Summer services update
Who needs consent to invest in New Zealand
Overseas persons need consent to invest in some sensitive New Zealand assets, including the sale of sensitive New Zealand assets in another jurisdiction. Transactions do not need consent if an exemption applies.
Selling sensitive New Zealand assets overseas
Exemptions from the need for consent
Definition of an overseas person
An overseas person is:
-
a person who is both:
- not a New Zealand citizen, and
- not ordinarily resident in New Zealand
or
-
an entity that is either or both:
- incorporated overseas
- more than 25% owned or controlled by an overseas person
or
- a New Zealand individual or entity investing on behalf of an overseas person.
Ordinarily resident in New Zealand
Investing on behalf of an overseas person
Different rules apply to some types of entities, such as limited partnerships, trusts, managed investment schemes, and listed companies. These rules are set out in section 7 of the Overseas Investment Act.
Overseas Investment Act 2005, s7 (as amended by section 5 of the Overseas Amendment Act 2021)
We recommend you seek advice early to help you understand the rules and confirm whether you are an overseas person.
Definition of a sensitive New Zealand asset
Sensitive New Zealand assets fall into 3 groups:
- sensitive land
- significant business assets
- fishing quota.
Transactions can involve more than one type of sensitive asset. For example, you may be investing in a business valued at more than $100 million (that is, a significant business asset) that also holds sensitive New Zealand land.
Investments requiring consent
Consent is required for investments by overseas persons in sensitive New Zealand assets.
Such an investment can include:
- acquiring a sensitive asset (such as sensitive land)
- leasing a sensitive asset for more than 10 years
- acquiring shares or securities in an entity owning sensitive assets (such as a company owning sensitive land in New Zealand, or increasing an existing interest above a certain level).
An investment will need consent if the transaction involves any one of the following:
- the overseas person acquiring a direct interest in sensitive land or fishing quota
- the overseas person acquiring an ownership or control interest of more than 25% of an entity that holds sensitive assets, where it previously held no interest
- the overseas person increasing an existing ownership or control interest of more than 25% of an entity that holds sensitive assets:
- if the overseas person holds an interest of more than 25% but less than 50%, consent is required for increasing its interest above 50%, or
- if the overseas person holds an interest of more than 50% but less than 75%, consent is required for increasing its interest above 75%, or
- if the overseas person holds an interest of more than 75% but less than 100%, consent is required for increasing its interest to 100%
- a person who directly or indirectly has an interest in sensitive land or fishing quota becoming an overseas person (for example, a company that, after the transaction, would now be more than 25% owned or controlled by overseas persons)
- the overseas person acquiring an ownership or control interest in an entity
- where the assets are valued at more than $100 million, or
- for which the purchase price is more than $100 million
- an overseas person commencing business in New Zealand, where the cost to establish the business exceeds $100 million
- the acquisition of assets used in carrying on business in New Zealand, and the consideration for those assets exceeding $100 million.
These rules apply to entities holding New Zealand assets of this value, whether the transaction is conducted in New Zealand or overseas. Different rules apply to New Zealand listed companies.
Note that the Overseas Investment Regulations exempt some types of transactions from the requirement for consent.
When trusts require consent
Consent is not required to transfer sensitive assets from a trust to an overseas person beneficiary, provided consent was obtained for the trust’s holding of the asset and the transfer is not contrary to the conditions of consent.
You will need consent to replace a trustee with an overseas person trustee if this will mean that, following the appointment of this trustee, the trust will be an overseas person.
You will need consent to transfer property to a beneficiary if the trust did not require consent to acquire the property but would require consent to acquire it now. For example, this could occur if land has become sensitive since being acquired, or shares are held in a company whose assets have grown to exceed $100m since being acquired.
What to do if you have already made an investment without consent
Please contact us immediately if you have made an investment without obtaining the necessary consent. You may be able to apply for consent retrospectively.