December, 2017 - Parry Field Lawyers

New legislation is proposed restricting non-resident foreign buyers from purchasing existing homes in New Zealand. Set to be enacted next year, the changes will mean that residential land will come under the category of “sensitive land” in the Overseas Investment Act (OIA). Any existing transactions and applications made before commencement are not affected.

Permanent residents and Australians will need to have resided in New Zealand for at least 183 days of the past year to be able to purchase property without scrutiny from the Overseas Investment Office (OIO). Those on temporary or student visas will be unable to purchase a house at all, but other-resident class visas will be screened.

These changes are significant as they represent quite a move in direction from the previous government. For those who are overseas and looking to buy a house in New Zealand or considering a move to New Zealand it may impact on their decision. However, some have pointed to statistics showing that there are not as many foreign buyers as people think so it will be interesting to see what impact it actually has on the housing market.

What are the exceptions to the general rule?

There are three exceptions. The first allows anyone to buy land and build a residential home on it, so long as they sell it on to add to the housing supply. Those planning to knock down an existing house to build several more will also come under this exception.

Secondly, overseas persons may buy sensitive land if they will convert the land to another use and are able to demonstrate this will have wider benefits to the country.

The third exception allows people buy a home if they intend to live in New Zealand. Housing Minister Phil Twyford has said:

“We do not want to deter people who have the genuine intent to make New Zealand their home and contribute to the country. We want to encourage foreign investment in the building of homes.”

What is residential land and how is it defined?

In the Explanatory Note, residential land consists of the following:

Apartments
Dwelling houses
Land which is likely to be developed into dwelling house sites
Where the dwelling house is the predominant use and there is an additional unit of use attached to, or associated with, the dwelling house which can be used to produce income

What about lifestyle land – is it covered?

Lifestyle land also comes under this category. It is defined in the Rating Valuations Rules 2008 as –

“Lifestyle land, generally in a rural area, where the predominant use is for a residence and, if vacant, there is a right to build a dwelling. The land can be of variable size but must be larger than an ordinary residential allotment. The principal use of the land is non-economic in the traditional farming sense, and the value exceeds the value of comparable farmland.”

This category includes:

Bare or substantially unimproved land, which is likely to be subdivided into smaller lifestyle lots:
Improved to the extent that there is some residential accommodation sited on the land:
Vacant or substantially unimproved land without immediate subdivision potential.

Negotiations are currently under way with Singapore to make sure the change doesn’t breach the current free trade agreement with them. However Minister Twyford has said that if issues can’t be resolved, then Singaporeans may be granted an exemption, similar to the one for Australia.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. We have experience with OIO applications in New Zealand and have assisted our clients from overseas through the process., please contact Steven Moe at Parry Field Lawyers (348-8480) stevenmoe@parryfield.com

Sustainability is a word being thrown around a lot lately. Many businesses now use the term as a marketing tool, as customers are asking for more socially responsible goods and services. But what does the term actually mean?

The UN has set out their list of goals on sustainability, which may be of interest for businesses and not-for-profits when thinking about strategic direction. Read more about it here.

End poverty in all its forms everywhere

Despite extreme poverty rates being cut by more than half since 1990, there are still too many who live just above this line. How can businesses help to alleviate these statistics both at home and overseas? Are there education scholarships that can be given out? Are living wages granted to workers, producers and farmers?

End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Sustainable food sources can provide nutrition, generate income and help protect the environment. How can food production and consumption in your workplace be developed?

Ensure healthy lives and promote well-being for all at all ages

Life expectancy is on the up, but many diseases and ongoing health issues need more attention for all people of all ages. How is the well-being of workers throughout your whole production line being cared for?

Ensure inclusive and quality education for all and promote lifelong learning

Quality education can be the foundation of improving a person’s life in a sustainable way. What are some ways your business can be encouraging and improving the standards of education for those who don’t have access to it?

Achieve gender equality and empower all women and girls

Providing women and girls with equal access to health-care, education, work opportunities, and representation at a political level creates a greater impact than just for the individual. With the opportunity to benefit society at large by investing in women, what can your business be doing to assist in this?

Ensure access to water and sanitation for all

Water scarcity and poor water quality can negatively impact food security and health standards. How are you ensuring others get access to clean water? How can you be preserving and avoid polluting the water in your own situation?

Ensure access to affordable, reliable, sustainable and modern energy for all

Sustainable energy has the potential to change lives, economies and the planet. Are there ways you can be using more sustainable energy sources? Can you be supporting others to do the same?

Promote inclusive and sustainable economic growth, employment and decent work for all

How can you be providing sustainable jobs which support your workers, the environment and the economy? How can you ensure this endeavour won’t burn out, leaving others without work?

Build resilient infrastructure, promote sustainable industrialisation and foster innovation

Quality infrastructure is foundational for the success of many communities. How can you promote inclusive and sustainable industrialisation, while supporting small-scale industries and enterprises?

Reduce inequality within and among countries

Inequality includes financial, social and environmental factors. What policies have you implemented that seek to reduce inequality within your own country and overseas?

Make cities inclusive, safe, resilient and sustainable

These days, cities are facing congestion, lack of funds for basic services, a shortage of adequate housing and deteriorating infrastructure. How can you provide services that enhance the city, rather than strain the resources currently available?

Ensure sustainable consumption and production patterns

In order to reduce pollution and waste, and increase quality of life, how can you aim at “doing more and better with less”?

Take urgent action to combat climate change and its impacts

Are there actions you can be taking now to decrease your greenhouse gas emissions or even become carbon neutral?

Conserve and sustainably use the oceans, seas and marine resources

How can you reduce your impact on the oceans? What fishing practices do you engage with? What are you putting into the waters?

Sustainably manage forests, combat desertification, halt and reserve land degradation, halt biodiversity loss

How are you adding to the forests? How can you help support the ecosystem?

Promote just, peaceful and inclusive societies

How can you help support countries affected by war and corruption? How can you establish an inclusive society in your own neighbourhood?

Revitalise the global partnership for sustainable development

How do you support global sustainable development? How do you choose to trade with?

While the above are all just topics to think over, any business wishing to be sustainable should seriously consider how they respond to these topics.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation, please contact Steven Moe.

Parry Field Lawyers (03 348-8480) stevenmoe@parryfield.com

There has certainly been a lot of buzz recently about crypto-currencies, Bitcoin, Blockchain and the opportunities they represent. Having done a lot of reading on this subject we thought it would be helpful to give an overview about them and, more importantly, what sits behind them that is so disruptive. We have also set out below links to the articles and commentary that we have found the most useful in this area.

What are they?

Cryptocurrencies are a potential disruptor to the traditional ways of thinking about money. They are probably best described as ‘tokens’ that exist in digital form and are traded via online exchanges. The most famous at present is Bitcoin due to its surges in price recently. In some ways it is like the heady days of old when gold rushes would sweep through and tales of vast wealth being found on the side of a river. In this case, the most prominent story stems from the fact that in April 2013 the Winklevoss twins (who got a settlement from Mark Zuckerberg as they claimed he stole the idea for Facebook from them) – bought $11 million dollars of Bitcoin (at $120 per coin). Do the math quickly and that makes them now Bitcoin billionaires.

What is going on now and why all this sudden interest?

There is a huge element of FOMO involved here (fear of missing out) and the reality is large volatility is seen with huge price fluctuations, delays in transactions being processed and rumours of hacking. All this in an environment where no one country has issued this new form of currency – that gets around some issues but creates others such as who stands behind it. There is a lot of talk about it being a classic bubble that will one day burst – but no one knows when that may happen and in the meantime millions more investors are getting in on this due to the seemingly endless rises of hundreds of percent. What is going to happen? If I knew I wouldn’t be writing this article! But be wary of anyone who looks to make a quick gain without the usual hard work. That can happen but more often than not it is the owners of the grocery stores that sold the products to the gold miners who actually made money.

How does The Blockchain fit in?

Underlying the different cryptocurrencies (Bitcoin is just the most famous) is the real disruptor – the Blockchain. This is a technology that allows cryptocurrencies to exist. It acts as a decentralised ledger (so no government controls it) on a network – so changes made to it are public and viewable. So a transaction begins by being requested and once it is validated it is a new “block” which gets added to the blockchain. The real point of interest is how the Blockchain can be used in other areas e.g. contracts, health care, energy, home ownership, voting etc.

This 6 minute video helps to explain it, or this shorter one.

This is all new and disruptive, do I still need to comply with “old world” rules on securities?

Yes. The FMA has issued guidance about this (see below) and it is worth talking through with your adviser before you set yourself up as a provider of services relating to crypto-currencies. It may be disruption but there are still implications of trading Bitcoin or other currencies.

I want to know more – where do I go?

For those who do want to dive deeper we recommend you have a look at the following resources online by clicking on the links below – is there something we have left out? Email me at stevenmoe@parryfield.com and we can add more in.

• The New Zealand Financial Markets Authority has released this guidance on crypto-currencies and initial coin offerings.

• This commentary has just been released by the SEC in the United States and offers a very helpful overview as well as some questions investors should ask when buying a crypto-currency

• Reserve Bank of New Zealand commentary

• Report by PwC

We have been helping a number of people with their questions about Bitcoin and crypto-currencies and the Blockchain. Let us know if you would like to discuss.

Steven Moe

03 348 8480
stevenmoe@parryfield.com

Recently the new Government announced the issue of a Ministerial Directive Letter to the Overseas Investment Office. From mid-December 2017 the Letter applies to both current and new applications. The Directive Letter serves to outline the Government’s policy approach to overseas investment in rural land, while the rules regarding the acquisitions of significant business assets remain unchanged. Overseas investors must now demonstrate that their investment will benefit New Zealand in order to obtain consent to acquire sensitive land.

Some of the key changes are:

Rural Land

The Letter states that certain factors will be of high relative importance for overseas investments of rural land larger than five hectares (which does not include forest land). These include:

The jobs factor – that the investment will create new job opportunities and/or retain existing jobs in New Zealand
The new technology of business skills factor – that the investment will result new technology or business skills
The increased exports receipts factor – that the investment will increase export receipts in New Zealand
The increased processing of primary products factor – that the investment will result in increased processing in New Zealand of New Zealand’s primary products
The oversight and participation by New Zealander’s factor – that the investment will provide for significant participation and oversight by New Zealanders

Forest Land

Factors of relative high importance for overseas investments in forest land include:

The increased processing of primary products factor
The advance significant Government policy or strategy factor

Overseas Person

An overseas person intending to reside in New Zealand indefinitely is not required to show that their investment in sensitive land is likely to benefit New Zealand. To meet this intention to reside criterion, an overseas person will generally:

Hold a residence class visa or an entrepreneur work visa; and
Show actions and plans, with supporting evidence, consistent with an intent to reside in New Zealand within 12 months

This is a tighter restriction than the previous letter. Other changes include that the sponsorship of community projects and donations is now generally of low relative importance.

Overall, this new policy directive sets out to welcome high quality overseas investment that:

Generates high levels of benefits to New Zealand
Creates new productive assets
Is environmentally sustainable, minimising adverse impacts on the natural environment, and is likely to create positive and long lasting environmental benefits
Provides economic, environmental, social and cultural benefits to regional communities
Significantly increases value added activities in New Zealand
Provides for significant participation and oversight by New Zealanders

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. We have experience with OIO applications in New Zealand and have assisted our clients from overseas through the process., please contact Steven Moe at Parry Field Lawyers (348-8480) stevenmoe@parryfield.com

This article by Steven Moe was published by the Spinoff December 4 2017

With the rise of China, Japan has taken something of a backseat in trade discussions. Lawyer Steven Moe says New Zealand’s relationship with the world’s third largest economy is still going strong, but may need some TLC.

Whenever foreign investment or overseas strategies are mentioned in New Zealand boardrooms these days it is most likely that the topic is China and its growing influence. As a result it is sometimes easy to forget that Japan and New Zealand have had a very long relationship which goes back many decades and which continues today. But what shape does that relationship take now, and what are the unique characteristics of it – and where do the opportunities lie for further growth?

The Japan New Zealand Business Council met recently in Osaka for its annual conference to discuss these and other issues. The council started in 1974, and is a member-based organisation promoting the growth of business relationships between Japan and New Zealand. This was the 44th conference, with the next one to be held in Auckland in November 2018. Participants came from large corporations, small and medium sized businesses, government and service providers. I was one of the 61 New Zealand representatives who flew to Osaka from New Zealand, out of more than 130 attendees.

To give a sense of the scale and depth of the relationship, it is first important to note that Japan is still the third largest economy in the world. Japan also is one of the top five markets for New Zealand, and is an important trading partner with New Zealand Trade and Enterprise (NZTE) at the conference putting the figure on two way trade at over NZD $7 billion.

This can be broken down further to NZ exports of $3.86 billion for the year ending December 2016, while from Japan to New Zealand the total was $3.55 billion. Dominating the trade from the New Zealand side are various natural and food products such as dairy, beef, fish, wood and aluminium, with an increasing focus on tech exports as well. From Japan, the goods mainly include vehicles, equipment and electronic goods. There is also a lot of direct investment into New Zealand by Japanese companies and approximately 100,000 Japanese tourists per year. For more on these and other aspects of the relationship some recent research called “Through the Japan Looking Glass” by The New Zealand Story Group is worth a look here.

The topics covered at the conference included the current economic outlook, infrastructure, manufacturing, trade and the potential for a free trade agreement, agriculture, science and technology. The uniting theme was sports, since the Rugby World Cup will be held in Japan in a few years, followed by the Olympics in 2020. One of the other themes to emerge in each of these sessions was the similarities faced by both Japan and New Zealand in each of these areas.

Beyond the statistics and trade figures there is something else going on though – both countries share many similarities and deep connections. Perhaps due to both being islands, each culture has a strong sense of identity and independence from the rest of the world. Both have similar landscapes with active volcanoes, rivers, lakes, forests – and earthquakes.

Unfortunately, the world’s eye on the Christchurch earthquakes in 2011 shifted across the Pacific Ocean to the major quake that hit Japan just a few weeks later. I was living in Tokyo at that time and vividly recall flying back from helping my parents clean up their house in Christchurch only to be in Japan (on the 22nd floor of a skyscraper) for the Japan earthquake.

As well as all these connections, it is also worth remembering that Japanese became one of the first Asian languages offered in New Zealand schools, and there is a generation of Kiwis who learned it. Many young people have gone on the JET programme teaching English, while others have gone there on a one year working holiday visa.

But what does all this actually mean? Perhaps it is time that Japan was placed back on the agenda at Kiwi board meetings that discuss overseas strategies. There is a ready market in Japan for quality goods, and particularly those that are foods with health benefits – but also increasingly from our world leading (and growing) tech sector. It would certainly pay to keep Japan in the picture going forward, as there are real opportunities for New Zealand businesses to explore there when they look to grow their overseas business or first start developing that strategy.

Steven Moe is a lawyer based in Christchurch at Parry Field Lawyers who recently returned to New Zealand after 10 years at an international law firms in London, Sydney and Tokyo. He works with Kiwi companies going offshore, as well as foreign companies looking to invest in New Zealand. He has a podcast Seeds: Talking Purpose where he interviews entrepreneurs and social enterprises about their journeys.

stevenmoe@parryfield.com

03 3488480

Rural Land

Forest Land

Overseas Person

Christchurch CBD

Christchurch

Rolleston

Hokitika