Overseas Investment Act: Removing unnecessary red tape

Posted by John Kearns on September 13 2019 in News

Consultation on phase two of potential reforms to the Overseas Investment Act 2005 is underway. The recent consultation document released by the Treasury follows from last year’s phase one changes which restricted foreign investment in ‘residential property’.

Overseas Investment Act

The intent of the phase two reforms is to remove the unnecessary red tape and simplify the process for foreign investors, while continuing to support high-quality overseas investment in productive assets that are in New Zealand’s national interest.

The phase two reforms focus on three key areas:

  1. What assets are considered sensitive and require consent under the Act
  2. Who is considered an “overseas person” for the purposes of the Act
  3. How overseas investments are screened for the purposes of obtaining consent under the Act


Proposed changes include:

  • Increasing the minimum lease duration for screening to ten years.
    Despite many leases being of a short-term nature, they are subject to the same scrutiny and compliance costs of higher-sensitive transactions. An increase to the threshold for consent for leases beyond the current three years may make leasing more attractive to foreign investors, however if their capital investment in say fit out is large, 10 years may still seem too short.
  • Allowing an overseas person to increase their control interest by any amount below a key control threshold, and permitting upstream shareholders to qualify for an exemption.
    The current regime screens too many low-risk transactions involving minor changes of ownership or control. This is a necessary change as the current regime is far too rigid and does not adequately allow for changed circumstances and can limit the funding requirements of the consented company, thereby limiting the benefits to New Zealand.


  • Streamlining the screening process by narrowing the ‘good character’ test and incorporating a provision to make it unnecessary for repeat investors to redo the process.
    This is a necessary change and clearly will be a positive.
  • Introducing timeframes for decisions on applications for consent under the Act.
    This will provide investors with greater certainty around the timing of consent decisions and reduce the cost of having ‘idle’ capital while an application is considered.

Again, in our view a necessary change and clearly a positive.

If you would like more information regarding the above, or have any questions, please contact us.

Author: John Kearns

This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.