The New Zealand Government welcomes sustainable, productive and inclusive overseas investment. Overseas investment supports job creation, developing and adopting new technologies, increasing human capital, and provides New Zealand with more diverse international connections, including access to global distribution networks and markets. Without foreign investment, New Zealanders' living standards would be lower.
At the same time, the Government recognises that foreign investment can pose risks. Foreign investment can take ownership and control of economic activity out of New Zealand. High levels of foreign ownership of sensitive New Zealand assets can conflict with a view that New Zealanders should own or control those assets. It can also, in extreme cases, present opportunities to undermine our national security.
The Overseas Investment Regulatory System ensures that investment in sensitive assets (land and residential property, significant business assets, and fishing quota) by overseas persons benefits New Zealand.
Te Tai Ōhanga / The Treasury provides policy advice relating to the Overseas Investment Act 2005 (the Act) and associated regulations. These rules include the types of sensitive assets that can be invested in, the exemptions that apply and the factors that need to be considered when making decisions relating to investment applications.
Toitū te Whenua / Land Information New Zealand (LINZ) is the operational agency responsible for delivering the overseas investment regulatory regime.
LINZ ensures that consented investments meet New Zealand's regulatory requirements. Specific pathways apply and legislative tests must be met, and LINZ consults with other agencies on consent applications, where appropriate, before making recommendations to Ministers. Recommendations often include conditions that should be placed on the consent. Ministers can also decide to impose additional consent conditions.
Overseas investors often seek advice and guidance on regulatory requirements. Expert advisors (such as lawyers, financial advisors, immigration advisors and real estate agents) commonly initiate engagement with LINZ on behalf of investors.
Decisions for investment are at the discretion of the Minister of Finance, Minister for Land Information, and Minister of Ocean and Fisheries. Ministers generally delegate some decisions to LINZ senior officials; however, any application can be called up for a Ministerial decision.
Proposed investors are screened under a specific investor test process.
Some investments are subject to a 'national interest test' where the Minister of Finance can consider the potential risks of a transaction to New Zealand's national interest when deciding whether to grant consent to invest. This test applies automatically to investments in 'strategically important businesses' (for example, significant telecommunications and electricity networks) and those with significant foreign government involvement (recognising that governments may invest for strategic, rather than commercial, reasons).
The Act also provides for a 'national security and public order call-in power' (NSPO regime). This allows screening of investments in strategically important businesses that would not otherwise require consent, such as those involving the acquisition of military technology.
The overseas investment pathways are:
- Investing in a strategically important business asset under NZD$100 million (NSPO regime)
- Investing in significant business assets over NZD$100 million
- Investing in fishing quota or annual catch entitlement
- Buying one home to live in
- Developing residential land
- Investing in forestry
- Investing in other sensitive land.
LINZ also monitors investments and where they do not comply with consent conditions, proportionate action is taken. In some cases, this may include enforcement action.
The Overseas Investment Act 2005 and associated regulations govern overseas investment in New Zealand.
Several of New Zealand's free trade agreements interface with the Overseas Investment Regulatory System by providing for differential treatment for investors from signatory countries, for example, a higher monetary threshold for investments that are defined as significant business assets.
There are also broader international treaties and agreements which can relate to proposed investments in New Zealand firms involved in the production of sensitive areas of technology.