NEW ZEALAND MERGERS & ACQUISITIONS

NEW NZ OVERSEAS INVESTMENT/FOREIGN DIRECT INVESTMENT RULES

The New Zealand Government has announced changes to the foreign investment consent rules to take effect this month, with other changes previously announced taking effect next month, later this year and next year.

Changes this Month (from 7 June): New National Security and Public Order Notification Regime

•  COVID-19 emergency notification regime to be replaced with a “national security and public order” notification regime for transactions entered into on or after 7 June 2021. 
•  New regime applies only to certain investments in “strategically important businesses”, rather than effectively all investments as was caught under the prior regime.  
•  Mandatory notification if investment relates to military or dual-use technology or a critical direct supplier, and in all other cases notification is voluntary. 
•  Even if notification is voluntary, the transaction may still be called in for review. 
•  Zero dollar threshold for notification continues to apply. 
•  Anti-avoidance provisions included in the new regime.

Changes Next Month (from 5 July): Streamlining the Consent Process

•  Removes the need for certain repeat investors to satisfy the investor test each time they apply for consent. 
•  Lease transactions in sensitive land that are less than 10 years (was 3 years before) will no longer need consent (a shorter period applies for residential land). 
•  Enhanced tax disclosures required for acquisitions of significant business assets. 
•  Certain foreign government investors (such as pension funds) may effectively apply for an exemption from the national interest assessment requirement. 
•  Increases in interests in sensitive land that do not cross-ownership or control limits will no longer require consent.

Changes in Approximately 6 Months or 12 Months

• Benefit to New Zealand test for investments in sensitive land is simplified by replacing the 21 benefit factors with seven broad factors.  
• The current ‘with and without’ counterfactual is replaced with a comparison of ‘before and after’ the investment. 
• Introducing prescribed timeframes for decision-making by the Overseas Investment Office. 
• Higher benefit thresholds will be required to be met for consent applications involving farmland. 
• Fresh water and marina areas must be offered to the Crown before a freehold interest may be acquired.

By David Quigg, Quigg Partners, New Zealand, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact newzealand@transatlanticlaw.com

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