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Chapman Tripp has made a submission to the Finance and Expenditure Committee on the Overseas Investment (Urgent Measures) Amendment Bill (the Bill). The Bill is being considered on an accelerated timeframe this week, with the Government having signalled it intends Parliament pass the Bill in urgency before the end of May with the legislation coming into force by mid-June.
Chapman Tripp supports many of the amendments proposed in the Bill. We welcome the decision to bring forward refinement of the investor test, exclusion of certain New Zealand listed issuers and managed investment schemes, reduction of the scope of land deemed sensitive due to what it adjoins, and the imposition of timeframes for decision making.
We acknowledge the Government’s policy intention to establish emergency measures, especially application of a notification regime and national interest test, to protect vulnerable industries from aggressive takeover.
Our submissions, which are explained in more detail in our full submission, include:
- We encourage the permanent introduction of the exclusion for listed issuers (proposed by the Bill to only be a standing consent) by adopting a modified overseas investor and by addressing the long standing “tipping point” anomaly.
- We also suggest an important refinement to the proposed ownership test for listed issuers, by looking at cumulative ownership in excess of 50% by foreign portfolio investors only (rather than all overseas persons). We think these two changes will significantly enhance the ability for fundamentally New Zealand issuers in New Zealand’s listed equity capital market to raise additional capital during the uncertainty of the COVID-19 response.
- It is important the operation of the emergency notification regime, and subsequently the call-in powers, are clear. We suggest an important refinement to the definition of strategically important business (SIB) to clarify that those involved in SIBs should be prescribed by class in supporting regulations and be limited to those that are themselves the operators or suppliers of the relevant critical infrastructure.
- The scope of the emergency notification regime is broad and has the potential to require significant volumes of transactions to be notified. We suggest amendments to clarify that the notification regime should apply to New Zealand investments only and encourage the making of regulations to limit the impact of the notification regime on normal economic activity, such as routine leasing.