The new fee structure for the Overseas Investment Office
(OIO) screening regime, to come into force on 4 July 2016,
was always only part of the solution to lifting the OIO's
performance and turnaround.
Details around the rest of the response emerged at a
workshop yesterday led by Land Information Minister Louise Upston
and officials. An exposure draft of the new regulations is expected
We report on the shape of things to come.
The Overseas Investment Act 2005 purpose states that it is a
"privilege for overseas persons to own or control sensitive
New Zealand assets".
Particularly since the Crafar
decision in the High Court (upheld
on appeal) imposed a new counterfactual test, the OIO has been
under considerable strain to process applications in a timely
manner. Applicants have been required to provide significantly more
information on, and commitments to, their investments, especially
where "sensitive land" is involved.
The Minister's stated objective is to achieve a 20%
reduction in decision-making times. This is to be achieved through
a mix of capacity building, improvements to operational procedures
and targeted exemptions. No legislative change is planned.
The increased fees will enable the OIO to recruit additional
staff and move to a more "customer-centric" focus.
The OIO will further tighten its initial quality assurance
application review to incentivise potential investors to provide
complete information on lodgement.
It will also make greater effort to keep applicants informed
through the assessment process and provide more clarity about when
a decision can be expected.
The quid pro quo of the OIO is asking the business and legal
community to do more as well. Currently the OIO is rejecting one in
four applications at the initial quality assurance phase (although
this is by no means Chapman Tripp's experience, reinforcing the
importance of getting good advice).
Part of the package to streamline the process, are proposals to
provide exemptions for:
acquisitions of leasehold farmland from the current requirement
to first offer the property on the open market (this will be
limited to leases of up to 20 years cumulative duration, including
rights of renewal)
the need to seek approval where a previously consented lease is
being renewed or re-granted with no change in conditions or
sensitive land transactions between overseas parties where
consent has previously been granted, the transaction is incidental
to a larger global transaction and the land concerned is urban land
of less than five hectares which is classified as sensitive only
because it abuts sensitive land
transactions where approval is required because the land is
vested under the Public Works Act 1981 and does not exceed five
hectares and is not inherently sensitive
overseas owned custodians who hold shares in their custodial
capacity, fixing an issue that came to light earlier this
Exposure drafts of these exemptions will be released in the
coming months for comment.
The government also considered creating an exemption for
residential property developers and has not entirely ruled it out
but has decided at this stage not to proceed because it is
"higher risk" than the other options and it would mean
exempting transactions that would not have previously received
Improvements the OIO is exploring to sharpen efficiency
changes to the management structure to free up capacity for the
core function of reviewing consents
delegating decision-making downwards for simpler matters,
relieving bottlenecks by developing parallel decision-making
Chapman Tripp comments
The changes are good so far as they go but we consider that
there is scope to be bolder. In particular, we would like listed
companies to be added to the exemptions list. We are continuing to
engage with the Treasury on this and other matters.
We note that there has already been some uplift in the OIO's
performance and we welcome that. But there is still a distance to
go. Currently, for example, the OIO is meeting its targets only 40%
of the time for sensitive land applications.
The Cabinet Paper is available
here and the Regulatory Impact Statement
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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