseas investment. In particular, the Bill simplifies the consenting requirements and excludes lower-risk investments from the regime (removing an estimated 14% of applications from screening). While the current drafting of the national interest test and call-in power may create some unnecessary uncertainty, overall, the Bill represents a significant improvement to the status quo.
The timeframe for passing this Bill before a September election was always tight. Given current circumstances, unless prioritised, there is a risk that it will not pass before Parliament rises on 6 August 2020. We understand that a decision on whether to prioritise the Bill is imminent. We note that the need for the national interest test could be viewed as more acute given the possible economic distress of current New Zealand owners in key sectors may lead to interest from well-capitalised offshore acquirers. A later election date is also a possibility, which would increase the likelihood of passage of the Bill in this Parliamentary term. In either event, the Bill should have a first reading soon after Parliament returns and be referred to the Select Committee with a reporting back date set. You can read more about the Parliamentary timetable in the wake of COVID-19 in our update here.