NEW ZEALAND Law and Practice Contributed by: Ian Beaumont, Tom Gillespie and Sam Kember, Russell McVeagh
The reforms comprised a range of amendments and improvements to the OIA and the process for acquir - ing consent for overseas investments in New Zealand. The most significant change was to remove the for - mer “investor test” and “benefit to New Zealand test” that investors previously had to meet when acquiring “significant business assets” and “sensitive land” in New Zealand, and replacing these tests with a sin - gle national interest test for almost all applications for consent. The introduction of this streamlined pathway repre - sents a significant improvement for most investors. The starting assumption is that investment can pro - ceed unless a national interest risk is identified, and the review period for most applications is now mate - rially shorter than previous processing periods. In majority of cases, OIO consent can now be granted in as little as five working days. The new national interest test that has been intro - duced operates through a three-stage process, as set out below. Stage 1: Initial National Interest Risk Assessment The OIO will undertake an initial risk assessment to identify any potential national interest risks with the transaction. If the OIO has reasonable grounds to con - sider that the transaction may include a risk to New Zealand’s national interest, the transaction becomes a transaction of national interest and a Stage 2 national interest assessment will be required. If no potential national interest risks are identified, the OIO will grant consent at this stage. The statutory timeframe for the OIO to complete the initial national interest risk assessment is 15 working days. However, the OIO has been directed to com - plete the review of least 80% of Stage 1 applications within five working days. The OIO considers that the majority of applications for significant business assets and non-farmland sensitive land are expected to be processed at this stage. Stage 2: Full National Interest Risk Assessment Where Stage 1 identifies a potential national interest risk with the investment, or where the investment is automatically deemed a transaction of national inter -
est (where it involves a “non-New Zealand govern - ment investor” or a “strategically important business” (see 2.3 Restrictions on Foreign Investments )), the transaction will require a full national interest assess - ment as part of Stage 2 of the national interest test. As part of a full national interest assessment, the OIO must consider a series of mandatory factors including risks to national security and public order, and wheth - er risks can be managed by other regulatory regimes. The OIO may also consider non-mandatory factors such as investor characteristics (replacing elements of the former investor test), whether risks can be man - aged through conditions, and whether benefits of the transaction may offset identified risks. Critically, the OIO cannot decline consent at Stage 2 and can only either grant consent to the investment, or refer the application to the Minister of Finance if there are reasonable grounds to consider the transaction may be contrary to New Zealand’s national interest, which forms Stage 3 of the national interest test. Stage 3: Ministerial Decision Only the Minister of Finance (not the OIO) can decline an investment under the national interest pathway. The Minister will consider whether the transaction is contrary to New Zealand’s national interest and must have regard to any relevant directions in the Ministe - rial Directive Letter as well as the mandatory factors above, and may consider the non-mandatory factors. The statutory timeframe for the OIO and the Minister to complete the full national interest risk assessment and, if required, the ministerial decision, is 55 working days. This is in addition to the initial 15-working-day risk assessment as part of Stage 1. However, the OIO has been directed to complete the review of least 80% of Stage 2/3 applications within half of the statutory In addition to the OIA reforms, the New Zealand Gov - ernment has also introduced the Commerce (Promot - ing Competition and Other Matters) Amendment Bill, which proposes wide-ranging reforms to the Com - merce Act. Key proposed amendments relevant to M&A include: clarifying that the “substantial lessening review period. Commerce Act
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