The overseas investment regime restricts acquisitions of certain New Zealand assets by overseas persons, and the definitions catch more transactions than people expect — including some involving New Zealand companies with offshore shareholders.
Who is an overseas person
The definition covers individuals who are not New Zealand citizens and are not ordinarily resident here, and entities with a specified level of overseas ownership or control.
The point most often missed: a New Zealand-incorporated company can be an overseas person if overseas persons hold sufficient ownership or control. A local company with offshore investors above the threshold falls within the regime.
Control matters as well as ownership, so arrangements giving overseas parties governance rights can be relevant even where the shareholding is below a threshold.
What requires consent
Broadly three categories:
Sensitive land. This includes residential land, and non-residential land that is sensitive because of its type, size or characteristics — farmland above a threshold, land on or adjoining the foreshore, lakebeds, conservation land, and land adjoining certain sensitive areas.
The adjoining-land provisions catch people out. Land can be sensitive because of what is next to it, not because of anything about the land itself.
Significant business assets, where the value of the assets or consideration exceeds a threshold.
Fishing quota.
Residential land
Residential land is generally restricted for overseas persons, with limited pathways. Australian and Singaporean citizens and permanent residents have particular positions under trade agreements.
Consent pathways exist for developments that increase housing supply, for conversion to long-term accommodation, and for incidental residential use as part of a larger acquisition. Each has conditions that must be complied with after purchase, not just at the point of consent.
Anyone acquiring land must complete a residential land statement confirming their status, and getting that wrong has consequences.
Farmland
Farmland acquisitions above the threshold generally require consent and are subject to a benefit test, which examines whether the investment will benefit New Zealand.
Farmland must also generally be offered for sale on the open market to New Zealanders before an overseas person can acquire it, subject to exceptions. That advertising requirement has specific process conditions and failing them can invalidate an application.
Business assets
Acquisitions of significant business assets above the threshold require consent, assessed against investor criteria including good character and business acumen.
Note that acquiring shares in a company that owns sensitive land can trigger the land provisions as well, so a business acquisition can engage both limbs.
Conditions and ongoing compliance
Consents typically come with conditions — development timelines, retention of employment, public access provisions, farm production commitments, or requirements not to occupy residential land.
These are enforceable and monitored. Non-compliance can result in penalties, and in some cases orders to dispose of the asset.
Keep a compliance register for consented assets, with each condition, the deadline and evidence of compliance. Conditions are frequently forgotten by the time they fall due, particularly after a change in management.
Timing
Consent takes time, and the timeframe varies with complexity and category. That has to be built into transaction timelines, and agreements should be conditional on consent with realistic dates.
Applying after entering an unconditional agreement is a serious problem, because acquiring without required consent is unlawful.
Practical guidance
- Check status early. Whether a purchaser is an overseas person is a question to resolve before an agreement, not during due diligence.
- Check whether land is sensitive, including by reason of adjoining land. This is not always obvious from the title.
- Make agreements conditional on consent with realistic timeframes.
- Look through the ownership chain. Offshore investment in a New Zealand company can change its status.
- Get specialist advice. This is a technical area and the consequences of getting it wrong include unwinding a transaction.
The regime is administered by the Overseas Investment Office within Land Information New Zealand, which publishes guidance, thresholds and application requirements. LINZ also publishes the register of consents and decisions.
General information only, not legal advice. Overseas investment is specialised — take advice.
