We have made a submission to the Finance and Expenditure Committee (FEC) on the Overseas Investment Amendment Bill (No 3) (the Bill). The Bill is on a relatively fast-track through Parliament, as the FEC is hearing submissions next week and due to report the Bill to the House by early March 2021. The Bill is then expected to be enacted before 30 June 2021.
Chapman Tripp supports many of the amendments proposed in the Bill. In particular, we welcome improvements to the benefits test and the associated counterfactual.
However, we also consider there are other changes that should be made to the Act to ensure that it regulates appropriate types of investors and transactions and operates effectively in the context of practical realities faced by overseas investors. The changes we are proposing reflect both long-standing issues with the current operation of the Overseas Investment Act 2005 (Act) and issues created by the Overseas Investment (Urgent Measures) Amendment Act 2020 that were unable to be addressed in the short consultation period for that legislation.
For New Zealand listed issuers, we consider the Bill goes some way to overcome the long standing issue that NZX listed issuers with widespread offshore portfolio ownership that are fundamentally “New Zealand persons” should not be treated as overseas persons because of poor scoping of the Act.
However we recommend inclusion of an exemption power to enable the Minister to exempt New Zealand listed issuers that would not otherwise satisfy the ownership test if the Minister is satisfied the issuer is an overseas person merely because of cumulative portfolio investment and otherwise should be treated as fundamentally a “New Zealand person”.