As widely anticipated, the New Zealand Government has announced
further changes to the overseas investment framework which governs
foreign investment in New Zealand.
The latest announcement results from the second stage of a
two-part review of the overseas investment framework announced by
the Government last year. The first stage saw several
changes made to the regime to simplify the overseas investment
rules and allow for more efficient processing times of overseas
investment applications, requiring fewer applications to be
determined by the relevant Ministers.
Under the latest changes, the Government has decided against
changing the Overseas Investment Act 2005, as originally planned,
instead opting to introduce extra flexibility for the relevant
Ministers to consider a wider range of issues when considering
overseas investment applications in sensitive land. The
Overseas Investment Regulations 2005 will be amended to include two
new measures under the test determining whether an overseas
investment in sensitive land will, or will be likely to, benefit
A new 'economic interests' factor will allow the
relevant Ministers to consider whether New Zealand's economic
interests are adequately safeguarded and promoted, and a new
'mitigating' factor will enable the relevant Ministers to
consider whether an overseas investment provides opportunities for
New Zealand oversight or involvement.
The changes give the relevant Ministers broader powers to
decline applications involving sensitive land, reflecting the
topical issue around overseas investment in New Zealand
farmland. The new 'mitigating' factor will see
investments that provide for local involvement, such as appointing
New Zealand resident directors, being regarded more favourably by
the Overseas Investment Office. Both factors are
considered by the Government to be of relatively high importance
when assessing overseas investment applications involving New
A new ministerial directive letter to the Overseas Investment
Office will also be issued, with the Government hoping to provide
extra clarity and certainty around its approach to investment by
potential foreign investors in sensitive land.
The Government has indicated that these changes to the overseas
investment regime will not take effect until December 2010 and will
only apply to applications received after this date.
Note: Sensitive land includes non-urban land
(including farmland) of more than five hectares in area, land on
certain islands and conservation land or land adjoining the
foreshore, a lake, conservation land, a regional park or a
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