New Zealand Extends Overseas Investment Notification Requirement

The notification regime allows the government to impose conditions on or block transactions that are contrary to New Zealand’s national interest.

New Zealand’s government has announced a three-month extension to its emergency notification regime for managing foreign investment risks.

The notification regime was introduced in June to ensure that heightened foreign investment risks caused, and exacerbated, by the Covid-19 pandemic could be managed effectively.

Under the regime, overseas persons are required to notify the government of certain controlling investments in existing New Zealand businesses or business assets, even if these interests would not ordinarily require consent under the Overseas Investment Act.

These notifiable transactions include those – regardless of value – where overseas investors and their associates would end up owning more than 25% of a New Zealand business or its assets, or where an increase in investment would result in existing ownership increasing beyond 50%, 75% or 100%.

The notification regime allows the government to impose conditions on transactions, or in cases where no other options are available, block transactions that are contrary to New Zealand’s national interest.

So far, most notified transactions have been approved within 10 days, and all transactions processed before the 40-day statutory deadline.

“There was no evidence available to indicate that the regime is having a significant negative impact on New Zealand’s attractiveness as a destination for high-quality foreign investment,” the Treasury said in a statement.

The notification regime will remain in force for an additional 90 days. Ministers will review the notification regime again on 28 November to assess whether the effects of the Covid-19 pandemic justify it remaining in force.

A separate review of the emergency notification regime is also being carried out to ensure that it remains efficient and effective.

When the notification regime is eventually discontinued, it will be replaced by a narrower national security and public order call in power – which will only apply to investments in strategically important business, such as military technology and critical national infrastructure.