NEW ZEALAND Law and Practice Contributed by: Ashton Goatley, Henry Willis, Sarah Keene and Erin Hickey, Webb Henderson
Investor Test An applicant for Significant Business Assets Consent or Sensitive Land Consent must satisfy the “Investor Test”. The Investor Test assesses whether the appli - cant and the individuals with control are suitable to own or control sensitive New Zealand assets. The assessment relates to specific factors indicating the character and capability of the applicant, including any previous convictions, fines, prohibitions on direc - torship, civil penalties or material unpaid taxes. Repeat investors need not satisfy the Investor Test each time they apply for consent, provided that no substantial changes have occurred since the last time The “National Interest Test” allows for consideration of whether some categories of proposed investment that require OIO consent are contrary to New Zea - land’s national interest. This applies if the transaction requires OIO consent and: • involves a SIB (see the following); • involves a foreign government investor acquiring more than a 25% interest as a result of the transac - tion (notably, this can capture foreign public sector superannuation funds); or • the minister determines that it should be the sub- ject of a national interest assessment. NSPO Regime and SIBs The government also has powers under the NSPO Regime to review investments in SIBs, even where the investment does not require OIO consent (ie, it does not involve significant business assets, sensi - tive land or a fishing quota). This includes reviewing a transaction after it has been completed. In practice, this means the ministers could block or impose con - ditions on a transaction, or order the disposal of the assets in question, should the investment be found to pose significant risks to New Zealand’s national security and public order. However, the government has publicly stated that this power is “expected to be rarely used... The test’s, and the Government’s, starting point is that investment is in New Zealand’s national interest”. they obtained consent. National Interest Test
In broad terms, SIBs are: • critical direct suppliers to the New Zealand Defence Force or an intelligence or security agency (“Critical Direct Supplier”); • involved in military or dual-use technology; • involved in ports or airports; • specified types of electricity, water, or telecommu - nications providers; • major financial institutions or involved in financial market infrastructure; • media businesses with significant impact; • involved in a strategically important irrigation scheme; or • a business that develops, produces, maintains or otherwise has access to “sensitive information” relating to 30,000 or more individuals (sensitive information includes the genetic, biometric, health or financial information of individuals, or relates to the sexual orientation or sexual behaviour of individuals). Mandatory prior notification to the OIO is required for an investment in a Critical Direct Supplier or an SIB involved in military or dual-use technology. Although the OI Act refers to this as a “notification” obligation, it further specifies that the transaction may not proceed without approval (ie, this is in substance a consent requirement). For all other categories of SIBs, notification is volun - tary. Investors who notify the OIO voluntarily through the NSPO Regime may obtain “safe harbour” from later intervention if the OIO’s initial review finds that the proposed investment does not pose significant risks to New Zealand’s national security and public order. Once the OIO has made such a decision on a voluntarily notified transaction, it may not revisit that transaction except on limited prescribed grounds (eg, if the notification contained false or misleading infor - mation). 7.3 Remedies and Commitments In granting consent for an overseas investment, the OIO always imposes standard conditions, including that the information provided by the applicant is cor - rect and the applicant complies with any representa - tions or plans submitted in support of the application.
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