OIO temporary emergency notification requirement
For all overseas purchasers
It seems as though the Overseas Investment Office (OIO) has been under constant evolution over the last two years. In June, the OIO enacted a change that now requires all overseas purchasers of New Zealand business assets to submit a notification to the OIO before the transaction takes place — regardless of the asset value. This submission will allow the OIO to monitor and prevent New Zealand asset ownership being unnecessarily diluted due to stressed sales caused by unprecedented economic pressures from Covid.
Which transactions does this apply to?
Previously, ‘overseas persons’ who purchased New Zealand business assets valued under $100 million (excluding land), did not have to apply for OIO consent. Under the ‘Emergency Notification’ requirement, however, the OIO must be notified by every overseas person before purchasing any New Zealand business assets — even if the transaction holds minimal value. This includes an increase of shareholding in a business in which the overseas person already holds an interest. The requirement to submit a notification does not extend to purchases that require the consent of the OIO, as the office will already be aware, and have the opportunity to reject, those transactions.
What is an ‘overseas person’?
An overseas person is anyone who is not a New Zealand citizen or ordinarily resident in New Zealand. In the case of a company, trust, partnership, joint venture or body corporate that entity will be considered an overseas person if the beneficial ownership or control is comprised of more than 25% of people who are not New Zealand citizens or ordinarily residing in New Zealand. We can help you understand whether you, or your purchaser, are considered an overseas person in New Zealand.
Notifying the OIO
The OIO has a form that must be completed on its website available here. Specific information that must be disclosed in the application includes:
The business details and industry being invested in Two years of financial statements of the business Passports of each party involved, and A structural diagram of the purchaser including beneficial and legal ownership.
When does the notification occur?
Notification to the OIO must be submitted before the transaction takes place. It is free of charge to submit. It is recommended that this notification be completed as soon as possible prior to the transaction becoming unconditional so that there is sufficient time for further assessments imposed by the OIO.
What happens after the notification?
Once a notification has been submitted, the OIO will assess the transaction. You will be notified within 10 working days whether the transaction is approved, if further assessment needs to be taken, conditions are required or if the transaction has been rejected.
While the OIO intends most transactions to proceed as planned, if it decides further assessment is required it may take more than 30 additional working days. This process underlines how important it is for a purchaser to be organised well in advance of the transaction’s proposed settlement date. The OIO will accept transaction notifications during the conditional phase in order to accommodate early notification.
Regime to remain during COVID
The requirement to report all transactions involving purchasers who are overseas persons is reviewed every 90 days by the government. The regime is intended to remain in place while our economy is vulnerable to the impacts of Covid. Even when the Emergency Notification requirement has been revoked, it could be reinstated for future emergency situations — albeit a resurgence of Covid or other national emergency.
If you have any queries on the impact of the OIO’s new regime on your particular situation, please contact us. For full details of the information that must be provided to the OIO, please click here.