Changes Ahead for New Zealand's Overseas Investment Regime

Tuesday 12 November, 2024

In a recent press release from Associate Finance Minister David Seymour, the Government has signalled its intention to reform the overseas investment legislation before the end of 2025. The changes are intended to make it easier for foreign investors to invest in New Zealand.  

The latest announcement follows the new Ministerial Directive Letter, issued earlier this year on 6 June 2024. The new Directive Letter gave clear instructions to the regulator, the Overseas Investment Office (OIO), to administer the law in a way that focuses on realising the benefits of overseas investment to support New Zealand’s economic objectives. 

The biggest change introduced through the Directive Letter is the reduced processing timeframes for applications for investment in sensitive New Zealand assets. In response to the Directive Letter, the OIO reports that all consent applications received after the 6^th of June have been assessed within half of their applicable statutory timeframe - instead of 100 working days, applications are being decided in 50 working days, or less. 

In its latest announcements the coalition Government has expressly committed to attracting more overseas investment as a key part of the Government's economic strategy.  The signalled reforms are yet to be confirmed, but Cabinet have agreed the following principles to guide amendments to overseas investment rules: 

• The scope of what is currently screened stays the same (including farmland), so that the Government retains the legal option of screening all investments currently subject to screening. 

• The assessment process is fast tracked with the starting assumption that investment can proceed unless there are risk factors identified, the Overseas Investment Act’s core tests are consolidated (investor test, benefit test, and national interest test) to do this. 

• The government will have flexibility to call-in investments for detailed scrutiny on a case-by-case basis and impose conditions or block the investment if it poses risks to New Zealand’s national interest. 

Essentially, the existing presumption that investing in New Zealand is a privilege and requires investors to prove benefits will be reversed, with the new starting point that investments can proceed unless there are identified risks to New Zealand’s interests. 

Detailed proposals to reform the legislation are underway, with work being led by Treasury.  The current legislative framework has been through several fundamental reforms in recent years resulting in a complex, expensive and restrictive regime. Changes to simplify the legislation and make investment easier will be eagerly anticipated by overseas investors, certain New Zealand businesses and vendors alike.  

We will be tracking these changes and keeping our clients up to date. Get in touch with our experts if you have any questions about the overseas investment regime or the upcoming changes.