New Overseas Investment Restrictions 13 Dec 2017

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