Zealand has relaxed its rules relating to foreign purchase of its non-land assets or securities.
Previously, New Zealand law required transactions that would result in an overseas person acquiring 25% or more of the ownership or control in a New Zealand entity, and where the consideration provided or the value of the entity's assets would exceed NZ$10 million, to be approved by the Overseas Investment Commission. Further, any overseas person establishing a new business in New Zealand with set-up costs in excess of NZ$10 million and who expected to operate in New Zealand for a period greater than three months per year also required consent.
One aspect of this threshold was recently amended by the Overseas Investment Amendment Regulations 1999. As of December 9 1999 the value of the consideration provided, or the value of the entity's assets, at which an overseas investor in non-land assets or securities, or an overseas person setting up a new business in New Zealand, must obtain consent is NZ$50 million. The Commission has stated that the change would mean about 40 investments per year in New Zealand would now escape its attention.
The amendments have also excluded the following transactions from the need to obtain consent:
- most purchases of urban land (generally speaking all non-farming land);
- the purchase of forestry rights; and
- any easements that confer rights to transmit or convey services, such as electricity, water and gas.
These changes mean that, for example:
- a NZ$60 million acquisition of non-land assets to be used in carrying on business in New Zealand would generally require consent;
- a $NZ40 million acquisition of securities by an overseas person, which gave that person control of 25% or more of the entity will generally require consent where the value of all the assets of the relevant entity exceeds NZ$50 million;
- land used for farming cannot normally be acquired without consent; and
- urban land can generally be acquired without consent.
It is also worth noting that secured lenders who are overseas persons have a general exemption from needing to obtain consent when securing or receiving rights or interests in specified securities or property as security for the repayment of a loan made by the overseas person.
James Aitken/Hamish Walker/Andrew Skinner