Overseas Investment Office
If you are considering investing in agricultural assets in New Zealand, one of the main legal aspects that must be considered at the outset, prior to entering in to a transaction to acquire any such assets, is whether the transaction is captured by the New Zealand foreign investment regime.
Foreign investment is welcomed in New Zealand and the regulation of foreign investment is liberal by international standards. However, investments by overseas persons in 'sensitive land' and ‘significant business assets’ are regulated under the Overseas Investment Act 2005, and consent is required from the Overseas Investment Office.
'Sensitive land' includes non-urban land of five hectares or more (i.e. farmland), any land that is part of the foreshore or seabed, and land over 0.4 hectares that includes or adjoins certain sensitive areas, for example, conservation land, reserves, historic or heritage areas, lakes or foreshore or seabed.
An overseas person will need consent to purchase sensitive land or invest in securities of an entity that owns or controls an interest in sensitive land, if as a result the overseas person will have a 25% or more ownership or controlling interest in the entity (or having such an interest, it would be increased).
If the target investment is in farmland, engaging a local farm management specialist, such as MyFarm, is vital to identify capital improvements that would improve the productivity of the farmland - if the investor is committed to undertake these in the application, this may improve the likelihood of consent being granted.
Overseas persons who are considering investing in New Zealand need to obtain advice from a lawyer experienced in Overseas Investment Office matters early on, before entering into any purchase agreement and before seeking Overseas Investment Office approval.
Chen Palmer’s Overseas Investment team (“OIO team”) has been very successful in representing clients through all phases of the Overseas Investment process. Our clients are diverse and include overseas investors, property developers, institutional investors such as fund managers, and personal investors.
There are two key phases in the investment process where Chen Palmer adds significant value:
- initial investment advice; and
- applications to the Overseas Investment Office (“OIO”) for consent under the Overseas Investment Act 2005.
Initial investment advice
The OIO team will advise whether the Overseas Investment Act 2005 applies and whether consent is required for a particular investment. This requires analysis of both the investment, and the profile of the investor.
Some overseas investments can be structured so as to avoid the need for OIO consent.
Overseas Investment Act applications
Where an investment requires OIO consent, our OIO team advises investors on all aspects of the application process, including:
- drafting applications, including preparing business cases to satisfy the statutory test for new overseas investments;
- preparing conditions;
- dealing with vendor solicitors; and
- advising on exemptions to the Act.
As part of this process, applicants must demonstrate:
- that the investor satisfies the “good character” test under the Act;
- that the applicant has business experience and acumen relevant to the investment;
- that the applicant has “demonstrated financial commitment” to the investment – i.e. has sufficient funds to make the investment; and
- that the investment will deliver a benefit to New Zealand which is “substantial and identifiable”.
Applications to the OIO are complex and require lengthy and detailed paper work – we can help with this. At present it takes between 50 and 70 working days for the OIO to process an application, assuming there are no complications. That time can increase significantly if there are difficulties – such as problems in identifying the benefits, or difficulties with land titles.
Finally, Chen Palmer has strong relationships with most of the large iwi in New Zealand. No Chen Palmer application has been held up or declined as a result of concerns by local Maori.
Application fees range between $19,524.44 and $22,488.89, depending on the circumstances of the application. These fees are payable to the OIO and non-refundable.
Our fee for preparing an application will depend on the scale and complexity of the application but in most cases it is possible to work to a budget of NZD $30,000 plus GST (if any) and disbursements.
For further information contact Nick Russell on +64 4 471 5799 or 021 475 388 or email email@example.com.
The Chen Palmer Team
Our expert term consists of: