Overseas Investment Amendment Bill (No 2)

Overseas Investment Amendment Bill (No 2)

Government Bill

233—1

Explanatory note

General policy statement

This Bill amends the Overseas Investment Act 2005 (the Act). The Bill’s purpose is to ensure that risks posed by foreign investment can be managed effectively while better supporting productive overseas investment by reducing the regulatory burden of the screening process. These changes are consistent with the Act’s purpose that it is a privilege for overseas persons to own or control sensitive New Zealand assets. The Bill is an omnibus Bill, which amends a number of Acts to achieve the Bill’s single broad purpose.

The Bill strengthens how the Act manages risk by—

  • introducing a “national interest test”, which allows the Minister responsible for the Act to deny consent to any investment ordinarily screened under the Act that is considered to be contrary to New Zealand’s national interest. This power has been modelled on the Australian regime, and gives the Minister a broad discretion to consider what is in the national interest in each case:

  • introducing a “call-in power”, which will allow the Government to review certain investments not ordinarily screened and to impose conditions on, prohibit, or dispose of those investments that pose a significant risk to national security or public order:

  • defining the strategically important businesses that the national interest test or call-in power will apply to. In general terms, strategically important businesses are businesses that develop, produce, or maintain military or dual-use technology, are critical direct suppliers to intelligence or security agencies, provide telecommunications infrastructure or services, generate or distribute electricity, are involved in designated ports and airports, are systemically important financial institutions or financial market infrastructures, or are media businesses that have an impact on New Zealand’s media plurality. Further, investments in certain large irrigation schemes will be considered under the national interest test, and investments in businesses that hold or generate certain types of sensitive data (for example, health or financial data) may be reviewed under the call-in power:

  • requiring the Minister responsible for the Act to be the decision-making Minister on these matters, given the significance of these investments to New Zealand’s interests:

  • embedding a higher threshold for acquiring farm land, reflecting its significant economic and cultural importance, as well as ensuring that farm land is advertised in a way that best ensures New Zealanders have a chance to acquire it (once regulations are made):

  • enabling decision makers to consider the impacts of investments involving water bottling or bulk water extraction for human consumption on water quality and sustainability:

  • providing better recognition for Māori cultural values, including by taking into account plans to protect or enhance wāhi tūpuna, wāhi tapu areas, and Māori reservations:

  • requiring investors to disclose information relating to their proposed investment structure and tax treatment to Inland Revenue, to support the integrity of New Zealand’s tax system (once regulations are made):

  • strengthening the regulator’s enforcement tools, to ensure that the Government can appropriately manage a range of breaches of the Act or actions by overseas persons that pose risks to national security and/or public order (for example, by placing an entity into statutory management):

  • facilitating greater information sharing between agencies on national security and public order risks, and ensuring that such information is appropriately managed during court proceedings.

This Bill also makes it simpler to make productive investments in New Zealand by—

  • no longer requiring lower-risk transactions to be screened, such as—

    • investments in less sensitive land that are only screened because the land adjoins land that is sensitive in its own right (sensitive adjoining land):

    • transactions involving fundamentally New Zealand entities:

    • leases or other interests of less than 10 years (whether this threshold is reached in a single interest or cumulative interests) other than residential leases:

    • small transactions that do not grant an overseas investor any control of sensitive assets:

    • transactions involving residential mortgage obligations, which support financial stability (once regulations are made); and

  • simplifying the screening process for the remaining transactions by—

    • undertaking more targeted assessments of an investor’s character and capability, by only considering serious proven matters, allegations of serious matters where proceedings have begun, and any enforceable undertakings entered into by the investor:

    • streamlining the process for determining whether an investment in sensitive land will benefit New Zealand, including by simplifying and clarifying the counterfactual assessment:

    • introducing statutory time frames for decisions by the regulator (once regulations are made). The motivations for this include introducing more rigour into the process and frontloading quality control of applications:

    • no longer requiring investors to carry out a full screening process for subsequent investment applications if they have been screened and approved in a prior investment.

The Bill follows amendments made by the Overseas Investment Amendment Act 2018 (the amendment Act). The amendment Act rationalised the screening regime for forestry assets and certain other profits-à-prendre, and added a general requirement for overseas persons to obtain consent to acquire residential land.

Departmental disclosure statement

The Treasury is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Regulatory impact assessment

The Treasury produced a regulatory impact assessment on 12 March 2020 to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

A copy of this regulatory impact assessment can be found at http://www.treasury.govt.nz/publications/informationreleases/ria

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 relates to commencement. Most of the Act comes into force 42 days after the Act receives Royal assent. This includes most of the amendments that reduce the number of transactions screened and that simplify the screening process.

A group of amendments (mainly related to farm land advertising requirements, fresh and sea water areas, and transactions of national interest) come into force no later than 6 months after Royal assent. A further group of amendments (mainly related to the benefit to New Zealand test and call-in transactions) come into force no later than 1 year after Royal assent. The main reason for deferred commencement is that regulations need to be made to give effect to some amendments. The amendments can come into force earlier by Order in Council commencement. This is to ensure that, if the regulator and other affected agencies are in a position to implement them earlier, they can, with the goal of increasing New Zealand’s investment attractiveness and ability to manage significant risks as soon as possible.

Part 1 amends the Overseas Investment Act 2005 (the principal Act).

Part 2 amends other Acts, notably sections 56 to 58B of the Fisheries Act 1996 (the overseas investment fishing provisions).

Part 1 of BillAmendments to Overseas Investment Act 2005

Part 1 of the Bill contains amendments to the principal Act. The main amendments are set out below, under the relevant Act headings.

Part 1 of principal ActPreliminary provisions

Section 7 contains the definition of who are overseas persons. Currently, a body corporate (A) is an overseas person if an overseas person or persons have 25% or more of any class of A’s securities or the power to control the composition of 25% or more of A’s governing body or the right to exercise or control the exercise of 25% or more of the voting power at a meeting of A.

The changes reduce the number of bodies corporate that will be overseas persons, in 2 ways.

First, bodies corporate that are both New Zealand-incorporated and New Zealand-listed will be less likely to be classed as overseas persons if they are widely held. The circumstances in which they will tip into being overseas persons are either of the following:

  • an overseas person has, or more than 1 overseas persons cumulatively have, a beneficial entitlement to, or a beneficial interest in, more than 50% of A’s securities:

  • overseas persons who own 10% or more of A’s securities control the composition of 50% or more of A’s governing body or exercise or control the exercise of more than 25% of the voting power at a meeting of A. Shareholders who own less than 10% are not counted for this test (unless they are associates).

Secondly, the changes increase the ownership and control threshold for all overseas persons (other than individuals) from “25% or more” to “more than 25%”. This reflects that persons would need to hold more than 25% to exercise negative control over a company (for example, to block a special resolution).

The changes also ensure that managed investment schemes will be overseas persons if their manager or trustee is an overseas person or if more than 25% of the value of the investment products in the investment scheme are invested on behalf of overseas persons.

Part 2 of principal ActConsent and conditions regime

Subpart 1—When consent required and criteria for consent

Section 12 sets out what are overseas investments in sensitive land. Currently, section 12 covers 2 types, direct investments in interests in land (section 12(a)) and indirect investments (for example, buying shares in an entity that owns or controls interests in land) (section 12(b)).

Section 12(a) is amended so that, unless a lease or an interest relates to residential land, leases or other interests for a term of less than 10 years do not need consent under the principal Act. Leases or other interests in land that relate to land that is residential will continue to have a 3-year-term threshold. There have also been changes to how the term of the interest is calculated. In particular, the term of any previous interest in land held by the overseas person will count towards the total term of the lease (see new Schedule 1A).

The main change for indirect investments is reducing the number of small overseas investors that are subject to screening on the ground that the entity becomes an overseas person as a result of their acquisition. The Bill does this by changing the “tipping point” for New Zealand-incorporated and New Zealand-listed issuers. Currently, an overseas investor is subject to screening if, as a result of their investment, the entity becomes an overseas person (for example, if the new investment tips the entity over the current 25% overseas ownership threshold). The changes mean that the indirect investment will require screening on this ground only if the new tipping point described in new section 12(2) is reached. This point is never reached if the entity is widely held (ie, if no overseas person (alone or together with its associates) has a beneficial entitlement to, or a beneficial interest in, 10% or more of any class of the entity’s securities that confer control rights). Investors acquiring more than 25% will still be subject to screening on the other grounds in new section 12(1)(b).

Sections 12 (land investments) and 13 (business assets investments) are also both changed to reflect the new ownership and control threshold for all overseas persons (other than individuals) from “25% or more” to “more than 25%”.

Section 16 sets out the criteria for consent for overseas investments in sensitive land. The main changes are in respect of farm land advertising and transactions of national interest. There is otherwise no substantive change in respect of residential land or forestry land.

The current rule in the Act on farm land advertising requirements is that, if the relevant land is or includes farm land, either that farm land or the securities to which the overseas investment relates must have been offered for acquisition on the open market to persons who are not overseas persons. The procedure for this is already set out in regulations. The main changes to the Act are as follows:

  • allowing regulations to set the requirements about when and how section 12 interests must be advertised (see section 61(1)(b)):

  • allowing relevant Ministers to exempt from the requirement to advertise on the open market and from other requirements about how section 12 interests must be advertised (see new section 20(2)). This will allow for alternative forms of advertising, and supplement the current exemptions in section 20 from the need to advertise. Standard provisions about exemptions will apply (for example, applications can be made at any time, fees may be charged, and conditions may be imposed):

  • requiring the advertising to happen before a transaction is entered into with the overseas person:

  • clarifying what must be advertised (for example, if a 50 year lease may be sold to an overseas person, the farm land advertising requirements can be met by advertising a 50 year lease. Advertising the freehold interest in that property is not required).

In addition, a new criterion for consent is that, if the overseas investment in sensitive land is a transaction of national interest, the Minister has not declined consent to the transaction (see new section 20C).

Section 16A sets out the benefit to New Zealand test, which is 1 of the main criteria for consent for overseas investments in sensitive land. The main changes are as follows:

  • changing the counterfactual to a simpler test (ie, Ministers must compare “before and after” the investment, rather than using the “with and without” the investment test used after the Court decision in the Crafar Farms case:

  • requiring a proportionate approach (ie, taking into account whether the benefit is proportionate to the sensitivity of the land and the nature of the overseas investment transaction). This means that if, for example, a large area of very sensitive land is being acquired, the benefits are expected to be greater than if only a very small area of not very sensitive land is being acquired:

  • removing current section 16A(1)(b), which requires that, if the relevant land is or includes non-urban land that, in area (either alone or together with any associated land) exceeds 5 hectares, the relevant Ministers have to determine that the benefit to New Zealand will be, or is likely to be, substantial and identifiable:

  • enacting a modified benefits test for rural land with an elevated benefits threshold, by moving the current Government’s rural land directive up into the Act. That was given under section 34, which provides that the Minister can direct the regulator by a Ministerial directive letter. If the acquisition is or includes more than 5 hectares of farm land (ignoring associated land), Ministers must give certain factors high relative importance and ensure that the applicant has demonstrated, in relation to 1 or more of those factors, that the benefits of the investment are of a size or nature that represent a substantial benefit to New Zealand:

  • if an overseas investment involves extraction of water for bottling, or other extraction of water in bulk for human consumption, introducing an additional factor, namely, whether the overseas investment will, or is likely to, result in a negative impact on water quality or sustainability. Any negative impact must be deducted from any benefit to New Zealand that has been determined.

There are no changes proposed to the 2 forestry pathways within the benefit test set out in section 16A. Also, there are no substantive changes proposed to section 34, which enables a Ministerial directive letter to direct the regulator about things like the relative importance of different criteria or factors in relation to particular assets.

Section 17 currently sets out some of the factors for assessing the benefit of overseas investments in sensitive land and regulation 28 of the regulations currently sets out more factors. The intention is that the new factors will be those set out in new section 17, and that no factors will be able to be set by regulations.

Section 18 sets out the criteria for overseas investments in significant business assets. A new criterion for consent is that, if the overseas investment is a transaction of national interest, the Minister has not declined consent to the transaction (see new section 20C).

Significant business assets are assets as defined in section 13 of the Act. Broadly speaking, they are securities and other assets with a value exceeding $100 million, or higher amounts in the case of investors from certain countries with which New Zealand has signed free trade agreements that confer more favourable treatment on this point as follows:

  • there are higher thresholds of $537 million for Australian non-Government investors and $113 million for Australian Government investors under the Protocol on Investment to the New Zealand–Australia Closer Economic Relations Trade Agreement:

  • New Zealand increased the monetary thresholds in section 13 of the Act from $100 million to $200 million for investors from other parties to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership:

  • this also triggered “most favoured nation” obligations that New Zealand had under other agreements, so the $200 million threshold also applies under the following agreements:

    • the Free Trade Agreement between New Zealand and the Republic of Korea:

    • the Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu on Economic Cooperation:

    • the New Zealand–Hong Kong, China Closer Economic Partnership Agreement:

    • the Free Trade Agreement between the Government of New Zealand and the Government of the People’s Republic of China:

    • the Trans-Pacific Strategic Economic Partnership Agreement (the P4 Agreement).

New section 18A contains the new investor test, which applies for almost all overseas investments. The new section clarifies that the purpose of the test is to determine whether investors are unsuitable to own or control any sensitive New Zealand assets, by assessing whether they are likely to pose risks to New Zealand, based on factors relating to their character and capability. The main changes to the factors are—

  • replacing the current requirements for good character with new factors, including factors about offences and contraventions by relevant overseas persons that are non-natural persons:

  • removing the current factors about business experience and acumen:

  • introducing new capability factors, such as whether the person is prohibited from being a director or manager under the Companies Act 1993 or similar Acts:

  • removing the current factor about financial commitment to the overseas investment:

  • introducing new factors, including to enable consideration of tax evasion, abusive tax positions, and outstanding unpaid tax of $5 million or more.

The Bill changes the nature of the investor test as follows:

  • currently, certain factors disqualify an investor from meeting the test (for example, they cannot meet the test if they have been convicted of an offence for which they were sentenced to imprisonment for a term of 5 years or more). The new test provides that the investor test can be met in either of 2 ways, namely, if none of the factors are established, or if Ministers are satisfied that any factor that is established does not make the person unsuitable to own or control any sensitive New Zealand assets:

  • currently, in assessing good character, Ministers are required to take into account any other matter that reflects adversely on the person’s fitness to have the particular overseas investment. Under the new test, Ministers will not be able to consider any other matter outside of those listed in the Act.

The Bill also changes the focus of the investor test as follows:

  • currently, some of the factors in the test assess the investor in terms of the particular overseas investment in sensitive New Zealand assets. The new test will assess whether the investor is unsuitable for any overseas investment in sensitive New Zealand assets (including any that the investor may make in the future):

  • currently, some New Zealanders are subject to the test (for example, if they are identified as the person making the overseas investment as an associate of an overseas person or as an individual with control of the relevant overseas person). The new test will exclude New Zealanders from its scope.

See also new section 29A for increased flexibility about the investor test, for example for repeat investors. Currently, the investor test is a transaction-based test, and is required to be satisfied afresh for each transaction. The new provisions will mean that investors who have already passed the investor test will not need to re-satisfy the test in full each subsequent time that they propose to make another investment. They would only need to declare any changes relevant to the investor test that have occurred since they last passed the test.

New section 20 relates to the exemptions from the criterion in current section 16(1)(f) that requires farm land to be offered for acquisition on the open market to persons who are not overseas persons.

New section 20C allows the Minister to decline consent to a transaction of national interest if the Minster considers that the transaction is contrary to New Zealand’s national interest. Transactions of national interest are transactions that already require consent under the Act and that result in–

  • an investment by a non-New Zealand government investor; or

  • an investment in a strategically important business; or

  • any other investment that the Minister considers could be contrary to New Zealand’s national interest, but only if the Minister has notified the applicant that the transaction is being considered as a transaction of national interest.

A decision as to whether a transaction of national interest is contrary to New Zealand’s national interest cannot be delegated to the regulator (see new section 32(2)). In addition, the person who makes a decision in relation to an application for consent cannot also make a decision about whether the transaction is contrary to New Zealand’s national interest.

Strategically important businesses are businesses operating in a range of areas that are considered to be strategically important, including businesses involved in military or dual-use technology, ports or airports, electricity, water, telecommunications, and financial market infrastructure (see the new definition of SIB, or strategically important business, in section 6(1)). For the most part, regulations will need to be made in order for a business to be considered a strategically important business under the Act.

New sections 20D to 20F deal with critical direct suppliers. An investment in a critical direct supplier is either a transaction of national interest (if the transaction already required consent under the Act) or a call-in transaction (if the transaction does not otherwise require consent under the Act). A list of critical direct suppliers will be published so that potential investors will be able to identify whether the proposed transaction will be a transaction of national interest or a call-in transaction. New sections 20E and 20F deal with what happens if a critical direct supplier’s name is not published on that list.

Subpart 2—Procedure for making an application for consent and for granting consent

New section 25C imposes an automatic condition on any consent relating to a transaction of national interest, requiring each consent holder not to act with a purpose or an intention of adversely affecting national security or public order.

New section 25D imposes an automatic condition on any consent involving a fresh or seawater area, requiring compliance with the provisions of new Schedule 5 (which provides for the Crown acquisition of fresh or seawater areas, and which replaces the special land provisions in the principal Act).

New section 29A provides increased flexibility in relation to the investor test and for repeat investors. People will be able to apply at any time for an assessment of whether they meet the test (not just when they apply for consent for a particular investment). Also, passing the test will count for later investments if either there has been no change in the extent to which the investor test factors are established or any change in the extent to which an investor test factor is established does not make the person unsuitable to own or control any sensitive New Zealand assets. However, if the national interest test was failed for the most recent investment where the investor met the investor test, for reasons connected to the investor, then the investor must apply again for a new assessment of whether they meet the test for their next investment.

Subpart 3—Administration

New section 32(2) provides that certain decisions relating to transactions of national interest and call-in transactions cannot be delegated to the regulator.

New section 37B empowers regulations to be made setting time frames for the exercise of functions and powers, performance of duties, and provision of services, under the Act and requiring information to be included in the annual report of the regulator about the extent to which those time frames are met.

Subpart 4—Information-gathering powers

New section 38A provides for overseas persons who make, or apply to make, an overseas investment in sensitive New Zealand assets to be required to provide information that the Commissioner of Inland Revenue considers necessary or relevant for tax purposes. The intention is that regulations will set out things like what information or other evidence or documents must be provided.

Section 41 extends the existing information-gathering powers so that they will apply for the purpose of investigating whether a transaction is a call-in transaction and whether a transaction gives rise to, or is likely to give rise to, a significant risk to national security or public order. (See generally new Part 3 for provisions relating to call-in transactions).

Subpart 5—Enforcement

New sections 46A to 46F provide for enforceable undertakings.

Section 48 provides that the court may order a person in breach of the Act, or involved in a breach, to pay a civil pecuniary penalty. Currently, the maximum penalty that may be awarded is the higher of $300,000 or 3 times the amount of any quantifiable gain or the cost of remedying the breach of condition or the loss suffered by a person in relation to a breach of condition. The Bill proposes to change the $300,000 cap to $500,000 in the case of an individual or $10 million in any other case. Amendments have also been proposed to section 48 to allow for maximum penalties to be set if a prohibition order or a direction order is breached (see new sections 88 to 92 in relation to those orders).

New sections 51AAA to 51AAE relate to injunctions, for the purpose of enforcing the provisions of the Act.

Subpart 6—Miscellaneous provisions

Section 61 sets out regulation-making powers. The main changes here are—

  • widening the power to make regulations prescribing when and how section 12 interests in farm land must be advertised for acquisition on the open market:

  • removing the power to make regulations setting out additional factors for assessing the benefit of overseas investments in sensitive land.

The regulation making powers relating to the offer of foreshore, seabed, riverbed, or lakebed have been moved to new Schedule 5 (which provides for the acquisition of fresh or seawater areas by the Crown).

Section 61B sets out the purpose of exemption-making powers. The main changes are—

  • adding undue cost to the list of purposes in section 61B(a). Currently, a purpose of the exemption-making powers is to provide flexibility where compliance with the Act is impractical, inefficient, or unduly burdensome but where the purpose of the Act can still be substantially achieved through terms and conditions of the exemption:

  • replacing the reference in the above to the purpose of the Act being able to be substantially achieved through terms and conditions of the exemption with a reference to taking into account the sensitivity of the sensitive assets and the nature of the overseas investment transaction:

  • adding 2 new purposes for exemptions. The first new purpose is exempting persons, transactions, rights, interests, or assets that the Minister considers to be fundamentally New Zealand owned or controlled or to have a strong connection to New Zealand. The second new purpose is exempting persons, transactions, rights, interests, or assets that the Minister considers to be necessary or desirable to support the issuance or management of residential mortgage-backed securities complying with a standard created or endorsed by the Reserve Bank of New Zealand.

New Part 3 of principal ActNational security and public order risks management regime

New section 81 explains that the purpose of new Part 3 is to manage significant national security and public order risks associated with transactions by overseas persons.

Subpart 1—Call-in transactions

New section 84 gives the Minister the power to review call-in transactions to determine if the transaction gives rise, or may give rise, to a significant risk to national security or public order. A call-in transaction is a transaction that is an overseas investment in SIB assets that does not otherwise require consent under the Act (see new section 82).

New sections 85 to 87 deal with the notification of call-in transactions. Transactions involving military or dual-use technology, or a critical direct supplier, must be notified to the regulator before they are given effect to. Failure to do so is a contravention of the Act. Other transactions may, but do not have to, be notified to the regulator.

Subpart 2—NSPO management actions

New subpart 2 provides for 4 types of NSPO management actions, as follows:

  • a direction order, which allows a call-in transaction to proceed so long as the relevant overseas person complies with the automatic condition and any other conditions imposed in the order (see new sections 88 to 90):

  • a prohibition order, which prohibits a call-in transaction from being given effect to (see new section 92):

  • a disposal order, which can be made in relation to an investment given effect to under a call-in transaction or a transaction of national interest. A disposal order requires the relevant overseas person to dispose of the sensitive assets acquired under the transaction. (See new section 93):

  • a recommendation that a person be put into statutory management in accordance with new sections 94 to 111. The main purpose of a statutory management is to manage national security and public order risks, including by removing the overseas person’s access to or control over sensitive assets.

Subpart 3—Protection of classified information

New subpart 3 applies to civil court proceedings relating to the administration or enforcement of the Act. It sets out the manner in which classified security information may be used in those court proceedings.

This subpart is substantially the same as subpart 8 of Part 4 of the Telecommunications (Interception Capability and Security) Act 2013, except that information held by any law enforcement or regulatory agency may be classified security information if certified by the head of the agency or the Attorney-General (see new section 114).

Subpart 4—Miscellaneous provisions

New subpart 4 contains various miscellaneous provisions relating to the national security and public order risks management regime.

The main provision in this subpart is new section 126, which provides that various agencies can share information (including personal information) between them if they consider it necessary or desirable for the purpose of managing national security and public order risks associated with transactions by overseas persons.

Amendments to Schedule 1AA of principal Act: Transitional, savings, and related provisions

See Schedule 1AA for new transitional, savings, and related provisions.

Amendments to Schedule 1 of principal Act: Sensitive land

Table 2 of Schedule 1, which provides for land to be sensitive if it adjoins the types of land listed in that table, has been amended. The amendments generally reduce the scope of sensitive adjoining land (for example, see row 5 of Table 2 which amends the types of regional parks that will be sensitive adjoining land), or refocus a type of sensitive adjoining land onto land that is significant to Māori (for example, see row 10 of Table 2). There will no longer be a list of reserves, public parks, and other sensitive areas under section 37 of the Act.

There is otherwise no substantive change to Schedule 1.

Amendments to Schedule 3 of principal Act: Exemptions from requirement for consent

Clause 5 is replaced with no change in substance. New clause 5 is an exemption that applies to premises used, or intended to be used, in the course of business principally for providing temporary lodging to the public. To try to help readers, the current clause 5 uses the term “hotel” for these premises (defined as above) and the term “hotel company” for people operating and developing these premises. It is thought that the use of these terms risks creating an implication that the narrower ordinary meaning of “hotel” is intended. The new clause therefore instead uses the terms TLtP premises and TLtP participant, to cover all premises used, or intended to be used, in the course of business principally for providing temporary lodging to the public.

New Schedule 5 inserted into principal Act: Fresh and seawater areas

The principal Act requires an overseas person to offer special land to the Crown, and the provisions of that offer are dealt with in regulations. The main changes here are that—

  • the special land (renamed fresh or seawater areas) must be acquired by the Crown unless the Crown declines to acquire the areas in accordance with the provisions set out in the schedule (see clauses 4 and 5 of new Schedule 5):

  • the Crown’s right to acquire only applies if the overseas person is acquiring a freehold interest or a leasehold interest in the land. The Crown’s right to acquire does not apply in the case of acquisition of other estates or interests in land, or of rights or interests in securities:

  • the Crown’s right to acquire only applies if the criteria satisfied in a consent application included the benefit to New Zealand test:

  • unless the Crown declines, the acquisition must be completed during the term of the water areas acquisition notice that will be registered against the relevant record of title relating to the fresh or seawater area.

Regulations will still set out the details of the acquisition, including standard terms of acquisition that will apply unless the Crown and overseas person agree otherwise. The provisions of new Schedule 5 will bind the overseas person and any of their associates. If a water areas acquisition notice is registered on the record of title relating to the fresh or seawater areas, the provisions of new Schedule 5 will also bind any subsequent owners of the fresh or seawater areas. For land held off-register, a water areas covenant will apply.

Part 2 of BillAmendments to other Acts

Anti-Money Laundering and Countering Financing of Terrorism Act 2009: the amendment to this Act gives power to use and disclose information supplied or obtained under the Overseas Investment Act 2005 for AML/CFT purposes.

Fisheries Act 1996: the amendments to this Act are to align the overseas investment fishing provisions with the changes made to the Overseas Investment Act 2005.

Tax Administration Act 1994: the amendment to this Act overrides the confidentiality provisions in the Tax Administration Act 1994 to allow the Commissioner to disclose certain sensitive revenue information to the regulator under the Overseas Investment Act 2005 and to a list of public sector agencies that have some connection with the management of national security or public order risks.

Hon David Parker

Overseas Investment Amendment Bill (No 2)

Government Bill

233—1

Contents

Explanatory note
1Title
2Commencement
3Principal Act
4Section 3 amended (Purpose)
5Section 4 amended (Overview)
6Section 6 amended (Interpretation)
7Section 7 amended (Who are overseas persons)
8Section 8 amended (Meaning of associate and associated land)
9Section 12 replaced (What are overseas investments in sensitive land)
12What are overseas investments in sensitive land
10Section 13 amended (What are overseas investments in significant business assets)
11Section 15 amended (Who are relevant overseas persons, and individuals with control, for overseas investments)
12Section 16 amended (Criteria for consent for overseas investments in sensitive land)
13Section 16A amended (Benefit to New Zealand test)
14Section 17 amended (Factors for assessing benefit of overseas investments in sensitive land)
15Section 18 replaced (Criteria for overseas investments in significant business assets)
18Criteria for consent for overseas investments in significant business assets
16New section 18A inserted (Investor test)
18AInvestor test
17Section 19 repealed (Applying good character and Immigration Act 2009 criteria)
18Section 20 replaced (Exemptions from farm land offer criterion)
20Exemptions from farm land offer criterion
19New sections 20A to 20G and cross-heading inserted
20ATransactions that are transactions of national interest
20BOther transactions may be transactions of national interest if notice given
20CConsent may be declined if transaction contrary to national interest
20DWho are critical direct suppliers
20EProvisions relating to unpublished CDS
20FStatus of unpublished CDS confidential
20GWhat are media businesses with significant impact
20Section 23 amended (Requirements for application for consent)
21Section 25A amended (Conditions of consent)
22New sections 25C and 25D inserted
25CAutomatic condition: every transaction of national interest
25DAutomatic condition: transactions involving fresh or seawater areas
23Section 27A amended (Consent holder may apply for new consent)
24New section 29A inserted (Investor test applications where no change since investor test last met)
29AInvestor test applications where no change since investor test last met
25Section 31 amended (What regulator does)
26Section 32 amended (Delegation by relevant Minister or Ministers)
27Section 34 amended (Ministerial directive letter)
28Section 36 amended (Regulator may issue guidelines)
29Section 37 repealed (Regulator must keep list of reserves, parks, and other sensitive areas)
30New sections 37A and 37B inserted
37ARegulator must publish list of sensitive adjoining land relating to collective group of Māori
37BTime frames
31Section 38 amended (Regulator may require person who is subject to condition to provide information for monitoring purposes)
32New section 38A inserted (Information for tax purposes)
38AInformation for tax purposes
33Section 39 amended (Regulator may require any person to provide information for statistical or monitoring purposes)
34Section 40 amended (Regulator may require person who is subject to condition to provide statutory declaration as to compliance)
35Section 41 amended (Regulator may require information and documents to be provided for purpose of monitoring compliance, investigating, and enforcing Act and regulations)
36Section 41G amended (Consequences of disposal or retention of property)
37Section 42 amended (Offence of giving effect to overseas investment without consent)
38Section 43 amended (Offence of defeating, evading, or circumventing operation of Act)
39Section 44 amended (Offence of resisting, obstructing, or deceiving)
40Section 46 amended (Offence of false or misleading statement or omission)
41New sections 46A to 46E and cross-heading inserted
46ARegulator may accept undertakings
46BWhen undertaking is enforceable
46CNotice of decision
46DWithdrawal or variation of enforceable undertaking
46EProceedings for alleged contravention
42New sections 46F and 46G inserted
46FContravention of enforceable undertaking
46GConsiderations for court orders
43Section 47 amended (Court may order disposal of property)
44Section 48 amended (Court may order person in breach or involved in breach to pay civil penalty)
45Section 49 amended (Court may order mortgage to be registered over land)
46Section 50 amended (Court may order interest to be paid)
47Section 51 amended (Court may order compliance with condition of consent, exemption, or exemption certificate)
48New sections 51AAA to 51AAE inserted
51AAACourt may grant injunction
51AABWhen court may grant restraining injunctions
51AACWhen court may grant performance injunctions
51AADUndertaking as to damages not required by regulator
51AAEPublication under this subpart may be deferred or dispensed with
49Section 51A amended (Person who acquires interest in residential land must make and provide statement)
50Section 51C amended (Conveyancer must obtain and keep statement)
51Section 52 amended (Administrative penalties for late filing)
52Section 54 amended (Address for service)
53Section 54A amended (Notices or other documents given, provided, or served by regulator)
54Section 61 amended (Regulations)
55Section 61B amended (Purpose of exemptions)
56Section 61D amended (Minister may grant individual exemptions)
57Section 61E amended (Criteria for all exemptions)
58Section 61F amended (Other provisions applying to all exemptions)
59Section 62 repealed (Foreshore, seabed, riverbed, or lakebed acquired by the Crown under consent process is not subdivision)
60New Part 3 inserted
81Purpose of Part
82What is a call-in transaction and an overseas investment in SIB assets
83Who are relevant acquirers
84Review of call-in transactions
85Military or dual-use technology and critical direct supplier call-in transactions
86Other call-in transactions
87Requirements for notice of call-in transaction
88Direction orders
89Direction orders may be varied by agreement
90Revocation of direction order
91Interim direction orders
92Prohibition orders
93Disposal orders
94Purpose of statutory management
95Statutory management of person who owns sensitive assets and associates
96Recommendation of Minister
97Statutory management of New Zealand business only
98Date and time of appointment
99Considerations affecting exercise of powers by statutory manager
100Role of regulator in statutory management
101Statutory manager may form body corporate to acquire business of branch of persons not incorporated in New Zealand
102Body corporate formed and registered also subject to statutory management
103Statutory manager may sell vested assets
104Statutory manager may terminate contracts or arrangements posing significant risk to national security or public order
105Application of Corporations (Investigation and Management) Act 1989
106Termination of statutory management
107Effect of termination of statutory management
108Powers to obtain documents and information
109Protection from liability and indemnity
110Expenses of statutory management
111Modifications where person under statutory management is regulated by Reserve Bank
112When NSPO management actions may be taken in connection with consented transactions of national interest
113Application of subpart
114Classified security information and other terms defined
115Obligation to provide court with access to classified security information
116Court orders
117Appointment of special advocate
118Nomination of person for appointment
119Role of special advocates
120Court may provide access to classified security information to special advocate
121Communication between special advocate and other persons
122Protection of special advocates from liability
123Other matters relating to procedure in proceedings involving classified security information
124Nothing in this subpart limits other rules of law that authorise or require withholding of document, etc
125Ancillary general practices and procedures to protect classified security information
126Power to use and disclose information relevant to managing national security or public order risks
127Regulations regarding transactions of national interest and overseas investments in SIB assets
128Giving effect to and unwinding of call-in transactions
129Minister must publish decisions on call-in transactions and transaction of national interest
61Schedule 1AA amended
62Schedule 1 amended
63New Schedule 1A inserted
64Schedule 2 amended
65Schedule 3 amended
66New Schedule 5 inserted
67Amendment to Anti-Money Laundering and Countering Financing of Terrorism Act 2009
68Section 140 amended (Power to use and disclose information supplied or obtained under other enactments for AML/CFT purposes)
69Amendments to Fisheries Act 1996
70Section 57A amended (Interpretation of overseas investment fishing provisions)
71Section 57D amended (What are overseas investments in fishing quota)
72Section 57F amended (Who are relevant overseas persons, and individuals with control, for overseas investments)
73Sections 57G to 57I replaced
57GCriteria for overseas investments in fishing quota
57HFactors for determining whether or not overseas investment in fishing quota will, or is likely to, benefit New Zealand
74Amendments to Tax Administration Act 1994
75Section 3 amended (Interpretation)
76Schedule 7 amended

The Parliament of New Zealand enacts as follows:

1 Title

This Act is the Overseas Investment Amendment Act (No 2) 2020.

2 Commencement

(1)

This Act comes into force on the 42nd day after the date on which it receives the Royal assent.

(2)

Subsection (1) applies with the following exceptions:

(a)

the following provisions come into force on a date appointed by the Governor-General by Order in Council or, if not earlier brought into force, 6 months after the date on which this Act receives the Royal assent:

(i)

section 12(6) (amendments to section 16(1)(f) and (g), which relate to farm land advertising and transactions of national interest):

(ii)

section 18 (replacement of section 20, which relates to farm land advertising):

(iii)

section 19 (insertion of new sections 20A to 20G, which relate to transactions of national interest):

(iv)

section 22 (insertion of new sections 25C and 25D, which relate to automatic conditions for transactions of national interest and fresh or seawater areas):

(v)

section 60 in so far as it inserts subparts 2 and 4 of new Part 3 (which relate to transactions of national interest):

(vi)

sections 13(3) and (4), 59, and 66 (which relate to special land/fresh or seawater areas):

(b)

the following provisions come into force on a date appointed by the Governor-General by Order in Council or, if not earlier brought into force, 1 year after the date on which this Act receives the Royal assent:

(i)

sections 13(1) and (2) and 14(1) (replacement of sections 16A(1) and 17(1) and (2) (which relate to the benefit test):

(ii)

section 60 in so far as it inserts subpart 1 of Part 3 (which relates to call-in transactions).

(3)

In subsection (2)(a) and (b), 1 or more orders may be made appointing different dates for different provisions and for different purposes.

(4)

In this section, provision includes any item, or any part of an item, in any of the schedules.

Part 1 Amendments to Overseas Investment Act 2005

3 Principal Act

This Part amends the Overseas Investment Act 2005 (the principal Act).

4 Section 3 amended (Purpose)

In section 3, insert as subsection (2):

(2)

This Act also has the purpose of managing national security and public order risks associated with transactions by overseas persons.

5 Section 4 amended (Overview)

After section 4(1)(b), insert:

(c)

Part 3 contains the national security and public order risks management regime for transactions by overseas persons, and is organised as follows:

(i)

subpart 1 provides for the review of call-in transactions:

(ii)

subpart 2 sets out the details of the NSPO management actions that may be taken to manage national security and public order risks: direction orders, prohibition orders, disposal orders, and statutory management:

(iii)

subpart 3 deals with the protection of classified information:

(iv)

subpart 4 relates to regulations and other miscellaneous matters.

6 Section 6 amended (Interpretation)

(1)

In section 6(1), repeal the definitions of 25% or more ownership or control interest, 25% or more subsidiary, and foreshore or seabed.

(2)

In section 6(1), insert their appropriate alphabetical order:

call-in transaction has the meaning set out in section 82

control rights, in respect of a person (A), means—

(a)

the power to participate in the control of the composition of A’s governing body; or

(b)

the right to exercise, or control of the exercise of, the voting power at a meeting of A

critical direct supplier means a person who has been notified by the Minister of their status as a critical direct supplier under section 20D

direction order means an order made under section 88

disposal order means an order made under section 93

estate or interest has the meaning set out in section 5(1) of the Land Transfer Act 2017

fresh or seawater area has the meaning set out in clause 2 of Schedule 5

fresh or seawater interest has the meaning set out in clause 2 of Schedule 5

intelligence or security agency means—

(a)

the New Zealand Defence Force:

(b)

the Government Communications Security Bureau:

(c)

the New Zealand Security Intelligence Service

interim direction order means an order under section 91

investor test factors means the factors set out in section 18A(4)

kaitiakitanga has the meaning set out in section 2(1) of the Resource Management Act 1991

listed issuer

(a)

means a person that is a party to a listing agreement with a licensed market operator in relation to a licensed market (and includes a licensed market operator that has financial products quoted on its own licensed market); but

(b)

excludes a person that is a listed issuer only because its debt securities are approved for trading on a licensed market,—

(where terms used in this definition have the same meanings as in the Financial Markets Conduct Act 2013)

managed investment scheme has the meaning set out in section 9 of the Financial Markets Conduct Act 2013

marine and coastal area has the meaning set out in section 9(1) of the Marine and Coastal Area (Takutai Moana) Act 2011, but any reference to land adjoining the marine and coastal area is to land that adjoins this land on the landward side only

media business with significant impact has the meaning set out in section 20G

military or dual-use technology means—

(a)

any goods listed in the strategic goods list, but not of a class specified in regulations; and

(b)

any technology—

(i)

that control of which, or access to which, could pose a significant risk to national security or public order; and

(ii)

that is within a class of technology set out in regulations

more than 25% ownership or control interest has the meaning set out in subsection (4)

more than 25% subsidiary has the meaning set out in subsection (5)

natural environment includes land, water, air, soil, all forms of plants and animals (whether native to New Zealand or introduced), and ecosystems and their constituent parts

New Zealand listed issuer means a listed issuer that is incorporated in New Zealand

non-NZ government investor means—

(a)

the government, or any part of the government (including regional or local government), of—

(i)

a territory other than New Zealand; or

(ii)

a part of a territory other than New Zealand; or

(b)

a relevant government enterprise; or

(c)

a person who is acting—

(i)

as an agent, a trustee, or a representative of a person described in paragraph (a) or (b); or

(ii)

in any way on behalf of a person described in paragraph (a) or (b); or

(iii)

subject to the direction, control, or influence of a person described in paragraph (a) or (b)

NSPO management action means the making of a direction order, prohibition order, disposal order, or recommendation under section 96 that a person be put into statutory management

overseas investment in SIB assets has the meaning set out in section 82

prohibition order means an order made under section 92

relevant government enterprise means—

(a)

a body corporate (W), if a relevant government investor or investors have, directly or indirectly, a more than 25% ownership or control interest in W; or

(b)

a partnership, an unincorporated joint venture, or any other unincorporated body of persons (Z) (other than a trust or unit trust or managed investment scheme) if—

(i)

more than 25% of Z’s partners or members are relevant government investors; or

(ii)

1 or more relevant government investors have a beneficial interest in or entitlement to more than 25% of Z’s profits or assets (including on Z’s winding up); or

(iii)

1 or more relevant government investors have the right to exercise, or to control the exercise of, more than 25% of the voting power at a meeting of Z; or

(c)

a trust (X) (other than a managed investment scheme) if—

(i)

more than 25% of X’s governing body are relevant government investors; or

(ii)

1 or more relevant government investors have a beneficial interest in or entitlement to more than 25% of X’s trust property; or

(iii)

more than 25% of the persons having the right to amend or control the amendment of X’s trust deed are relevant government investors; or

(iv)

more than 25% of the persons having the right to control the composition of X’s governing body are relevant government investors; or

(d)

a unit trust (Y) (other than a managed investment scheme) if—

(i)

the manager or trustee, or both, are relevant government investors; or

(ii)

1 or more relevant government investors have a beneficial interest in or entitlement to more than 25% of Y’s trust property; or

(e)

a managed investment scheme if—

(i)

the manager or the trustee (as the case may be) is a relevant government investor; or

(ii)

more than 25% of the value of the investment products in the managed investment scheme is invested on behalf of 1 or more relevant government investors,—

where terms in this paragraph have the same meanings as in the Financial Markets Conduct Act 2013

relevant government investor means a non-NZ government investor or an associate of a non-NZ government investor

section 12 interest has the meaning set out in section 12(1)

sensitive assets means—

(a)

a section 12 interest; and

(b)

any rights or interests in securities, business, or property of a kind described in section 13; and

(c)

any interest in fishing quota, or rights or interests, of a kind described in section 57D of the Fisheries Act 1996; and

(d)

any rights or interests in securities or property of a kind described in section 82(2)

sensitive information means information, but not of a class set out in regulations, that—

(a)

is genetic, biometric, health, or financial information of individuals or relates to the sexual orientation or sexual behaviour of individuals; or

(b)

is official information (as defined in section 2(1) of the Official Information Act 1982 or section 2(1) of the Local Government Official Information and Meetings Act 1987) that is relevant to the maintenance of national security or public order

SIB, or strategically important business, means a business that is 1 or more of the following:

(a)

a business that researches, develops, produces, or maintains military or dual-use technology, but not of a class set out in regulations:

(b)

a business that is a critical direct supplier, but not of a class set out in regulations:

(c)

a business that is involved in ports or airports of a class set out in regulations:

(d)

a business that is involved in electricity generation, distribution, metering, or aggregation of a class set out in regulations:

(e)

a business that is involved in drinking water, waste water, or storm water infrastructure of a class set out in regulations:

(f)

a business that is involved in telecommunications infrastructure or services of a class set out in regulations:

(g)

a business that is a financial institution or is involved in financial market infrastructure of a class set out in regulations:

(h)

a business that is a media business with significant impact:

(i)

in section 20A (relating to transactions of national interest),—

(i)

a business that is involved in an irrigation scheme of a class set out in regulations:

(ii)

any other business that is involved in a strategically important industry or that owns or controls high-risk critical national infrastructure of a class set out in regulations; and

(j)

in section 82(2) (definition of overseas investment in SIB assets), a business that develops, produces, maintains, or otherwise has access to sensitive information of a class set out in regulations

strategic goods list means the list of all goods and classes of goods whose exportation is prohibited under section 96 of the Customs and Excise Act 2018 because they have or may have a strategic use (within the meaning of section 96(11) of that Act) that the Secretary is required to publish under section 96(7) of that Act

transaction of national interest means—

(a)

a transaction of a kind described in section 20A; and

(b)

a transaction that the Minister has identified in a notice given under section 20B

unpublished CDS means a critical direct supplier whose status is not published on the list of critical direct suppliers under section 20D(2)(b)(i)

(3)

In section 6(1), definition of excluded accommodation facility, replace paragraph (b) with:

(b)

any TLtP premises as defined in clause 5 of Schedule 3 (which relates to premises used, or intended to be used, in the course of business principally for providing temporary lodging to the public); or

(4)

In section 6(1), definition of farm land, after “livestock”, insert “(which, to avoid doubt, do not include forestry activities within the meaning of section 16A(9))”.

(5)

In section 6(1), definition of give effect to an overseas investment,—

(a)

paragraph (a), replace “an overseas investment in sensitive land, overseas investment in significant business assets, or overseas investment in fishing quota” with “an overseas investment in sensitive land, an overseas investment in significant business assets, an overseas investment in fishing quota, or a call-in transaction”; and

(b)

paragraph (b), after “on consent”, insert “or a direction order”.

(6)

In section 6(1), replace the definition of historic heritage with:

historic heritage has the meaning set out in section 2(1) of the Resource Management Act 1991

(7)

In section 6(1), replace the definition of investor test with:

investor test means the test set out in section 18A

(8)

In section 6(1), replace the definition of involved with:

involved, in relation to a contravention, an offence, or a failure to comply, has the meaning set out in subsection (7)

(9)

In section 6(1), definition of relevant land, replace “referred to in section 12(a) or 12(b)” with “that the estate or interest referred to in section 12(1)(a) or (b) relates to”.

(10)

In section 6(2)(a)(iii), after “New Zealand”, insert “(see subsection (2A))”.

(11)

In section 6(4), replace 25% or more ownership or control interest with more than 25% ownership or control interest.

(12)

In section 6(4)(a), (b), and (c), replace “25% or more” with “more than 25%”.

(13)

In section 6(5), replace 25% or more subsidiary with more than 25% subsidiary.

(14)

In section 6(5)(b) and (c), replace “25% or more” with “more than 25%”.

7 Section 7 amended (Who are overseas persons)

(1)

Repeal section 7(1).

(2)

Replace section 7(2) with:

(2)

In this Act, overseas person means—

(a)

an individual who is neither a New Zealand citizen nor ordinarily resident in New Zealand; or

(b)

a body corporate that is incorporated outside New Zealand or is a more than 25% subsidiary of a body corporate incorporated outside New Zealand; or

(c)

a body corporate—

(i)

that is a New Zealand listed issuer; and

(ii)

that meets the ownership test in subsection (3)(a), or the control test in subsection (3)(b), or both; or

(d)

a body corporate (A) (other than a New Zealand listed issuer) if an overseas person or persons have—

(i)

more than 25% of any class of A’s securities; or

(ii)

the power to control the composition of more than 25% of A’s governing body; or

(iii)

the right to exercise or control the exercise of more than 25% of the voting power at a meeting of A; or

(e)

a partnership, unincorporated joint venture, or other unincorporated body of persons (other than a trust or unit trust or managed investment scheme) (A) if—

(i)

more than 25% of A’s partners or members are overseas persons; or

(ii)

an overseas person or persons have a beneficial interest in or entitlement to more than 25% of A’s profits or assets (including on A’s winding up); or

(iii)

an overseas person or persons have the right to exercise or control the exercise of more than 25% of the voting power at a meeting of A; or

(f)

a trust (A) (other than a managed investment scheme) if—

(i)

more than 25% of A’s governing body are overseas persons; or

(ii)

an overseas person or persons have a beneficial interest in or entitlement to more than 25% of A’s trust property; or

(iii)

more than 25% of the persons having the right to amend or control the amendment of A’s trust deed are overseas persons; or

(iv)

more than 25% of the persons having the right to control the composition of A’s governing body are overseas persons; or

(g)

a unit trust (A) (other than a managed investment scheme) if—

(i)

the manager or trustee, or both, are overseas persons; or

(ii)

an overseas person or persons have a beneficial interest in or entitlement to more than 25% of A’s trust property; or

(h)

a managed investment scheme if—

(i)

the manager or the trustee (as the case may be) is an overseas person; or

(ii)

more than 25% of the value of the investment products in the managed investment scheme is invested on behalf of overseas persons,—

where terms in this paragraph have the same meanings as in the Financial Markets Conduct Act 2013.

(3)

For the purpose of applying subsection (2)(c)(ii) to a New Zealand listed issuer (A),—

(a)

the ownership test is that an overseas person has, or 2 or more overseas persons cumulatively have, a beneficial entitlement to, or a beneficial interest in, more than 50% of A’s securities:

(b)

the control test is that—

(i)

at least 1 overseas person (alone or together with its associates) has a beneficial entitlement to, or a beneficial interest in, 10% or more of any class of A’s securities that confer control rights; and

(ii)

when the interests of each overseas person to which subparagraph (i) applies are added together, those overseas persons cumulatively have the right to—

(A)

control the composition of 50% or more of A’s governing body; or

(B)

exercise or control the exercise of more than 25% of the voting power at a meeting of A.

8 Section 8 amended (Meaning of associate and associated land)

In section 8(4)(b) and (c), replace “interest in” with “estate or interest in”.

9 Section 12 replaced (What are overseas investments in sensitive land)

Replace section 12 with:

12 What are overseas investments in sensitive land

(1)

An overseas investment in sensitive land is the acquisition by an overseas person, or an associate of an overseas person, of all or any of the following (a section 12 interest):

(a)

an estate or interest in land if—

(i)

the land that the estate or interest relates to is sensitive land under Part 1 of Schedule 1; and

(ii)

the estate or interest acquired is—

(A)

a freehold estate; or

(B)

if the land that the interest relates to is residential land, any interest in land (other than an exempted interest) for a total term (as calculated in accordance with Schedule 1A) of 3 years or more; or

(C)

if the land that the interest relates to is sensitive (but not residential) land, any interest in land (other than an exempted interest) for a total term (as calculated in accordance with Schedule 1A) of 10 years or more:

(b)

rights or interests in securities of a person (A) if A owns or controls (directly or indirectly) an estate or interest in land described in paragraph (a) and, as a result of the acquisition,—

(i)

the overseas person or the associate (either alone or together with its associates) has a more than 25% ownership or control interest in A; or

(ii)

the overseas person or the associate (either alone or together with its associates) has an increase in an existing more than 25% ownership or control interest in A; or

(iii)

A becomes an overseas person in either of the following circumstances:

(A)

A is a New Zealand listed issuer and the tipping point for New Zealand listed issuers is met; or

(B)

A is not a New Zealand listed issuer.

(2)

In this Act, the tipping point for New Zealand listed issuers, for the purposes of subsection (1)(b)(iii)(A), is met in respect of a New Zealand listed issuer if—

(a)

at least 1 overseas person (alone or together with its associates) has a beneficial entitlement to, or a beneficial interest in, 10% or more of any class of A’s securities that confers control rights; and

(b)

when the interests of each overseas person to which paragraph (a) applies are added together, those overseas persons cumulatively have—

(i)

the power to control the composition of 50% or more of A’s governing body; or

(ii)

the right to exercise or control the exercise of more than 25% of the voting power at a meeting of A.

10 Section 13 amended (What are overseas investments in significant business assets)

In section 13(1)(a)(i) and (ii), replace “25% or more” with “more than 25%” in each place.

11 Section 15 amended (Who are relevant overseas persons, and individuals with control, for overseas investments)

In section 15(2)(a), replace “25% or more” with “more than 25%”.

12 Section 16 amended (Criteria for consent for overseas investments in sensitive land)

(1)

Above section 16(1)(a), insert:

Criteria regardless of type of relevant land

(2)

Above section 16(1)(b), insert:

Criteria if relevant land is exclusively residential and not otherwise sensitive

(3)

Above section 16(1)(c), insert:

Criteria if relevant land is exclusively non-residential land that is sensitive

(4)

Above section 16(1)(d), insert:

Criteria if relevant land is all residential and some or all is sensitive for some other reason

(5)

Above section 16(1)(e), insert:

Criteria if some relevant land is residential and some or all is sensitive for some other reason

(6)

Replace section 16(1)(f) with:

Additional criteria if land includes farm land

(f)

if the relevant land is or includes farm land, before a transaction is entered into with the relevant overseas person, the farm land or section 12 interest has been offered for acquisition on the open market to persons who are not overseas persons as required by the regulations (but see section 20):

Additional criteria for transaction of national interest

(g)

if the overseas investment in sensitive land is a transaction of national interest, the Minister has not declined consent to the transaction (see section 20C).

(7)

Repeal section 16(2).

(8)

In section 16(3), replace “Subsection (1)(a) (the investor test)” with “The investor test”.

(9)

In section 16(3)(b)(iii), replace “interest” with “estate or interest”.

13 Section 16A amended (Benefit to New Zealand test)

(1)

Replace section 16A(1) with:

Outline

(1AA)

This subsection shows the ways in which the benefit to New Zealand test can be met, but it is a guide only to the general scheme and effect of this section.

PathwayWhich subsections applyWhich counterfactual applies
General testSubsections (1), (1A)Subsection (1A)(a)
Modified benefit test if relevant land is or includes farm land described in subsection (1C)Subsections (1), (1A), (1C), (1D)Subsection (1A)(a)
Modified benefit test for things described in subsection (2) (forestry activities) Subsections (1), (3), (7), (9)Subsection (3)
Special benefit test relating to forestry activities Subsections (4) to (9)N/a
General test

(1)

The benefit to New Zealand test is met if both of the following are met:

(a)

the overseas investment will, or is likely to, benefit New Zealand (or any part of it or group of New Zealanders) to the extent required by this section, as determined by the relevant Ministers under section 17; and

(b)

if the relevant land is or includes residential land, the relevant Ministers are satisfied that the conditions that the relevant Ministers will impose on the consent in accordance with section 16B will be, or are likely to be, met.

(1A)

For the purposes of subsection (1)(a), the relevant Ministers—

(a)

must assess the benefit to New Zealand (or any part of it or group of New Zealanders) by comparing the likely result of the overseas investment against the existing state of affairs as at the time the overseas investment transaction is entered into or the time the application is made, whichever occurs first (counterfactual); and

(b)

must take a proportionate approach to whether the benefit test is met, by taking into account whether that benefit is proportionate to the following:

(i)

the sensitivity of the land (for example, the importance to New Zealand of the purpose for which the land is used, the size and value of the land, any sensitive features associated with the land, and the level of interest that the public have in the land); and

(ii)

the nature of the overseas investment transaction (for example, the estate or interest being acquired, whether the estate or interest is temporary or permanent, and the degree of overseas ownership or control of the land or of the estate or interest in land).

(1B)

However, subsection (1A) does not apply if subsection (3) or (4) applies.

Modified benefit test if relevant land is or includes farm land

(1C)

If the relevant land is or includes farm land that in area exceeds 5 hectares, the relevant Ministers must—

(a)

give the following factors high relative importance:

(i)

the economic benefits factor in section 17(2)(a) and, in particular, the creation or retention of jobs, introduction of technology or business skills, increased export receipts, and increased processing of primary products; and

(ii)

the oversight or participation factor in section 17(2)(f); and

(b)

ensure that the applicant has demonstrated, in relation to 1 or more of those factors, that the benefits of the investment are of a size or nature that represent a substantial benefit to New Zealand.

(1D)

However, the relevant Ministers may determine not to apply subsection (1C) if they are satisfied that—

(a)

the transaction is minor or technical; or

(b)

the transaction does not materially change the level of ownership or control that the relevant overseas person has over the asset.

(1E)

Subsection (1C) does not preclude the relevant Ministers also giving other factors high relative importance.

Modified benefit test for things described in subsection (2) (forestry activities)

(2)

In section 16A(3), replace “subsection (1)(a) and (b)” with subsection (1)(a).

(3)

Repeal section 16A(4)(f).

(4)

In section 16A(9), repeal the definition of special land.

14 Section 17 amended (Factors for assessing benefit of overseas investments in sensitive land)

(1)

Replace section 17(1) and (2) with:

(1)

For the purposes of section 16A(1)(a) (including where section 16A(3) is being applied), the relevant Ministers—

(a)

must consider all the factors in subsection (2) to determine which factor or factors (or parts of them) are relevant to the overseas investment; and

(b)

must determine whether the criterion in section 16A(1)(a) (including where section 16A(3) is being applied) is met after having regard to those relevant factors; and

(c)

in doing so, may determine the relative importance to be given to each relevant factor (or part), subject to section 16A(1C).

(2)

The factors are whether the overseas investment will, or is likely to,—

(a)

result in economic benefits for New Zealand (for example, the creation or retention of jobs, the introduction of technology or business skills, increases in productivity or export receipts, or a reduced risk of illiquid assets):

(b)

result in benefits to the natural environment (for example, protection of indigenous flora and fauna or erosion control):

(c)

result in continued or enhanced access by the public, or any section of the public, within or over the sensitive land or the features giving rise to the sensitivity (for example, access for recreational purposes or for the purposes of undertaking stewardship of, or exercising kaitiakitanga in relation to, historic heritage or the natural environment):

(d)

result in continued or enhanced protection of historic heritage in or on the relevant land (for example, agreement to execute a heritage covenant (or comply with existing covenants), agreement to support entry to wāhi tūpuna, wāhi tapu, or wāhi tapu areas on the New Zealand Heritage List/ Rārangi Kōrero, taking other actions under the Heritage New Zealand Pouhere Taonga Act 2014 to recognise or protect heritage values, or agreement to land being set apart as a Māori reservation):

(e)

give effect to or advance a significant Government policy:

(f)

involve oversight of, or participation in, the overseas investment or any relevant overseas person by persons who are not overseas persons:

(g)

result in other consequential benefits to New Zealand.

(2)

After section 17(2), insert:

(3)

If the overseas investment involves extraction of water for bottling, or other extraction of water in bulk for human consumption, an additional factor is whether the overseas investment will, or is likely to, result in a negative impact on water quality or sustainability.

(4)

Only if subsection (3) applies must be a negative impact be deducted from any benefit to New Zealand that has been determined under section 16A(1)(a).

15 Section 18 replaced (Criteria for overseas investments in significant business assets)

Replace section 18 with:

18 Criteria for consent for overseas investments in significant business assets

The criteria for an overseas investment in significant business assets are both of the following:

(a)

the investor test is met:

(b)

if the overseas investment in significant business assets is a transaction of national interest, the Minister has not declined consent to the transaction (see section 20C).

16 New section 18A inserted (Investor test)

After section 18, insert:

18A Investor test
Purpose

(1)

The purpose of the investor test is to determine whether investors are unsuitable to own or control any sensitive New Zealand assets, by assessing whether they are likely to pose risks to New Zealand, based on factors relating to their character and capability.

When investor test is met

(2)

The investor test is met in respect of an overseas investment if the relevant Ministers are satisfied that all of the following persons (investors), excluding persons who are not overseas persons, meet the investor test:

(a)

the relevant overseas person; and

(b)

all the individuals with control of the relevant overseas person, to the extent that the relevant overseas person is not an individual.

(3)

The investor test is met in respect of an investor (A) if the relevant Ministers are satisfied that—

(a)

none of the investor test factors are established; or

(b)

any investor test factor or factors that are established do not make A unsuitable to own or control any sensitive New Zealand assets.

Investor test factors

(4)

The investor test factors are—

Character

(a)

the following, whether in New Zealand or any other jurisdiction:

(i)

whether A has, at any time, been convicted of an offence for which A has been sentenced to imprisonment for a term of 5 years or more, or for an indeterminate period capable of running for 5 years or more:

(ii)

whether A has, at any time in the preceding 10 years, been convicted of an offence for which A has been sentenced to imprisonment for a term of 12 months or more, or for an indeterminate period capable of running for 12 months or more:

(iii)

if A is not an individual, whether A has, at any time in the preceding 10 years, been convicted of an offence for which A has been sentenced to pay a fine:

(iv)

whether A has been ordered, in the preceding 10 years, by a court, any other court in New Zealand, or any equivalent body overseas to pay a civil pecuniary penalty in respect of a contravention of any enactment:

(v)

whether, at any time in the preceding 10 years, a court has imposed a penalty on A for a contravention of this Act or the regulations:

(vi)

whether any other proceedings have been begun against A, and have not been completed, for any offence, or contravention of an enactment, that carries a penalty corresponding to those listed in subparagraphs (i) to (v):

(vii)

whether A has entered, in the preceding 10 years, into an enforceable undertaking or an equivalent agreement with any regulator in respect of any contravention or alleged contravention of any enactment:

(b)

whether A is an individual of a kind referred to in section 16 of the Immigration Act 2009 (certain persons not eligible for visas or entry permission under that Act):

Capability

(c)

whether A is a person prohibited from being a director or promoter of, or concerned in the management of, an incorporated or unincorporated body under the Companies Act 1993, the Financial Markets Conduct Act 2013, or the Takeovers Act 1993:

(d)

whether A is a person subject to a management banning order under the Financial Markets Conduct Act 2013 or the Takeovers Act 1993 or is subject to an order under section 108 of the Credit Contracts and Consumer Finance Act 2003:

(e)

whether A has become liable, in the preceding 10 years, to pay a penalty in respect of any of the following:

(i)

an abusive tax position under section 141D of the Tax Administration Act 1994 or an equivalent enactment in another jurisdiction:

(ii)

evasion or a similar act under section 141E of the Tax Administration Act 1994 or an equivalent enactment in another jurisdiction:

(f)

whether A, at the date on which the application is made, has outstanding unpaid tax of $5 million or more due and payable in New Zealand or an equivalent amount due and payable in another jurisdiction (where the amount is converted into New Zealand currency by applying the close of trading spot exchange rate on the date or dates on which the tax became due and payable).

(5)

For the purposes of this section,—

(a)

enactment means an enactment that is or was part of the law of New Zealand or of any other jurisdiction:

(b)

preceding 10 years means the period of 10 years ending with the date of application:

(c)

tax includes any interest or penalty imposed in respect of any tax (in New Zealand or another jurisdiction):

(d)

section 15(2) of the Immigration Act 2009 applies to subsection (4)(a) in the same way as it applies to section 15(1)(a) and (b) of that Act:

(e)

an individual is not an individual of a kind referred to in section 16 of the Immigration Act 2009 if a special direction referred to in section 17(1)(a) of that Act has been made permitting a visa or entry permission to be granted to that individual.

17 Section 19 repealed (Applying good character and Immigration Act 2009 criteria)

Repeal section 19.

18 Section 20 replaced (Exemptions from farm land offer criterion)

Replace section 20 with:

20 Exemptions from farm land offer criterion

(1)

Section 16(1)(f) does not apply to an overseas investment if—

(a)

the relevant Ministers consider that the overseas investment need not meet this criterion by reason of the circumstances relating to the particular overseas investment or section 12 interest; or

(b)

the overseas person making the overseas investment belongs to a class of overseas persons, or the overseas investment transaction belongs to a class of transactions, that is exempted from this criterion by the relevant Ministers.

(2)

The relevant Ministers may also exempt a person or transaction from—

(a)

the requirement that offers for acquisition must be on the open market:

(b)

any other requirement in regulations about how farm land or section 12 interests must be advertised.

(3)

The relevant Ministers may grant an exemption under this section only if those Ministers consider that—

(a)

there are circumstances that mean that it is necessary, appropriate, or desirable to provide an exemption; and

(b)

the extent of the exemption is not broader than is reasonably necessary to address those circumstances.

(4)

In so considering, the relevant Ministers—

(a)

must have regard to the purpose of this Act; and

(b)

may have regard to any other factors that seem to those Ministers to be relevant to the circumstances.

(5)

An application for an exemption under this section may be made at any time by written notice to the regulator accompanied by the fee required by regulations.

(6)

An exemption under this section may be made subject to any conditions.

(7)

An exemption under this section must be published on an Internet site maintained by, or on behalf of, the regulator, together with the reasons of the relevant Ministers for granting the exemption.

(8)

However, the publication of an exemption under this section, or of the reasons for granting an exemption, may be deferred or dispensed with (in whole or in part) if the relevant Ministers are satisfied on reasonable grounds that good reason for withholding the exemption or the reasons (as the case may be) would exist under the Official Information Act 1982.

(9)

If the exemption is for a class of overseas persons, or a class of transactions, it must also be published in the Gazette and subsection (8) does not apply.

(10)

An exemption under this section may at any time be amended or revoked.

(11)

An exemption under this section may continue in force for not more than 5 years (and at the close of the date that is 5 years after the exemption first comes into force, the exemption must be treated as having been revoked unless it is sooner revoked or expires).

19 New sections 20A to 20G and cross-heading inserted

After section 20, insert:

Transactions of national interest

20A Transactions that are transactions of national interest
Transactions involving non-NZ government investors or SIB

(1)

The following kinds of overseas investment transactions are transactions of national interest:

Investment by non-NZ government investors

(a)

a transaction of a kind described in section 12(1)(a) or 13(1)(c) of this Act, or in section 57D(a) of the Fisheries Act 1996 where, as a result of the acquisition, the relevant estate or interest in land, property, or fishing quota is acquired by a non-NZ government investor:

(b)

a transaction of a kind described in section 12(1)(b)(i) or (ii), 13(1)(a), or in section 57D(b) of the Fisheries Act 1996 where, as a result of the acquisition, a non-NZ government investor has 10% or more ownership or control interest in A:

Investment in strategically important businesses

(c)

a transaction of a kind described in section 12(1)(a) where the estate or interest in land is used in carrying on an SIB:

(d)

a transaction of a kind described in section 12(1)(b)(i) or (ii) or 13(1)(a) where A is carrying on a SIB:

(e)

a transaction of a kind described in section 13(1)(c) where the business is or includes a SIB.

(2)

The Minister must notify an applicant if the Minister considers that an application for consent involves a transaction of the kind set out in subsection (1), unless the applicant has already identified this in their application.

(3)

However, failure to notify an applicant does not affect a transaction’s status as a transaction of national interest and does not invalidate any action taken by the Minister in reliance on a transaction’s status as a transaction of national interest.

20B Other transactions may be transactions of national interest if notice given

(1)

If the Minister considers that any other overseas investment transaction for which an application for consent has been made could be contrary to New Zealand’s national interest, the Minister may notify the applicant in writing that the transaction is a transaction of national interest.

(2)

The person making a decision under section 24 in relation to a particular application cannot exercise the Minister’s power under subsection (1) in relation to that application.

20C Consent may be declined if transaction contrary to national interest

(1)

The Minister may decline consent to a transaction of national interest if the Minister considers that the transaction is contrary to New Zealand’s national interest.

(2)

The person making a decision under section 24 in relation to a particular application cannot exercise the Minister’s power under subsection (1) in relation to that application.

20D Who are critical direct suppliers

(1)

The Minister may identify a person as a critical direct supplier if the Minister is satisfied that—

(a)

the person is a direct supplier of goods or services to an intelligence or security agency; and

(b)

the goods or services are integral to the functioning of the agency as an intelligence or security agency; and

(c)

the supply of those goods or services cannot readily be replaced.

(2)

The Minister must—

(a)

notify a person that they are a critical direct supplier; and

(b)

either—

(i)

publish that person’s name in a list of critical direct suppliers on an Internet site maintained by or for the regulator; or

(ii)

if subsection (3) applies, notify the person that they are an unpublished CDS.

(3)

The Minister may defer or dispense with publication if the Minister is satisfied on reasonable grounds that good reason for withholding the publication would exist under the Official Information Act 1982.

20E Provisions relating to unpublished CDS

(1)

This section applies if a critical direct supplier has been notified that it is an unpublished CDS.

Notice to prospective investors and new investors of status as critical direct supplier

(2)

An unpublished CDS must notify a person of the unpublished CDS’s status as a critical direct supplier as soon as is reasonably practicable after the earlier of—

(a)

the date on which there are reasonable grounds for an unpublished CDS to conclude that the person is likely to become an investor in that unpublished CDS; and

(b)

the date on which an unpublished CDS knows or ought reasonably to know or believes that the person has become an investor in that unpublished CDS.

(3)

A notice under subsection (2) must—

(a)

be in writing; and

(b)

contain any other information specified by the Minister by notice in the Gazette.

Notice to regulator of investment or prospective investment

(4)

An unpublished CDS must notify the regulator that it has given a notice under subsection (2) as soon as is reasonably practicable after the notice under subsection (2) is given.

(5)

A notice under subsection (4) must—

(a)

be in writing; and

(b)

contain any information specified by the Minister by notice in the Gazette; and

(c)

be accompanied by a copy of the notice given under subsection (2).

Contravention is not offence

(6)

A person who fails to comply with this section does not commit an offence for the purposes of section 45.

(7)

In this section, an investor is a person who, under a call-in transaction or a transaction of national interest, acquires sensitive assets that relate to a critical direct supplier.

20F Status of unpublished CDS confidential

(1)

This section applies to—

(a)

a critical direct supplier who has been notified that it is an unpublished CDS; and

(b)

a person who receives a notice under section 20E; and

(c)

a person to whom the status of an unpublished CDS as a critical direct supplier has been disclosed in confidence, if that person knows the critical direct supplier is an unpublished CDS.

(2)

A person to whom this section applies must not knowingly or recklessly disclose the fact that an unpublished CDS is a critical direct supplier.

(3)

Subsection (2) does not apply to the extent that disclosure is—

(a)

required under section 20E, 23, or 87; or

(b)

otherwise authorised by the regulator.

20G What are media businesses with significant impact

(1)

A media business with significant impact, in relation to an overseas investment transaction or a call-in transaction, is a business that publishes content, or causes content to be published, if—

(a)

all or a significant part of the business involves the generation or aggregation of content; and

(b)

the business has a significant impact on the plurality of content available to the public or a particular section of the public, either before or as a result of the overseas person’s (or their associate’s) acquisition.

(2)

Content is available to the public or a particular section of the public whether or not—

(a)

a receiver has to pay for the content; or

(b)

a receiver is required to be a subscriber or member of the publishing service; or

(c)

the content is delivered on the demand of a receiver; or

(d)

the content is aimed at particular groups of people (for example, people who are located in a particular area of New Zealand, who have a particular interest, or who speak a particular language).

(3)

In this section,—

content means news, information, or opinion

publish includes to transmit or broadcast by any means (including, but not limited to, Internet sites, applications, and software).

20 Section 23 amended (Requirements for application for consent)

(1)

Replace section 23(1)(c) with:

(c)

contain the information set out in regulations; and

(2)

After section 23(3), insert:

(4)

A person required to provide information under subsection (3) must comply with the regulator’s notice within the time, and in the manner, specified in it.

21 Section 25A amended (Conditions of consent)

In section 25A(1), replace “section 25B (which apply to every consent)” with “sections 25B, 25C, and 25D.

22 New sections 25C and 25D inserted

After section 25B, insert:

25C Automatic condition: every transaction of national interest

It is a condition of every consent relating to a transaction of national interest, whether or not it is stated in the consent, that each consent holder must not, in relation to sensitive assets in which the relevant investment is made, act or omit to act with a purpose or an intention of adversely affecting national security or public order.

25D Automatic condition: transactions involving fresh or seawater areas

(1)

Schedule 5 applies if—

(a)

an overseas person or their associate obtains consent for an overseas investment in sensitive land; and

(b)

the section 12 interest to be acquired is or includes a fresh or seawater interest; and

(c)

the criteria that were satisfied as part of the application for consent included the benefit to New Zealand test.

(2)

If Schedule 5 applies, it is a condition of every consent, whether or not it is stated in the consent, that each consent holder must comply with the provisions of that schedule.

23 Section 27A amended (Consent holder may apply for new consent)

In section 27A(5)(a), replace “expected” with “likely”.

24 New section 29A inserted (Investor test applications where no change since investor test last met)

After section 29, insert:

29A Investor test applications where no change since investor test last met

(1)

A person (A) may apply at any time for an assessment of whether the person meets the investor test, in which case the Minister must determine the matter in accordance with section 18A(3) to (5).

(2)

Subsections (3) and (4) apply if the investor test has to be met in respect of a particular overseas investment (a new investment) and a person (A) is a person who previously met the investor test.

(3)

In that case, the investor test is met, to the extent that it applies to A, if the relevant Ministers are satisfied, in respect of A, that—

(a)

there has been no change in the extent to which the investor test factors are established; or

(b)

any change in the extent to which the investor test factors are established does not make A unsuitable to own or control any sensitive New Zealand assets.

(4)

The statutory declaration required to accompany the application must include verification as to whether there has been any change in the extent to which the investor test factors are established since the information previously provided to the regulator about those factors.

(5)

However, if A has ever been the investor (or one of the investors) referred to in section 18A(2) in respect of a transaction of national interest for which consent was declined for reasons connected to A under section 20C, then—

(a)

subsection (1) does not apply; and

(b)

subsection (3) does not apply unless A has met the investor test since that consent was declined.

(6)

Section 23 applies with necessary modifications to an application for an assessment of whether a person meets the investor test.

25 Section 31 amended (What regulator does)

(1)

Replace section 31(d) with:

(d)

monitor compliance with consents or orders made under this Act:

(2)

In section 31(i), after “New Zealand assets”, insert “or the management of national security and public order risks associated with transactions by overseas persons”.

26 Section 32 amended (Delegation by relevant Minister or Ministers)

In section 32, insert as subsections (2) and (3):

(2)

However, the following cannot be delegated in accordance with subsection (1):

(a)

a decision under section 20B to advise an applicant that a transaction is a transaction of national interest:

(b)

a decision under section 20C that a transaction of national interest is contrary to New Zealand’s national interest:

(c)

a decision under section 88, 90, 92, 93, or 96 that a call-in transaction, or an event, or the actions of an overseas person or their associate, gives rise, or is likely to give rise, to a significant risk to national security or public order:

(d)

a decision under section 92, 93, or 96 that a risk to national security or public order cannot be adequately managed in another manner or that the risk is too significant to allow a transaction to be given effect to.

(3)

See also section 20B(2) or 20C(2) (a person making a decision under section 24 cannot also exercise the Minister’s power under section 20B(1) or 20C(1)).

27 Section 34 amended (Ministerial directive letter)

(1)

Replace section 34(3)(ba) with:

(ba)

conditions of consents or direction orders, including conditions that this Act requires be imposed:

(2)

Repeal section 34(3)(d).

28 Section 36 amended (Regulator may issue guidelines)

(1)

Replace section 36(1)(a) with:

(a)

the acquisition of fresh or seawater areas by the Crown:

(2)

After section 36(1)(e), insert:

(ea)

matters relating to national security, public order, and NSPO management actions:

29 Section 37 repealed (Regulator must keep list of reserves, parks, and other sensitive areas)

Repeal section 37.

30 New sections 37A and 37B inserted

After section 37, insert:

37A Regulator must publish list of sensitive adjoining land relating to collective group of Māori

(1)

The regulator must—

(a)

compile and keep a list of land and reserves for which the adjoining land is sensitive under rows 10 and 11 of table 2 in Part 1 of Schedule 1; and

(b)

publish that list on an Internet site maintained by or for the regulator.

(2)

The regulator may amend that list.

37B Time frames

(1)

The Governor-General may, by Order in Council, make regulations—

(a)

setting time frames for the exercise of powers, performance of functions and duties, and provision of services under this Act:

(b)

requiring information to be included in the annual report of the regulator about the extent to which those time frames are met.

(2)

The time frames do not create any legal right enforceable in a court of law or affect or limit the way in which a person (for example, a Minister or the regulator) is required to exercise a statutory power of decision.

(3)

In particular, no form of monetary compensation or relief, or injunctive relief, is available as a remedy if the time frames are not met.

31 Section 38 amended (Regulator may require person who is subject to condition to provide information for monitoring purposes)

(1)

In the heading to section 38, delete who is subject to condition.

(2)

Replace section 38(1) with:

(1)

For the purpose of monitoring compliance with the terms or conditions of a consent, an exemption, an exemption certificate, a direction order, an interim direction order, a prohibition order, or a disposal order, the regulator may, by notice in writing, require a person (A) who is required to comply with any of the terms or conditions to provide the regulator with the information or documents (or both) that are specified in the notice.

32 New section 38A inserted (Information for tax purposes)

After section 38, insert:

38A Information for tax purposes

(1)

The purpose of this section is to enable regulations to impose requirements under which overseas persons who make, or apply to make, an overseas investment in sensitive New Zealand assets must provide information that the Commissioner of Inland Revenue considers necessary or relevant for any purpose relating to—

(a)

the administration or enforcement of an Inland Revenue Act (within the meaning of the Income Tax Act 2007):

(b)

the administration or enforcement of any matter arising from, or connected with, a function lawfully conferred on the Commissioner.

(2)

For the purpose of this section, the Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations that impose requirements on all or any persons who make, or apply to make, an overseas investment in sensitive assets, including prescribing all or any of the following:

(a)

overseas investments to which all or any requirements apply (for example, by reference to a type of investment, a pathway, or a type of land):

(b)

what information or other evidence or documents must be provided:

(c)

by whom, when, where, and how the information must be provided:

(d)

to whom the information must be provided:

(e)

the form that must be used:

(f)

requirements with which information, evidence, or documents that are provided must comply.

(3)

The Commissioner may treat information obtained under this section as information obtained for the purposes of administering the Inland Revenue Acts.

33 Section 39 amended (Regulator may require any person to provide information for statistical or monitoring purposes)

(1)

In section 39(1), after “New Zealand assets”, insert “or call-in transactions”.

(2)

Replace section 39(1)(b) with:

(b)

monitoring compliance with a term or condition of a consent, an exemption, an exemption certificate, a direction order, an interim direction order, a prohibition order, or a disposal order.

34 Section 40 amended (Regulator may require person who is subject to condition to provide statutory declaration as to compliance)

(1)

In the heading to section 40, delete who is subject to condition.

(2)

Replace section 40(1) with:

(1)

The regulator may, by notice in writing, require a person (A) who is required to comply with a term or condition of a consent, an exemption, an exemption certificate, a direction order, an interim direction order, a prohibition order, or a disposal order to provide the regulator with a statutory declaration verifying—

(a)

the extent to which A has complied with the term or condition; and

(b)

if A is in breach of a term or condition, the reasons for the breach and the steps that A intends to take to remedy the breach.

35 Section 41 amended (Regulator may require information and documents to be provided for purpose of monitoring compliance, investigating, and enforcing Act and regulations)

(1)

In the heading to section 41, delete for purpose of monitoring compliance, investigating, and enforcing Act and regulations.

(2)

After section 41(1A)(a), insert:

(aa)

investigating whether a transaction is an overseas investment transaction or a call-in transaction:

(ab)

investigating whether a transaction, an event, or a matter gives rise to, or is likely to give rise to, a significant risk to national security or public order:

36 Section 41G amended (Consequences of disposal or retention of property)

In section 41G(3), replace “civil penalty” with “civil pecuniary penalty”.

37 Section 42 amended (Offence of giving effect to overseas investment without consent)

In section 42(2)(b), replace “in the case of a body corporate” with “in any other case”.

38 Section 43 amended (Offence of defeating, evading, or circumventing operation of Act)

In section 43(2)(b), replace “in the case of a body corporate” with “in any other case”.

39 Section 44 amended (Offence of resisting, obstructing, or deceiving)

In section 44(2)(b), replace “in the case of a body corporate” with “in any other case”.

40 Section 46 amended (Offence of false or misleading statement or omission)

(1)

After section 46(1)(aa), insert:

(ab)

any notice under section 85 or 86; or

(2)

After section 46(1)(c), insert:

(d)

any information provided to the regulator or the Commissioner of Inland Revenue under section 38A.

41 New sections 46A to 46E and cross-heading inserted

After section 46, insert:

Enforceable undertakings

46A Regulator may accept undertakings

(1)

The regulator may accept an enforceable undertaking given by, or on behalf of, a person in writing in connection with a matter relating to a contravention or an alleged contravention by the person of this Act or regulations (including any matter referred to in section 48(1)).

(2)

An undertaking may include—

(a)

an undertaking to pay compensation to any person or otherwise take action to avoid, remedy, or mitigate any actual or likely adverse effects arising from a contravention or possible contravention of this Act:

(b)

an undertaking to pay to the regulator all or part of the regulator’s costs incurred in investigating, or bringing proceedings in relation to, a contravention or an alleged contravention.

(3)

However, the regulator may not accept an undertaking to pay an amount in lieu of a civil pecuniary penalty (for example, a donation to a charity that is not connected with any loss).

(4)

An undertaking may include an admission of liability by the person giving it in relation to the contravention or alleged contravention to which the undertaking relates, but otherwise does not constitute an admission of liability.

Compare: 2015 No 70 s 123

46B When undertaking is enforceable

(1)

The regulator must give the person making an undertaking written notice of—

(a)

its decision to accept or reject the undertaking; and

(b)

the reasons for the decision.

(2)

An enforceable undertaking takes effect and becomes enforceable when the regulator’s decision to accept the undertaking is given to the person who made the undertaking, or at any later date specified by the regulator.

(3)

A person must not contravene an enforceable undertaking given by that person that is in force.

Compare: 2015 No 70 ss 124(1), 125

46C Notice of decision

(1)

The regulator must publish, on an Internet site maintained by, or on behalf of, the regulator, notice of the decision to accept an enforceable undertaking.

(2)

The notice must include—

(a)

a summary of the circumstances and nature of the contravention or alleged contravention of this Act or regulations to which the undertaking relates:

(b)

a summary of the reasons for that decision:

(c)

any amounts payable under the undertaking.

(3)

Alternatively, the notice may include a copy of the undertaking if the undertaking contains all of the information in subsection (2).

Compare: 2015 No 70 s 124(2)

46D Withdrawal or variation of enforceable undertaking

(1)

A person who has given an enforceable undertaking may at any time, with the written agreement of the regulator,—

(a)

withdraw the undertaking; or

(b)

vary the undertaking.

(2)

However, the provisions of the undertaking cannot be varied to provide for a different alleged contravention of this Act or regulations.

(3)

The regulator must publish on an Internet site maintained by, or on behalf of, the regulator notice of the withdrawal or variation of an enforceable undertaking.

Compare: 2015 No 70 s 128

46E Proceedings for alleged contravention

(1)

No proceedings may be brought for a contravention or an alleged contravention of this Act or regulations against—

(a)

a person who made an undertaking in relation to that contravention, while the undertaking is enforceable and there is no contravention of the undertaking:

(b)

a person who made, and has completely discharged, an enforceable undertaking in relation to that contravention.

(2)

The regulator may accept an enforceable undertaking in relation to a contravention or an alleged contravention before proceedings in relation to that contravention have been completed.

(3)

If the regulator accepts an enforceable undertaking before the proceedings are completed, the regulator must take all reasonable steps to have the proceedings discontinued as soon as practicable.

Compare: 2015 No 70 s 129

42 New sections 46F and 46G inserted

Before section 47, insert:

46F Contravention of enforceable undertaking

(1)

The regulator may apply to the court for an order if a person contravenes an enforceable undertaking.

(2)

If the court is satisfied that the person who made the enforceable undertaking has contravened the undertaking, the court may make any of the following orders:

(a)

a civil pecuniary penalty not exceeding $50,000 for an individual or $300,000 in any other case:

(b)

an order directing the person to comply with the undertaking:

(c)

an order discharging the undertaking.

(3)

In addition to the orders referred to in subsection (2), the court may make any other order that the court considers appropriate in the circumstances, including—

(a)

orders directing the person to pay to the regulator the costs of the proceedings and the reasonable costs of the regulator in monitoring compliance with the enforceable undertaking in the future:

(b)

an order in respect of the contravention or alleged contravention of this Act or regulations to which the enforceable undertaking relates, as if no undertaking had been made.

Compare: 2015 No 70 s 127

46G Considerations for court orders

The court must, before making an order under section 46F, take into account—

(a)

the nature and extent of the contravention; and

(b)

any loss or damage caused by the contravention; and

(c)

any financial gain made, or loss avoided, from the contravention; and

(d)

the circumstances in which the contravention took place (including whether the contravention was intentional, inadvertent, or caused by negligence); and

(e)

the purpose of this Act; and

(f)

any other matters that it considers relevant.

43 Section 47 amended (Court may order disposal of property)

(1)

In section 47(1)(d), replace “a consent or of an exemption” with “a consent, an exemption, or a direction order”.

(2)

In section 47(3)(b), replace “interest” with “estate or interest”.

44 Section 48 amended (Court may order person in breach or involved in breach to pay civil penalty)

(1)

In the heading to section 48, replace civil penalty with civil pecuniary penalty.

(2)

In section 48(1), replace “civil penalty” with “civil pecuniary penalty”.

(3)

Replace section 48(1)(d) with:

(d)

failed to comply with a condition of a consent, an exemption, an exemption certificate, a direction order, or an interim direction order; or

(4)

Replace section 48(2) with:

(2)

The court may order A to pay a civil pecuniary penalty not exceeding the highest of the following:

(a)

$500,000 in the case of an individual or $10 million in any other case:

(b)

3 times the amount of any quantifiable gain (for example, the increase in the value since acquisition) by A in relation to the property to which the consent, exemption, exemption certificate, direction order, interim direction order, prohibition order, or disposal order relates or for which a consent should have been obtained:

(c)

the cost of remedying the breach of condition:

(d)

the cost of remedying the breach of a term of a prohibition order or a direction order:

(e)

the loss suffered by a person in relation to a breach of a term of a condition.

(5)

In section 48(2A), replace “civil penalty” with “civil pecuniary penalty”.

45 Section 49 amended (Court may order mortgage to be registered over land)

(1)

In section 49(1), replace “a consent, an exemption, or an exemption certificate” with “a consent, an exemption, an exemption certificate, a direction order, an interim direction order, a prohibition order, or a disposal order”.

(2)

Replace section 49(1)(a) with:

(a)

the performance of any obligation, or the repayment of any money, under a term or condition of the consent, the exemption, the exemption certificate, the direction order, the interim direction order, the prohibition order, or the disposal order; or

(3)

In section 49(1)(b), replace “civil penalty” with “civil pecuniary penalty”.

46 Section 50 amended (Court may order interest to be paid)

In section 50(1),—

(a)

replace “a consent, an exemption, or an exemption certificate” with “a consent, an exemption, an exemption certificate, a direction order, or an interim direction order”; and

(b)

replace “civil penalty” with “civil pecuniary penalty”.

47 Section 51 amended (Court may order compliance with condition of consent, exemption, or exemption certificate)

(1)

In the heading to section 51, replace consent, exemption, or exemption certificate with consent, exemption, exemption certificate, direction order, or interim direction order.

(2)

After section 51(1)(b), insert:

(c)

a person who is subject to a direction order or an interim direction order.

(3)

In section 51(2)(a) and (b), replace “a consent, an exemption, or an exemption certificate” with “a consent, an exemption, an exemption certificate, a direction order, or an interim direction order”.

48 New sections 51AAA to 51AAE inserted

After section 51, insert:

51AAA Court may grant injunction

(1)

The court may, on the application of the regulator or any other person, grant an injunction—

(a)

restraining a person from engaging in conduct that constitutes or would constitute a contravention of this Act or regulations (including any matter referred to in section 48(1)):

(b)

requiring a person to do an act or a thing if—

(i)

that person has refused or failed, or is refusing or failing, or is proposing to refuse or fail, to do that act or thing; and

(ii)

the refusal or failure was, is, or would be a breach of this Act or regulations.

(2)

The court may at any time rescind or vary an injunction granted under this Part.

Compare: 2013 No 69 s 480

51AAB When court may grant restraining injunctions

(1)

The court may grant an injunction restraining a person from engaging in conduct of a particular kind if—

(a)

it is satisfied that the person has engaged in conduct of that kind; or

(b)

it appears to the court that, if an injunction is not granted, it is likely that the person will engage in conduct of that kind.

(2)

The court may grant an interim injunction restraining a person from engaging in conduct of a particular kind if in its opinion it is desirable to do so.

(3)

Subsections (1)(a) and (2) apply whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of that kind.

(4)

Subsections (1)(b) and (2) apply whether or not the person has previously engaged in conduct of that kind or there is an imminent danger of substantial damage to any other person if that person engages in conduct of that kind.

Compare: 2013 No 69 s 481

51AAC When court may grant performance injunctions

(1)

A court may grant an injunction requiring a person to do an act or a thing if—

(a)

it is satisfied that the person has refused or failed to do that act or thing; or

(b)

it appears to the court that, if an injunction is not granted, it is likely that the person will refuse or fail to do that thing.

(2)

The court may grant an interim injunction requiring a person to do an act or a thing if in its opinion it is desirable to do so.

(3)

Subsections (1)(a) and (2) apply whether or not it appears to the court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing.

(4)

Subsections (1)(b) and (2) apply—

(a)

whether or not the person has previously refused or failed to do that act or thing; or

(b)

where there is an imminent danger of substantial damage to any other person if that person refuses or fails to do that act or thing.

51AAD Undertaking as to damages not required by regulator

(1)

If the regulator applies to the court for the grant of an interim injunction under this subpart, the court must not, as a condition of granting an interim injunction, require the regulator to give an undertaking as to damages.

(2)

In determining the regulator’s application for the grant of an interim injunction, the court must not take into account that the regulator is not required to give an undertaking as to damages.

Compare: 2013 No 69 s 482

51AAE Publication under this subpart may be deferred or dispensed with

The regulator may defer or dispense with publication of a matter under this subpart (in whole or in part) if the regulator is satisfied on reasonable grounds that good reason for withholding the publication would exist under the Official Information Act 1982.

49 Section 51A amended (Person who acquires interest in residential land must make and provide statement)

(1)

In the heading to section 51A, delete interest in.

(2)

Replace section 51A(1) with:

(1)

This section applies if—

(a)

a person (A) is acquiring an estate or interest in residential land under a transaction, other than an interest under a mortgage, an interest under any other security arrangement, or an exempted interest; and

(b)

an instrument recording A’s acquisition of the estate or interest will be lodged by or under the direction of a conveyancer.

50 Section 51C amended (Conveyancer must obtain and keep statement)

In section 51C(3), replace “civil penalty” with “civil pecuniary penalty”.

51 Section 52 amended (Administrative penalties for late filing)

In section 52(1), replace “a condition of a consent, an exemption, or an exemption certificate” with “a term or condition of a consent, an exemption, an exemption certificate, a direction order, an interim direction order, a prohibition order, or a disposal order”.

52 Section 54 amended (Address for service)

In section 54, replace “consent holder, holder of an exemption under section 61D, and holder of an exemption certificate” with “consent holder, holder of an exemption under section 61D, holder of an exemption certificate, and recipient of a direction order, an interim direction order, a prohibition order, or a disposal order”.

53 Section 54A amended (Notices or other documents given, provided, or served by regulator)

In section 54A(2)(d), replace “a consent, an exemption, or an exemption certificate” with “a consent, an exemption, an exemption certificate, a direction order, or an interim direction order”.

54 Section 61 amended (Regulations)

(1)

After section 61(1)(a), insert:

(ab)

prescribing enactments for the purposes of rows 10 and 11 of table 2 in Part 1 of Schedule 1:

(2)

Replace section 61(1)(b) with:

(b)

prescribing, for the purposes of the criteria in section 16(1)(f), when and how farm land or section 12 interests must be advertised for acquisition to persons who are not overseas persons (including what is required for open market advertising):

(3)

In section 61(1)(ba), delete “(see also paragraphs (c) and (ca) of this subsection)”.

(4)

Repeal section 61(1)(c), (ca), and (d).

55 Section 61B amended (Purpose of exemptions)

(1)

Replace section 61B(a) with:

(a)

provide flexibility where compliance with this Act is impractical, inefficient, unduly costly, or unduly burdensome, taking into account the sensitivity of the sensitive assets and the nature of the overseas investment transaction; or

(2)

After section 61B(c)(vii), insert:

(viii)

persons, transactions, rights, interests, or assets that the Minister considers to be fundamentally New Zealand owned or controlled or to have a strong connection to New Zealand:

(ix)

persons, transactions, rights, interests, or assets that the Minister considers to support the issuance or management of residential mortgage-backed securities complying with a standard created or endorsed by the Reserve Bank.

56 Section 61D amended (Minister may grant individual exemptions)

In section 61D(3), after “regulator”, insert “, unless section 61F(6) applies”.

57 Section 61E amended (Criteria for all exemptions)

In section 61E(1), replace “The Minister may” with “A Minister may”.

58 Section 61F amended (Other provisions applying to all exemptions)

(1)

In section 61F(5), replace “the Minister” with “a Minister”.

(2)

In section 61F(6),—

(a)

replace “Minister is” with “relevant Minister or Ministers are”; and

(b)

delete “if they were official information”.

59 Section 62 repealed (Foreshore, seabed, riverbed, or lakebed acquired by the Crown under consent process is not subdivision)

Repeal section 62.

60 New Part 3 inserted

After section 80, insert:

Part 3 National security and public order risks management regime

81 Purpose of Part

(1)

The purpose of this Part is to manage significant national security and public order risks associated with transactions by overseas persons.

(2)

In order to give effect to that purpose, the Minister may—

(a)

review call-in transactions in accordance with subpart 1; and

(b)

take any of the following NSPO management actions in accordance with subpart 2:

(i)

make a direction order in relation to a call-in transaction (see sections 88 to 90):

(ii)

make a prohibition order in relation to a call-in transaction (see section 92):

(iii)

make a disposal order in relation to an investment given effect to under a call-in transaction or a transaction of national interest (see section 93):

(iv)

make a recommendation that a person be put into statutory management (see section 96).

(3)

The Minister may also make an interim direction order if the Minister is considering whether to take an NSPO management action, or what kind of NSPO management action to take, in relation to a call-in transaction (see section 91).

Subpart 1—Call-in transactions

Call-in transactions, etc

82 What is a call-in transaction and an overseas investment in SIB assets

(1)

A call-in transaction is a transaction by an overseas person or an associate of an overseas person that—

(a)

is an overseas investment in SIB assets; but

(b)

does not require consent (see section 10).

(2)

An overseas investment in SIB assets is—

Investment in strategically important businesses

(a)

the acquisition by an overseas person, or an associate of the overseas person, of rights or interests in securities of a person (A) who is (directly or indirectly) carrying on a SIB if,—

Investment in media businesses with significant impact

(i)

in the case of a SIB that is a media business with significant impact, as a result of the acquisition the overseas person or the associate (either alone or together with its associates) has a more than 25% ownership or control interest in A; or

Investment in listed issuers

(ii)

in the case of A being a listed issuer that is not carrying on a media business with significant impact, as a result of the acquisition the overseas person or the associate (either alone or together with its associates) has 1 or more of the following:

(A)

a beneficial entitlement to, or a beneficial interest in, 10% or more of A’s securities:

(B)

the right to exercise or control the exercise of 10% or more of the voting power at a meeting of A:

(C)

disproportionate access to or control of A; or

Any other investment in a SIB business

(iii)

in any other case, as a result of the acquisition the overseas person or the associate (either alone or together with its associates) has any ownership or control interest in A; or

Investment in SIB property

(b)

the acquisition by the overseas person or the associate of property (including goodwill and other intangible assets) in New Zealand used in carrying on a SIB.

(3)

For the purposes of subsection (2)(a)(ii)(C), a person has disproportionate access to or control of A if the person has 1 or more of the following:

(a)

access to—

(i)

information that would not otherwise be available to the person, but which is information that is material to an assessment of the value of shares or other financial products issued by A or a related company; or

(ii)

sensitive information held by A or its subsidiaries:

(b)

membership or observer rights on the governing body of A:

(c)

the power to control the composition of 10% or more of the governing body of A:

(d)

any involvement, other than through the voting of securities, in the substantive decision-making of A regarding—

(i)

research, development, production, or maintenance of military or dual-use technology or sensitive information; or

(ii)

the use of, or access to, the assets of A; or

(iii)

the supply of goods or services to an intelligence or security agency.

83 Who are relevant acquirers

The Minister may determine which 1 or more of the following persons is the relevant acquirer for a call-in transaction:

(a)

the person making the overseas investment in SIB assets (A), whether A is an overseas person or an associate of an overseas person:

(b)

any associate of A in relation to the overseas investment in SIB assets.

Review of call-in transactions

84 Review of call-in transactions

(1)

The Minister must review a call-in transaction that is notified under section 85 or 86.

(2)

The Minister must take an NSPO management action following a review under subsection (1).

(3)

The Minister may review any other call-in transaction.

(4)

The purpose of a review is to determine whether the transaction gives rise, or is likely to give rise, to a significant risk to national security or public order.

(5)

However, if a direction order has already been made in relation to a call-in transaction, the Minister cannot review that transaction, or take another NSPO management action in relation to the transaction, unless the direction order is revoked in accordance with section 90.

Notification of call-in transactions

85 Military or dual-use technology and critical direct supplier call-in transactions

(1)

This section applies to a call-in transaction relating to an SIB that is—

(a)

a business that researches, develops, produces, or maintains military or dual-use technology; or

(b)

a critical direct supplier.

(2)

Each overseas person or associate making the overseas investment in SIB assets must notify the regulator before giving effect to the call-in transaction.

(3)

A call-in transaction must not be given effect to unless the Minister makes a direction order in relation to that transaction.

(4)

However, in the case of an overseas person or associate investing in an unpublished CDS,—

(a)

a notice under subsection (2) must be given before the date of giving effect to the call-in transaction or on a later date that may be set out in regulations; and

(b)

that person does not breach subsection (2) if the reason the person fails to give the notice is that the person had not received a notice under section 20E.

(5)

A person who fails to comply with this section does not commit an offence for the purposes of section 45.

86 Other call-in transactions

(1)

This section applies to a call-in transaction that is not a call-in transaction of a kind referred to in section 85.

(2)

Any overseas person or associate making the overseas investment in SIB assets may notify the regulator of a call-in transaction at any time before the date set out in regulations.

87 Requirements for notice of call-in transaction

(1)

A notice under section 85 or 86 must—

(a)

be in writing; and

(b)

be signed by each person giving the notice; and

(c)

contain the information set out in regulations; and

(d)

be accompanied by a statutory declaration from each person giving the notice, verifying that the information contained in the notice is true and correct, unless the regulator waives this requirement; and

(e)

be accompanied by the relevant fee (if any), unless this has already been paid.

(2)

For the purpose of considering the notice under section 85 or 86, the regulator may, by notice in writing, require a relevant acquirer or any other person with information relevant to the notice under section 85 or 86 to provide the information specified in the regulator’s notice and in a form specified by the regulator’s notice.

Subpart 2—NSPO management actions

Direction orders

88 Direction orders

(1)

The Minister may give a direction order to a relevant acquirer following a review of a call-in transaction, requiring compliance with the conditions of the order if the call-in transaction is or has been given effect to.

Automatic condition: every direction order

(2)

It is a condition of every direction order, whether or not it is stated in the order, that the relevant acquirer must not, in relation to the SIB, act or omit to act with a purpose or an intention of adversely affecting national security or public order.

Other conditions: to manage national security or public order risks

(3)

A direction order is subject to any other conditions (if any) that the Minister thinks appropriate to manage the risks to national security or public order posed by the transaction.

(4)

The Minister may impose other conditions only if the Minister considers that the call-in transaction gives rise, or is likely to give rise, to a significant risk to national security or public order.

(5)

When imposing other conditions, the Minister must have regard to New Zealand’s international obligations.

89 Direction orders may be varied by agreement

(1)

A direction order may be varied by the Minister with the agreement of the relevant acquirer.

(2)

Any conditions of a direction order may be varied or added to by the Minister with the agreement of the relevant acquirer.

(3)

A condition of a direction order may be revoked by the Minister.

90 Revocation of direction order

The Minister may revoke a direction order if the Minister considers that—

(a)

1 or more of the following events or matters have occurred in connection with the direction order or the call-in transaction that the order relates to:

(i)

a notice under section 85 or 86 or any information provided under section 87(2) contained a statement that was false or misleading in any material particular or any material omission:

(ii)

a notice under section 85 or 86 or any information provided under section 87(2) provided the Minister with a document that was false or misleading in any material particular:

(iii)

a person has breached a condition of a direction order:

(iv)

a person has contravened an enforceable undertaking (see sections 46A to 46F); and

(b)

the event or matter gives rise, or is likely to give rise, to a significant risk to national security or public order.

91 Interim direction orders

(1)

The Minister may give an interim order of the kind referred to in section 88 to a relevant acquirer if the Minister is considering whether to take an NSPO management action, or what kind of NSPO management action to take, in relation to a call-in transaction.

(2)

Sections 88(2), (3), and (5) and 89 apply to an interim direction order as if it were a direction order.

(3)

The Minister may impose other conditions only if the Minister considers that the call-in transaction could give rise to a significant risk to national security or public order.

(4)

An interim direction order is in force until the earlier of—

(a)

the date specified in regulations; and

(b)

the date on which the Minister takes an NSPO management action in relation to the relevant call-in transaction.

(5)

The Minister may revoke an interim direction order at any time.

Prohibition orders

92 Prohibition orders

(1)

The Minister may give a prohibition order to a relevant acquirer following a review of a call-in transaction, prohibiting the call-in transaction from being given effect to.

(2)

A prohibition order may—

(a)

specify any reasonable steps that must be taken in order to comply with the prohibition order:

(b)

require the person to report to the regulator within the time specified in the order stating how and when the order has been or will be implemented.

(3)

The Minister may give a prohibition order only if the Minister is satisfied on reasonable grounds that—

(a)

the call-in transaction gives rise, or is likely to give rise, to a significant risk to national security or public order; and

(b)

the risk cannot be adequately managed by giving the relevant acquirer a direction order.

(4)

When acting under this section, the Minister must have regard to New Zealand’s international obligations.

(5)

A person who is given a prohibition order must comply with it.

Disposal orders

93 Disposal orders

(1)

The Minister may give a disposal order to an overseas person, or an associate of an overseas person, who acquired sensitive assets under a transaction of national interest or a call-in transaction.

(2)

A disposal order may—

(a)

require disposal of the whole or any part of the sensitive assets owned by the person or their associate:

(b)

specify the time within which or manner in which the disposal must be made:

(c)

specify any reasonable steps that must be taken in order to comply with the disposal order:

(d)

require the person to report to the regulator within the time specified in the order stating how and when the order has been or will be implemented.

(3)

The Minister may give a disposal order to a person only if the Minister is satisfied on reasonable grounds that—

(a)

the transaction gives rise, or is likely to give rise, or has given rise to a significant risk to national security or public order; and

(b)

the risk cannot be adequately managed by taking an enforcement action under subpart 5 of Part 2 or (in the case of sensitive assets acquired under a call-in transaction) giving a direction order to the relevant acquirer.

(4)

See also section 112, which applies when the Minister is giving a disposal order in connection with a transaction of national interest.

(5)

The Minister must have regard to New Zealand’s international obligations when acting under this section.

(6)

A person who is given a disposal order must comply with it within the time, and in the manner, specified in the order.

Statutory management

94 Purpose of statutory management

The purpose of statutory management under this subpart is to manage the risks to national security or public order associated with actions by an overseas person, or an associate of an overseas person, who has an interest in sensitive assets, including (without limitation) removing the overseas person’s, or their associate’s, access to or control over the sensitive assets.

95 Statutory management of person who owns sensitive assets and associates

(1)

The Governor-General may, by Order in Council, on the recommendation of the Minister,—

(a)

declare that a person who owns sensitive assets is subject to statutory management; and

(b)

declare that an associate of a person who owns sensitive assets is subject to statutory management; and

(c)

vest the assets identified in accordance with section 103 in the statutory manager for the purposes of disposing of those assets under that section; and

(d)

appoint 1 or more persons as statutory manager or statutory managers of the person for a specified period.

(2)

If an order is made under subsection (1),—

(a)

every subsidiary of a person declared to be subject to statutory management, except any subsidiary declared to be a subsidiary to which the order does not apply, is subject to statutory management; and

(b)

the appointment of a statutory manager for the specified period in respect of the person under statutory management also applies to those subsidiaries.

(3)

If the order appoints 2 or more persons as statutory managers,—

(a)

the order must state whether the powers of a statutory manager are to be exercised by those persons acting jointly or may be exercised individually; and

(b)

references in this Act to a statutory manager include references to the statutory managers.

(4)

In this section, a person includes a body of persons whether incorporated or not.

96 Recommendation of Minister

(1)

The Minister may make a recommendation under section 95 only if—

(a)

an overseas person, or an associate of the overseas person, acquired sensitive assets under a transaction of national interest or a call-in transaction; and

(b)

the Minister is satisfied on reasonable grounds that,—

(i)

in relation to the sensitive assets, the overseas person or their associate has acted, is acting, or is likely to act in a manner that gives or is likely to give rise to a significant risk to national security or public order; and

(ii)

the risk cannot be adequately managed by making a direction order (in the case of assets acquired under a call-in transaction), a disposal order, or taking an enforcement action under subpart 5 of Part 2.

(2)

The Minister must have regard to New Zealand’s international obligations when acting under this section.

(3)

See also section 112, which applies when the Minister is making a recommendation in connection with a transaction of national interest.

97 Statutory management of New Zealand business only

Section 95 applies only to the person’s property, rights, assets, and liabilities relating to its New Zealand business or, if the person has business undertakings unrelated to the sensitive assets, that part of its New Zealand business that relates to the sensitive assets.

98 Date and time of appointment

(1)

Every order made under section 95 must specify the date on which, and the time at which, it comes into force.

(2)

The date and time specified must not be earlier than the date on which, and the time at which, the order is made.

(3)

If a question arises as to whether, on the date on which a statutory manager was appointed, an act was done or a transaction was entered into or effected before or after the appointment, the act or transaction must, in the absence of proof to the contrary, be treated as having been done, entered into, or effected, as the case may be, after the appointment of the statutory manager.

99 Considerations affecting exercise of powers by statutory manager

(1)

In exercising the powers conferred on them under this subpart, a statutory manager must have regard to—

(a)

the purpose of statutory management (see section 94); and

(b)

to the extent not inconsistent with paragraph (a), the desirability of preserving the interests of members and creditors of the person under statutory management and the overseas person or, where appropriate, the need to protect the beneficiaries under any trust administered by the person under statutory management or the overseas person or the public interest; and

(c)

to the extent not inconsistent with paragraphs (a) and (b), the need to preserve the business or undertaking of the person under statutory management and the overseas person.

(2)

A statutory manager must, in relation to the statutory management,—

(a)

consult the regulator as and when required by the regulator; and

(b)

have regard to any advice given to the statutory manager by the regulator; and

(c)

comply with any directions given under section 100; and

(d)

provide any reports required under section 100; and

(e)

notify the regulator before taking an action under—

(i)

section 50(1) or (2) of the Corporations (Investigation and Management) Act 1989 (power of statutory manager to sell business undertaking of corporation) (as applied by section 105(i)):

(ii)

section 52(1) of the Corporations (Investigation and Management) Act 1989 (power of statutory manager to put corporation into liquidation) (as applied by section 105(j)):

(iii)

section 103 (power to sell vested property):

(iv)

section 104 (power to terminate contracts).

100 Role of regulator in statutory management

(1)

The regulator may, in relation to the conduct of the statutory management,—

(a)

give advice to the statutory manager; and

(b)

give written directions to the statutory manager; and

(c)

require a statutory manager to give to the regulator, or to other persons specified by the regulator, reports about the conduct of the statutory management and the state of the affairs or business of the person under statutory management.

(2)

A report required under subsection (1)(c) must be given in the way, and within the period, required by the regulator.

(3)

When acting under this section, the regulator must have regard to—

(a)

the purpose of statutory management (see section 94); and

(b)

New Zealand’s international obligations.

101 Statutory manager may form body corporate to acquire business of branch of persons not incorporated in New Zealand

(1)

If a person declared to be subject to statutory management is a body corporate incorporated outside New Zealand or an unincorporated body that has its head office or principal place of business outside New Zealand, the statutory manager may—

(a)

form and register a body corporate under the Companies Act 1993 or any other Act:

(b)

subscribe for or acquire, as trustee for the person, all or any of the shares of the body corporate:

(c)

allot or issue all or any of the shares in the body corporate as fully or partly paid, as the case may be, up to the value of any property, rights, and assets vested in the body corporate under subsection (2) (after deducting the value of any liabilities so vested).

(2)

The Governor-General may, by Order in Council, on the recommendation of the Minister, declare that the whole or any part of any property, rights, assets, and liabilities of the person relating to its New Zealand business will vest in the body corporate referred to in subsection (1)(a) on a date specified in the order (and the property, rights, assets, and liabilities vest in the body corporate on the date specified).

(3)

Nothing in subsection (2) reduces, extinguishes, or affects any obligation or liability of a person.

(4)

If a body corporate is formed under subsection (1)(a),—

(a)

the body corporate is subject to statutory management under this subpart as if it had been declared to be so by an order under section 95; and

(b)

the body corporate has the same statutory manager as the person under statutory management; and

(c)

the provisions in this Act relating to statutory management apply (with any necessary modifications) as if the body corporate were a person under statutory management.

102 Body corporate formed and registered also subject to statutory management

If a body corporate is formed and registered under section 50(2)(a) of the Corporations (Investigation and Management) Act 1989, as applied by section 105(i),—

(a)

the body corporate is subject to statutory management under this subpart as if it had been declared to be so by an order under section 95; and

(b)

the body corporate has the same statutory manager as the person under statutory management; and

(c)

the provisions in this Act relating to statutory management apply (with any necessary modifications) as if the body corporate were a person under statutory management.

103 Statutory manager may sell vested assets

(1)

This section applies to sensitive assets owned by any overseas person or their associate if—

(a)

the overseas person or their associate is acting in the manner described in section 96(1)(b); but

(b)

the order under section 95 will not make that overseas person or associate subject to statutory management.

(2)

The order may identify the whole or any part of the sensitive assets as assets to be vested in the statutory manager.

(3)

The order may identify the assets either individually or as a group or class.

(4)

The assets identified in the order are vested in the statutory manager on the date on which and time at which the order comes into force (see section 98).

(5)

The statutory manager may sell or otherwise dispose of the whole or any part of the vested assets to any person, on any terms and conditions, that the statutory manager considers appropriate.

(6)

The provisions of section 51 and 72 of the Corporations (Investigation and Management) Act 1981 apply, with any necessary modifications, to a sale of vested assets under this section as if the sale were a sale under section 50(1) of that Act.

104 Statutory manager may terminate contracts or arrangements posing significant risk to national security or public order

(1)

If the statutory manager considers that a contract or an arrangement entered into by the person under statutory management gives rise, or is likely to give rise, to a significant risk to national security or public order, the statutory manager may cancel that contract or arrangement.

(2)

If a contract or an arrangement is cancelled under this section,—

(a)

the person under statutory management is discharged from the further performance of the contract or arrangement and from all liabilities for subsequent non-performance of the contract or arrangement; and

(b)

the other party to the contract or arrangement may apply to the court for compensation in respect of the contract or arrangement.

(3)

An application under subsection (2)(b) must be made within 3 months of the person receiving notice of the cancellation.

(4)

The court may award any compensation that it considers just and reasonable, having regard to—

(a)

the value of the consideration provided by the person; and

(b)

all amounts and benefits that the person has received under the contract or arrangement; and

(c)

the conduct of the parties.

105 Application of Corporations (Investigation and Management) Act 1989

The following provisions of the Corporations (Investigation and Management) Act 1989 apply for the purposes of a statutory management under this Act, with all necessary modifications as if a person declared to be subject to statutory management under this Act were a corporation declared to be subject to statutory management under that Act:

(a)

section 42 (moratorium):

(b)

section 43 (prohibition against removal of assets from New Zealand), except that a person who commits an offence under section 43(2) is liable on conviction,—

(i)

in the case of an individual, to imprisonment for a term not exceeding 12 months or to a fine not exceeding $300,000:

(ii)

in any other case, to a fine not exceeding $300,000:

(c)

section 44 (statutory manager may suspend payment of money owing):

(d)

section 45 (management of corporation to vest in statutory manager):

(e)

section 46 (powers of statutory manager):

(f)

section 47 (statutory manager may carry on business of corporation):

(g)

section 48 (statutory manager may pay creditors and compromise claims):

(h)

section 49 (termination of contract of agency or service):

(i)

sections 50, 51, 53, and 72 (statutory manager may sell business undertaking of corporation), but subject to the modifications in section 110:

(j)

section 52 (liquidation of corporations):

(k)

section 54 (power to trace property improperly disposed of):

(l)

section 55 (application of certain provisions of Companies Act 1993):

(m)

section 58 (statutory manager may apply to court for directions):

(n)

section 59 (court may confer additional powers on statutory manager):

(o)

section 61 (prior winding up, liquidation, or receivership to cease):

(p)

section 64 (corporation not entitled to be consulted about exercise of powers):

(q)

section 66 (advances to statutory managers and members of advisory committees):

(r)

section 67 (duty to deliver books and property to statutory manager):

(s)

section 68 (offence to destroy, alter, or conceal records), except that a person who commits an offence under section 68(1) is liable on conviction,—

(i)

in the case of an individual, to imprisonment for a term not exceeding 12 months or to a fine not exceeding $300,000:

(ii)

in any other case, to a fine not exceeding $300,000:

(t)

section 69 (duty to report offences), except that—

(i)

the reference to a person being guilty of an offence includes a person being liable to a civil pecuniary penalty under this Act:

(ii)

in relation to an offence, or to a liability to a civil pecuniary penalty, under this Act, the duty to report the matter to the Solicitor-General includes a duty also to report the matter to the regulator:

(u)

sections 71 and 71A (application of other Acts).

106 Termination of statutory management

(1)

The Governor-General may, by Order in Council, on the recommendation of the Minister, declare that a person under statutory management is to cease to be subject to statutory management.

(2)

The order must specify the date on which, and the time at which, it comes into force.

(3)

A person under statutory management ceases to be subject to statutory management if the person is put into liquidation on the application of the statutory manager.

107 Effect of termination of statutory management

(1)

If an order is made under section 106, or a person under statutory management is put into liquidation as referred to in section 106(3), the following happens at the specified time:

(a)

the person under statutory management ceases to be subject to statutory management:

(b)

the appointment of the statutory manager terminates.

(2)

In subsection (1), specified time means, as the case requires,—

(a)

the date and time specified in the order; or

(b)

the date and time of the liquidator’s appointment.

108 Powers to obtain documents and information

A statutory manager has, and may exercise, all of the powers conferred on a liquidator of a company by sections 261 to 267 of the Companies Act 1993 in the same manner as if the statutory manager were the liquidator of a company in liquidation under that Act (and, for that purpose, section 373(3) of that Act applies with all necessary modifications).

109 Protection from liability and indemnity

(1)

No statutory manager is liable for an act done or omitted to be done in the performance or exercise in good faith of the statutory manager’s functions, duties, or powers under this Act.

(2)

The Crown indemnifies the statutory manager for any liability that arises from the exercise or purported exercise of, or omission to exercise, any power conferred by this Act unless it is shown that the exercise or purported exercise of, or omission to exercise, the power was in bad faith.

(3)

Any money required for the purposes of this section must be paid out of a Crown Bank Account without further authority than this section.

(4)

The indemnity conferred by subsection (2) extends to legal costs incurred in defending a proceeding.

110 Expenses of statutory management

(1)

All costs, charges, and expenses properly incurred by a statutory manager in the exercise of the manager’s functions or powers under this subpart (including any remuneration approved by the Minister) are payable by the Crown.

(2)

The Crown is entitled to recover the amounts paid under subsection (1) from either of the following:

(a)

the proceeds of sale or other disposition of any vested assets:

(b)

the proceeds of sale or other disposition of the sensitive assets of the overseas person or their associate’s (whether sold or disposed of as part of the sale of the business undertaking of the person under statutory management or otherwise).

(3)

Section 51 of the Corporations (Investigation and Management) Act 1989 (as applied by section 105(i)) must be read as if a reference to the costs of the statutory manager in selling or disposing of the relevant property were a reference to the Crown’s rights to be repaid under subsection (2).

111 Modifications where person under statutory management is regulated by Reserve Bank

(1)

This section applies if a person who will be made subject to statutory management by an order under section 95 is any of the following:

(a)

a registered bank (within the meaning of section 2(1) of the Reserve Bank of New Zealand Act 1989):

(b)

a covered bond SPV (within the meaning of section 139B of the Reserve Bank of New Zealand Act 1989):

(c)

a licensed insurer (within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2010):

(d)

a non-bank deposit taker (within the meaning of NBDT in section 5 of the Non-bank Deposit Takers Act 2013):

(e)

an operator of a designated settlement system (within the meaning of section 156N of the Reserve Bank of New Zealand Act 1989).

(2)

The Minister must consult the Reserve Bank before making a recommendation under section 96.

(3)

Section 99(1) does not apply and instead the statutory manager must have regard to—

(a)

the purpose of statutory management (see section 94):

(b)

the need to maintain public confidence in the operation and soundness of the financial system:

(c)

the need to avoid significant damage to the financial system:

(d)

to the extent not inconsistent with paragraphs (a), (b), and (c), the desirability of preserving the interests of members and creditors of the person under statutory management and the overseas person or, where appropriate, the need to protect the beneficiaries under any trust administered by the person under statutory management or the overseas person or the public interest:

(e)

to the extent not inconsistent with paragraphs (a), (b), (c), and (d), the need to preserve the business or undertaking of the person under statutory management and the overseas person.

(4)

The statutory manager must have regard to any advice given to the statutory manager by the Reserve Bank.

(5)

A notice under section 99(2)(e) must also be given to the Reserve Bank.

(6)

Section 100 is amended as it relates to directions so that—

(a)

a direction under section 100(1)(b) must be given jointly by the Reserve Bank and the regulator; and

(b)

section 100(3) applies to the regulator and the Reserve Bank; and

(c)

when making a joint direction, the Reserve Bank and the regulator must have regard to the matters set out in subsection (3)(b) and (c).

(7)

A requirement for a report under section 100(1)(c) may be made by the regulator or the Reserve Bank.

NSPO management actions and transactions of national interest

112 When NSPO management actions may be taken in connection with consented transactions of national interest

The Minister may only make a disposal order or a recommendation that a person be put into statutory management in connection with a transaction of national interest for which consent has been granted if the Minister considers that—

(a)

1 or more of the following events or matters has occurred in connection with the relevant consent or the transaction of national interest that the consent relates to:

(i)

an application under section 23 or any information provided under section 23(3) contained a statement that was false or misleading in any material particular or any material omission:

(ii)

an application under section 23 or any information provided under section 23(3) provided the Minister with a document that was false or misleading in any material particular:

(iii)

a person has breached a condition of a consent:

(iv)

a person has contravened an enforceable undertaking (see sections 46A to 46G); and

(b)

the event or matter gives rise, or is likely to give rise, to a significant risk to national security or public order.

Subpart 3—Protection of classified information

113 Application of subpart

This subpart applies to any civil proceedings (including public law and judicial review proceedings) in a court relating to the administration or enforcement of this Act.

114 Classified security information and other terms defined

(1)

In this subpart, classified security information means information—

(a)

that is relevant to any proceedings in a court that relate to the administration or enforcement of this Act (or to any intended proceedings); and

(b)

that is held by an agency listed in section 126(2); and

(c)

that the head of the agency, in the case of information held by an intelligence or security agency, or the Attorney-General, in the case of information held by any other agency, certifies in writing cannot be disclosed except to the extent provided in this subpart because, in the opinion of the head of the agency or the Attorney-General (as applicable),—

(i)

the information is information of a kind specified in subsection (2); and

(ii)

disclosure of the information would be disclosure of a kind specified in subsection (3).

(2)

Information falls within subsection (1)(c)(i) if it—

(a)

might lead to the identification of, or provide details of, the source of the information, the nature, content, or scope of the information, or the nature or type of the assistance or operational methods available to the agency; or

(b)

is about particular operations that have been undertaken, or are being or are proposed to be undertaken, in relation to any of the functions of the agency; or

(c)

has been provided to the agency by the Government of another country or by an agency of the Government of another country or by an international organisation, and is information that cannot be disclosed by the agency because the Government or agency or organisation by which the information has been provided will not consent to the disclosure.

(3)

Disclosure of information falls within subsection (1)(c)(ii) if the disclosure would be likely—

(a)

to prejudice the security or defence of New Zealand or the international relations of the Government of New Zealand; or

(b)

to prejudice the entrusting of information to the Government of New Zealand on a basis of confidence by the Government of another country or any agency of such a Government, or by any international organisation; or

(c)

to prejudice the maintenance of the law, including the prevention, investigation, and detection of offences, and the right to a fair trial; or

(d)

to endanger the safety of any person.

(4)

In this subpart,—

intended party has the meaning set out in section 117(1)(a)(i)

intended proceedings means the proceedings that an intended party intends to commence as notified under section 117(1)(a)(ii)

non-Crown party, in relation to proceedings, means a person (other than the Crown) that is a party to the proceedings

representative includes a barrister or solicitor engaged to act on behalf of a party

special advocate means a person appointed under section 118(2).

Compare: 2013 No 91 s 102

115 Obligation to provide court with access to classified security information

(1)

The Crown must, after proceedings are commenced, provide the court with access to the classified security information that is relevant to those proceedings.

(2)

If a special advocate is appointed before proceedings are commenced, the Crown must provide the court with access to the classified security information that is relevant to the intended proceedings.

(3)

The court must keep confidential and must not disclose any information provided as classified security information, even if it considers that the information does not meet the criteria set out in section 114(2) and (3), unless the head of the agency (in the case of information held by an intelligence or security agency) or the Attorney-General (in the case of information held by any other agency) consents to its release.

(4)

Subsection (3) applies both during and after completion of the proceedings.

Compare: 2013 No 91 s 103

116 Court orders

(1)

The court may, in order to comply with section 115(3), make 1 or more of the following orders:

(a)

an order forbidding publication of any report or account of the whole or any part of the evidence adduced or the submissions made in the proceedings:

(b)

an order forbidding the publication of the name of any witness or witnesses, or any name or particulars likely to lead to the identification of any witness or witnesses:

(c)

an order forbidding the publication of classified security information or information about classified security information:

(d)

an order excluding any person from the whole or any part of the court’s proceedings, including—

(i)

the non-Crown party or the non-Crown party’s representative; or

(ii)

staff of the court.

(2)

An order made under subsection (1)

(a)

may be made for a limited period or permanently; and

(b)

if it is made for a limited period, may be renewed for a further period or periods by the court; and

(c)

if it is made permanently, may be reviewed by the court at any time.

Compare: 2013 No 91 s 104

117 Appointment of special advocate

(1)

This section applies if—

(a)

it appears to a court that—

(i)

a person (the intended party) is or may be entitled to commence proceedings to which this subpart will or may apply but it is necessary for a special advocate to be appointed before the proceedings can be commenced; and

(ii)

the intended party has notified the Crown that the party intends to commence those proceedings and that the party will apply for the appointment of a special advocate; or

(b)

proceedings have been commenced and information presented, or proposed to be presented, in those proceedings includes classified security information; or

(c)

proceedings have been commenced but the non-Crown party’s claim cannot be fully particularised without the non-Crown party being able to consider classified security information.

(2)

The court may, on the application of an intended party or a non-Crown party, appoint a barrister or solicitor as a special advocate to represent the intended party’s or the non-Crown party’s interests on the terms that the court may direct if the court is satisfied that it is necessary to do so in order to ensure either or both of the following:

(a)

that the intended party can properly prepare and commence proceedings:

(b)

that a fair hearing will occur.

(3)

The court must, before appointing a person as a special advocate, be satisfied that the person—

(a)

holds an appropriate security clearance that allows the person to see information that is or may be classified security information; and

(b)

is suitably qualified and experienced to fulfil the role of a special advocate.

(4)

A special advocate appointed to represent an intended party may, after the proceedings are commenced, continue to act as the special advocate on behalf of that person (as a non-Crown party), subject to the terms that the court may direct.

(5)

The court may make directions as to the terms of the appointment, and on the matters referred to in sections 120 and 121(3), before or after the proceedings are commenced.

(6)

The appointment of a special advocate does not create an obligation requiring the intended party to commence proceedings.

(7)

The agency to which the proceedings or intended proceedings relate must meet the actual and reasonable costs of a special advocate on a basis—

(a)

agreed between the special advocate and the head of the agency (in the case of an intelligence or security agency) or the Attorney-General (in the case of any other agency); or

(b)

determined by the court (in default of agreement).

Compare: 2013 No 91 s 105

118 Nomination of person for appointment

(1)

Each of the following may nominate a barrister or solicitor to be appointed as the special advocate:

(a)

the Crown:

(b)

the intended party or the non-Crown party (as the case may be).

(2)

The court may appoint a person nominated under subsection (1) or another person.

Compare: 2013 No 91 s 106

119 Role of special advocates

(1)

The role of a special advocate is to represent an intended party or a non-Crown party.

(2)

In particular, a special advocate may—

(a)

prepare and commence proceedings on behalf of the person:

(b)

examine and cross-examine witnesses:

(c)

make oral and written submissions to the court:

(d)

assist in the settlement of the proceedings.

(3)

At all times, a special advocate must act in accordance with his or her duties as an officer of the High Court.

(4)

A special advocate must keep confidential and must not disclose classified security information, except as expressly provided or authorised under this Act.

Compare: 2013 No 91 s 107

120 Court may provide access to classified security information to special advocate

(1)

A special advocate may, before or after the commencement of proceedings, apply to the court for access to the classified security information.

(2)

The court may provide access to the classified security information to the special advocate on the terms that the court may direct.

Compare: 2013 No 91 s 108

121 Communication between special advocate and other persons

(1)

A special advocate may communicate with the relevant party or the relevant party’s representative on an unlimited basis until the special advocate has been provided with access to the classified security information.

(2)

After the special advocate has been given access to the classified security information, he or she must not communicate with any person about any matter connected with the classified security information except in accordance with this section.

(3)

A special advocate who, after having been given access to the classified security information, wishes to communicate with the relevant party, the relevant party’s representative, or any other person not referred to in subsection (4) may do so on the terms that the court may direct.

(4)

A special advocate may, without the approval of the court, communicate about any matter connected with the classified security information with—

(a)

the court:

(b)

the Crown’s security-cleared representative:

(c)

the Attorney-General:

(d)

the head of the agency to which the proceedings relate, or the agency’s security-cleared representative.

(5)

In this section, relevant party means the intended party or non-Crown party.

Compare: 2013 No 91 s 109

122 Protection of special advocates from liability

(1)

To the extent that a special advocate is acting in accordance with the requirements of this Act, the special advocate is not guilty of—

(a)

misconduct within the meaning of section 7 or 9 of the Lawyers and Conveyancers Act 2006; or

(b)

unsatisfactory conduct within the meaning of section 12 of that Act.

(2)

This subpart applies despite the requirements of any practice rules made and approved under the Lawyers and Conveyancers Act 2006.

(3)

No person is personally liable for any act done or omitted to be done in good faith, in his or her capacity as a special advocate, in accordance with the requirements or provisions of this Act.

Compare: 2013 No 91 s 110

123 Other matters relating to procedure in proceedings involving classified security information

(1)

The court must determine the proceedings on the basis of information available to it (whether or not that information has been disclosed to or responded to by all parties to the proceedings).

(2)

If information presented, or proposed to be presented, in the proceedings by the Crown includes classified security information,—

(a)

except where proceedings are before the Court of Appeal or the Supreme Court, the proceedings must be heard and determined by the Chief High Court Judge, or by 1 or more Judges nominated by the Chief High Court Judge, or both; and

(b)

the court must, on a request by the Attorney-General and if satisfied that it is necessary to do so for the protection of (either all or part of) the classified security information, receive or hear (the relevant part or all of) the classified security information in the absence of all or any of—

(i)

the non-Crown party; and

(ii)

the barristers or solicitors (if any) representing the non-Crown party; and

(iii)

journalists; and

(iv)

members of the public.

(3)

Without limiting subsection (2),—

(a)

the court may approve a summary of the classified security information that is presented by the Attorney-General except to the extent that a summary of any particular part of the information would itself involve disclosure that would be likely to prejudice the interests referred to in section 114(3); and

(b)

on being approved by the court, a copy of the summary must be given to the non-Crown party.

(4)

Subsections (1) to (3) apply despite any enactment or rule of law to the contrary.

Compare: 2013 No 91 s 111

124 Nothing in this subpart limits other rules of law that authorise or require withholding of document, etc

Nothing in this subpart limits section 27 of the Crown Proceedings Act 1950 or any rule of law that authorises or requires the withholding of a document or the refusal to answer a question on the ground that the disclosure of the document or the answering of the question would be injurious to the public interest.

Compare: 2013 No 91 s 112

125 Ancillary general practices and procedures to protect classified security information

(1)

Any general practices and procedures that may be necessary to implement the procedures specified in this subpart and to ensure that classified security information is protected in all proceedings to which this subpart applies must be agreed between the Chief Justice and the Attorney-General as soon as practicable after the commencement of this section, and revised from time to time.

(2)

General practices and procedures may be agreed under subsection (1) on the following matters:

(a)

measures relating to the physical protection of the information during all proceedings to which this subpart relates:

(b)

the manner in which the information may be provided to the court:

(c)

measures to preserve the integrity of the information until any appeals are withdrawn or finally determined.

(3)

Subsection (2) does not limit subsection (1).

Compare: 2013 No 91 s 113

Subpart 4—Miscellaneous provisions

126 Power to use and disclose information relevant to managing national security or public order risks

(1)

Any agency identified in subsection (2) (a disclosing agency) may disclose to any other agency identified in subsection (2) any information held by the disclosing agency if the disclosing agency has reasonable grounds to believe that the disclosure of that information is necessary or desirable for the purpose of managing national security and public order risks associated with transactions by overseas persons.

(2)

The agencies are—

(a)

an intelligence or security agency:

(b)

the Department of Internal Affairs:

(c)

the Department of the Prime Minister and Cabinet:

(d)

the Inland Revenue Department:

(e)

Land Information New Zealand:

(f)

the Ministry of Business, Innovation, and Employment:

(g)

the Ministry of Defence:

(h)

the Ministry of Foreign Affairs and Trade:

(i)

the New Zealand Customs Service:

(j)

the New Zealand Police:

(k)

New Zealand Trade and Enterprise:

(l)

the Reserve Bank:

(m)

the Treasury:

(n)

any other agency set out in regulations.

(3)

A disclosing agency may impose any conditions it thinks fit relating to the provision of the information, including conditions relating to—

(a)

the storage and use of, or access to, anything provided:

(b)

the copying, returning, or disposing of copies of any documents provided.

(4)

This section applies despite anything to the contrary in any contract, deed, or document.

127 Regulations regarding transactions of national interest and overseas investments in SIB assets

(1)

The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations for all or any of the following purposes:

(a)

prescribing classes of technology that are or are not military or dual-use technology:

(b)

prescribing classes of information that are not sensitive information:

(c)

prescribing classes of businesses that are or are not strategically important businesses:

(d)

prescribing a date for notification for the purposes of section 86:

(e)

prescribing agencies for the purposes of section 126.

(2)

The Minister must have regard to New Zealand’s international obligations when making a recommendation relating to a regulation for the purposes set out in subsection (1)(a) to (d).

(3)

The Minister must, before making a recommendation for the purpose set out in subsection (1)(c) that applies in section 82(2) or (3), be satisfied that a class of business is not broader than is reasonably necessary to manage risks to national security or public order.

(4)

Regulations made under subsection (1)(c) may prescribe a class of business using 1 or more of the following methods:

(a)

minimum criteria for a business to be a strategically important business (for example, minimum capacity of a generator):

(b)

the geographic area in which the business is located or provides services:

(c)

any other circumstances in which the business must operate.

128 Giving effect to and unwinding of call-in transactions

A call-in transaction that has been given effect to in contravention of section 85(3) or a prohibition order—

(a)

is not an illegal contract for the purposes of subpart 5 of Part 2 of the Contract and Commercial Law Act 2017; and

(b)

is not void only because the transaction has been given effect to without a direction notice or because giving effect to the overseas investment in contravention of a prohibition order is an offence.

129 Minister must publish decisions on call-in transactions and transaction of national interest

(1)

The Minister must publish, on an Internet site maintained by or for the regulator, notice of—

(a)

a decision about whether or not to decline consent to a transaction of national interest under section 20C:

(b)

a decision to take an NSPO management action.

(2)

The notice must include a summary of the decision made and the reasons for that decision.

(3)

However, the Minister may defer or dispense with publication (in whole or in part) if the Minister is satisfied on reasonable grounds that good reason for withholding the publication would exist under the Official Information Act 1982.

61 Schedule 1AA amended

(1)

In Schedule 1AA, clause 5(1) and (2), replace “interest” with “estate or interest”.

(2)

In Schedule 1AA, after Part 2, insert the Part 3 set out in Schedule 1 of this Act.

62 Schedule 1 amended

(1)

In Schedule 1, Part 1, table 1, first column, replace “foreshore or seabed” with “marine and coastal area”.

(2)

In Schedule 1, Part 1, table 1, number the existing rows 1 to 11, in the style of table 2 (see subsection (3)).

(3)

In Schedule 1, Part 1, replace table 2 with:

Table 2

RowLand A is sensitive if it adjoins land of this type… and land A exceeds this area threshold (if any)
1marine and coastal area0.2 hectares
2bed of a lake0.4 hectares
3land held for conservation purposes under the Conservation Act 1987 (if that conservation land exceeds 0.4 hectares in area)0.4 hectares
4any reserve under the Reserves Act 1977 that is administered by the Department of Conservation (if that reserve land exceeds 0.4 hectares in area)0.4 hectares
5any regional park or part of a regional park that is subject to a declaration under section 139 of the Local Government Act 2002 (if that park or part of the park exceeds 80 hectares)0.4 hectares
6any national park held under the National Parks Act 19800.4 hectares
7land that adjoins the sea or a lake and is a Māori reservation to which section 340 of Te Ture Whenua Maori Act 1993 applies (if that land/reservation exceeds 0.4 hectares in area)0.4 hectares
8land over 0.4 hectares that includes a wahi tapu or wahi tapu area that is entered on the New Zealand Heritage List/Rārangi Kōrero or for which there is an application that is notified under section 67(4) or 68(4) of the Heritage New Zealand Pouhere Taonga Act 20140.4 hectares
9land over 0.4 hectares that is set apart as Māori reservation and that is wahi tapu under section 338 of Te Ture Whenua Maori Act 19930.4 hectares
10

land (if that land exceeds 0.4 hectares in area) that, pursuant to an enactment specified in regulations,—

  • is owned by the governance entity of a collective group of Māori such as an iwi or a hapū; and

  • is managed in accordance with the Conservation Act 1987 or an enactment referred to in Schedule 1 of that Act

0.4 hectares
11any reserve under the Reserves Act 1977 (if that reserve exceeds 0.4 hectares in area) that, pursuant to an enactment specified in regulations, is managed wholly or jointly by the governance entity of a collective group of Māori such as an iwi or a hapū0.4 hectares
12Te Urewera land (as defined in section 7 of the Te Urewera Act 2014)0.4 hectares
13Whanganui River (as defined in section 7 of the Te Awa Tupua (Whanganui River Claims Settlement) Act 2017) 0.4 hectares
14Maungatautari Mountain Scenic Reserve (as defined in section 71(1) of the Ngāti Koroki Kahukura Claims Settlement Act 2014) 0.4 hectares
63 New Schedule 1A inserted

After Schedule 1, insert the Schedule 1A set out in Schedule 2 of this Act.

64 Schedule 2 amended

(1)

In Schedule 2, clause 2, definition of relevant interest, paragraphs (a) and (b), replace “interest” with “estate or interest”.

(2)

In Schedule 2, after clause 12(2)(b), insert:

(c)

a business of a person (C) if C owns or controls the relevant interest in the residential land and A has rights or interests in securities of C.

(3)

In Schedule 2, clause 17(3), after “the land”, insert “for residential purposes”.

(4)

In Schedule 2, clause 17(3)(b), replace “25% or more” with “more than 25%”.

(5)

In Schedule 2, clause 21(1)(b), replace “an interest” with “an estate or interest”.

65 Schedule 3 amended

(1)

In Schedule 3, repeal the cross-heading above clause 2.

(2)

In Schedule 3, replace clause 2(1) with:

(1)

A transaction does not require consent for the purposes of section 10(1)(a) to the extent that it will result in an overseas investment in sensitive land if the estate or interest in land described in section 12(1)(a) is a periodic lease.

(3)

In Schedule 3, clause 2(2)(b), replace “3 years” with “4 months”.

(4)

In Schedule 3, clause 3(1)(a), replace “interest” with “estate or interest”.

(5)

In Schedule 3, replace clause 5 with:

5 Certain units acquired and leased back

(1)

In this clause,—

TLtP participant means—

(a)

the person (A) that operates the TLtP premises or that will operate the TLtP premises after the TLtP premises are completed; or

(b)

any person involved in the development of the TLtP premises (the developer), provided that the developer has assigned its estate or interest in the land to A, or will assign it to A immediately after the TLtP premises are completed to the extent that it relates to the relevant unit

TLtP premises means premises used, or intended to be used, in the course of business principally for providing temporary lodging to the public.

(2)

A transaction does not require consent for the purposes of section 10(1)(a) to the extent that it will result in an overseas investment in sensitive land if—

(a)

the relevant land is residential (but not otherwise sensitive) land; and

(b)

the relevant land is being used, or is intended to be used,—

(i)

in the construction of TLtP premises that have 20 or more units, or to increase by 20 or more the number of units in TLtP premises; or

(ii)

for the operation of TLtP premises that have 20 or more units; and

(c)

the estate or interest in land described in section 12(1)(a) is—

(i)

an estate or interest in 1 (or more) of those units that is acquired by a person (a purchaser) and that is immediately subject to a lease-back to the TLtP participant; or

(ii)

a lease of 1 (or more) of those units by the purchaser to the TLtP participant (a lease-back).

(3)

The exemption is subject to the following conditions:

(a)

the lease-back must meet the following requirements at all times on and after the acquisition of the purchaser’s estate or interest:

(i)

the purchaser cannot occupy, reserve, or use the unit for more than 30 days in each year; and

(ii)

for the rest of the year, the unit must be managed and used for the general purposes of operating the TLtP premises; and

(b)

when the lease-back period ends, the purchaser must either, within 12 months of that period ending,— —

(i)

grant to the TLtP participant a new lease-back of the unit that complies with the matters in paragraph (a); or

(ii)

dispose of its estate or interest in the unit; and

(c)

the purchaser must not occupy, reserve, or use the unit while it is not leased back to a TLtP participant.

(6)

In Schedule 3, replace clause 6(4)(b)(ii) with:

(ii)

that are for a total term (as calculated in accordance with Schedule 1A) of 10 years or more.

(7)

In Schedule 3, clause 6(5)(b)(i) and (ii), replace “25% or more” with “more than 25%”.

(8)

In Schedule 3, clause 8(5)(c), replace “25% or more” with “more than 25%”.

66 New Schedule 5 inserted

After Schedule 4, insert the Schedule 5 set out in Schedule 3 of this Act.

Part 2 Amendments to other Acts

Subpart 1—Amendment to Anti-Money Laundering and Countering Financing of Terrorism Act 2009

67 Amendment to Anti-Money Laundering and Countering Financing of Terrorism Act 2009

This subpart amends the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

68 Section 140 amended (Power to use and disclose information supplied or obtained under other enactments for AML/CFT purposes)

After section 140(2)(p), insert:

(pa)

the Overseas Investment Act 2005:

Subpart 2—Amendments to Fisheries Act 1996

69 Amendments to Fisheries Act 1996

This subpart amends the Fisheries Act 1996.

70 Section 57A amended (Interpretation of overseas investment fishing provisions)

Replace section 57A(2)(b) with:

(b)

any term or expression that is defined in the Overseas Investment Act 2005 and used in those provisions has the same meaning as in that Act; and

71 Section 57D amended (What are overseas investments in fishing quota)

Replace section 57D(b) with:

(b)

rights or interests in securities of a person (A) if A owns or controls (directly or indirectly) an interest in fishing quota and, as a result of the acquisition, 1 or more of the things referred to in section 12(1)(b)(i) to (iii) of the Overseas Investment Act 2005 happens.

72 Section 57F amended (Who are relevant overseas persons, and individuals with control, for overseas investments)

In section 57F(2)(a), replace “25% or more” with “more than 25%”.

73 Sections 57G to 57I replaced

Replace sections 57G to 57I with:

57G Criteria for overseas investments in fishing quota

The criteria for an overseas investment in fishing quota are all of the following:

(a)

the investor test is met:

(b)

the overseas investment will, or is likely to, benefit New Zealand (or any part of it or group of New Zealanders) to the extent required by section 16A(1A) of the Overseas Investment Act 2005, as determined by the relevant Ministers under section 57H:

(c)

if the overseas investment in fishing quota is a transaction of national interest, the Minister has not declined consent to the transaction (see section 20C of the Overseas Investment Act 2005):

(d)

the interest in fishing quota is capable of being registered in the Quota Register or the Annual Catch Entitlement Register.

57H Factors for determining whether or not overseas investment in fishing quota will, or is likely to, benefit New Zealand

(1)

The relevant Ministers—

(a)

must consider all the factors in subsection (2) to determine which factor or factors (or parts of them) are relevant to the overseas investment; and

(b)

must determine whether the criterion in section 57G(b) is met after having regard to those relevant factors; and

(c)

in doing so, may determine the relative importance to be given to each relevant factor (or part).

(2)

The factors are whether the overseas investment will, or is likely to,—

(a)

result in economic benefits for New Zealand (for example, the creation and retention of jobs, introduction of technology or business skills, increased export receipts, increased processing in New Zealand of fish, aquatic life, or seaweed, or a reduced risk of illiquid assets):

(b)

result in benefits to the natural environment (for example, protection of indigenous fish or mitigation of environmental impacts by innovations in fishing technologies):

(c)

give effect to or advance a significant Government policy:

(d)

involve oversight of, or participation in, the overseas investment and any relevant overseas person by persons who are not overseas persons:

(e)

result in other consequential benefits to New Zealand.

Subpart 3—Amendments to Tax Administration Act 1994

74 Amendments to Tax Administration Act 1994

This subpart amends the Tax Administration Act 1994.

75 Section 3 amended (Interpretation)

In section 3(1), definition of offshore person, paragraph (b), replace “section 7(2)(b) to (f) of the Overseas Investment Act 2005” with section 7(2)(b) to (h) of the Overseas Investment Act 2005”.

76 Schedule 7 amended

In Schedule 7, part C, subpart 1, after clause 39, insert:

39B Regulator under Overseas Investment Act 2005

(1)

Section 18 does not prevent the Commissioner from disclosing sensitive revenue information to any officer or employee of the regulator under the Overseas Investment Act 2005 (the OIA) if the officer or employee is authorised by the regulator to receive the information and if the regulator has reasonable grounds to believe that the disclosure of that information is necessary or desirable for all or any of the following purposes:

(a)

enabling the regulator to consider whether an investor meets the investor test under the OIA:

(b)

managing national security and public order risks associated with transactions by overseas persons:

(c)

any purpose set out in section 41(1A) of the OIA.

(2)

Information provided for the purpose in subclause (1)(a) may include, for example, information on tax defaults, tax-related penalties, and tax settlement agreements made with the Commissioner.

(3)

Section 18 does not prevent the regulator from disclosing sensitive revenue information to any officer or employee of an agency referred to in section 121(2) of the OIA, if the officer or employee is authorised by the agency to receive the information and the regulator has reasonable grounds to believe that the disclosure of that information is necessary or desirable for the purpose of managing national security and public order risks associated with transactions by overseas persons.

(4)

Despite subclause (1), the Commissioner may disclose information to the regulator only where it is reasonable and practical to do so, the information is readily available, and it is not undesirable to disclose the information.

Schedule 1 New Part 3 inserted into Schedule 1AA

s 61

Part 3 Provisions relating to Overseas Investment Amendment Act (No 2) 2020

14 Interpretation in this Part

(1)

In this Part,—

2020 Amendment Act means the Overseas Investment Amendment Act (No 2) 2020

commencement, in relation to a provision that is being amended by the 2020 Amendment Act, means the commencement of the amendment

new, in relation to a provision of this Act, means the provision as it reads immediately after commencement

new Act means this Act as it reads immediately after the relevant provision of the 2020 Amendment Act commenced

old, in relation to a provision of this Act, means the provision as it read immediately before commencement

old Act means this Act as it read immediately before the relevant provision of the 2020 Amendment Act commenced.

(2)

Part 1 of this schedule applies when determining whether a transaction is entered into before commencement or on or after commencement (see clause 1(4) and (5)).

15 Existing transactions and applications, etc

(1)

This clause applies for the purposes of applying a provision of this Act that relates to—

(a)

determining who are overseas persons, what are overseas investments in sensitive assets, and other matters in Part 1 of this Act; and

(b)

determining when consent is required and the criteria for consent under subpart 1 of Part 2 of this Act; and

(c)

the making an applications for consent and for granting consent under subpart 2 of Part 2 of this Act.

(2)

Except as provided in this Part, the new Act applies to—

(a)

transactions entered into on or after commencement:

(b)

applications received by the regulator on or after commencement, regardless of when the transaction is or was entered into or, in the case of farm land, when it is or was advertised:

(c)

transactions entered into before commencement in respect of which this Act requires an application to be made on or after commencement (for example, for retrospective consent):

(d)

any other matters that relate to events or circumstances on or after commencement.

(3)

In other cases, the old Act continues to apply.

16 Persons who are no longer overseas persons

(1)

A person who ceases to be an overseas person on commencement of section 7 of the 2020 Amendment Act (section 7 amended (who are overseas persons)) may apply to the regulator under section 27 for a variation of a consent granted to them while they were an overseas person.

(2)

To avoid doubt, this clause does not require a variation to be granted.

17 Benefit test

When applying section 16A after commencement, section 16A(1A)(a) applies in the same way regardless of whether the counterfactual relates to the existing state of affairs before, on, or after commencement.

18 Investor test

(1)

When applying new section 18A after commencement, the factors in new section 18A(4) apply to events (for example, convictions) before commencement in the same way as they apply to events after commencement.

(2)

New section 29A(3) and (4) (investor test applications where no change since investor test last met) does not apply to a person until the person has met the investor test under new section 18A (which, to avoid doubt, may be after an application made under new section 29A(1)).

19 Administration

(1)

The powers in subpart 3 of Part 2 of the new Act apply to any circumstances for which the powers are conferred, whether occurring before, on, or after commencement.

(2)

Time frames set under new section 37B do not apply to any functions, powers, duties, or services under this Act that first arose for exercise, performance, or provision in respect of a matter before commencement.

20 New information-gathering powers apply to matters before, on, or after commencement

(1)

The regulator may exercise a power under subpart 4 of Part 2 of the new Act in connection with any transaction, act, omission, or other matter, regardless of whether the transaction, act, omission, or other matter was entered into or otherwise occurred before, on, or after commencement.

(2)

However, the regulator may not exercise a power under subpart 4 of Part 2 of the new Act—

(a)

in connection with any transaction of national interest that is entered into before the commencement of section 19 of the 2020 Amendment Act (new sections 20A to 20G inserted):

(b)

in connection with any call-in transaction that is entered into before the commencement of section 60 of the 2020 Amendment Act in so far as it inserts new subpart 1 of Part 3).

21 Enforcement
General rule: exceptions

(1)

Except as provided in this Part,—

(a)

subpart 5 of Part 2 of the old Act continues to apply in relation to contraventions, or alleged contraventions, of this Act or the regulations that occurred before commencement; and

(b)

subpart 5 of Part 2 of the new Act applies to contraventions, or alleged contraventions, of this Act or the regulations that occur on or after commencement.

Exceptions

(2)

However, the following apply to contraventions, or alleged contraventions, of this Act or the regulations, whether occurring before, on, or after commencement:

(a)

new sections 46A to 46E (enforceable undertakings):

(b)

new sections 51AAA to 51AAE (injunctions, etc).

22 Existing regulations saved

Regulations that are made under an old provision, and in force immediately before commencement, continue in force until revoked as if made under the new Act.

23 Existing exemptions saved

Exemptions that are granted under an old provision, and in force immediately before commencement, continue in force until revoked as if made under the new Act.

24 National interest and public order risks management regime

A notification given under new section 85(2) or 86(2) has the same effect whether it is given before, on, or after the commencement of section 60 of the 2020 Amendment Act in so far as it inserts new subpart 1 of Part 3 (which relates to call-in transactions).

25 Overseas investment fishing provisions

This Part applies to matters under sections 56 to 58B of the Fisheries Act 1996 in the same way as it applies to similar matters under the rest of this Act.

Schedule 2 New Schedule 1A inserted

s 63

Schedule 1A Total term of interest in land

s 12

1 Calculation of total term of interest in land

(1)

The total term of an interest in land is the duration of—

(a)

either—

(i)

the term of the interest acquired; or

(ii)

in the case of an interest that is part-way through its current term, the remainder of any current term of the interest as at the time the overseas investment transaction is entered into; and

(b)

any rights of renewal of that interest (whether of the grantor or grantee); and

(c)

any previous interest that relates to the same or substantially the same land; and

(d)

if a previous interest was separated in time by a periodic interest, that periodic interest.

Example

An overseas person was a tenant of a lease of sensitive land for a term of 9 years with no rights of renewal. At the end of that lease, the parties enter into a 2-year extension.

The total term of the interest is 11 years: 2 years’ extension plus 9 years under the previous lease. The acquisition of the extension is an overseas investment in sensitive land, and consent is required.

(2)

A previous interest, in relation to an interest in land, is an estate or interest in land that—

(a)

was held by—

(i)

the overseas person or an associate of the overseas person; or

(ii)

a person in which the overseas person or their associate (either alone or together with its associates) had a more than 25% ownership or control interest; and

(b)

was consecutive in time to the relevant interest or to another previous interest of the relevant interest.

(3)

The duration of a previous interest before the overseas person or their associate had a more than 25% ownership or control interest in the person who held that previous interest must be disregarded from the calculation of the total term.

Example

A tenant has a lease of land for a term of 10 years. In year 6 of the lease, an overseas person increases its ownership interest in the tenant from 15% interest to 30%. At the end of the lease, the tenant enters into a new lease of the same land for a 5-year term.

The total term of the interest is 9 years: 5 years in the new lease plus 4 years of the previous lease from the point that the overseas person invested in the tenant. The acquisition of the new lease is not an overseas investment in sensitive land.

(4)

In this clause,—

consecutive includes separated by—

(a)

any periodic interest; or

(b)

a period of less than 4 months

periodic interest means any interest in land that—

(a)

is terminable at will, whether by the grantor or the grantee; and

(b)

offers no certainty of term of 4 months or more (including rights of renewal, whether of the grantor or the grantee).

Example

An overseas person was a tenant under a lease of sensitive land for 5 years. The tenant held over after the lease expired. No consent is required for that periodic lease (see clause 2 of Schedule 3).

After a year of holding over, the tenant enters into a new lease with the landlord for another 5 years.

The new lease is the acquisition of an interest in land. The total term of the interest is 11 years: 5 years in the new lease, 1 year of holding over, and 5 years under the previous lease. The acquisition of the new lease is an overseas investment in sensitive land, and consent is required.

Schedule 3 New Schedule 5 inserted

s 66

Schedule 5 Fresh or seawater areas

s 25D

Part 1 Application and interpretation

1 Which owners of land this schedule applies to

(1)

This schedule gives the Crown the right to acquire fresh or seawater areas from the owners of the fresh or seawater interests that relate to those areas.

(2)

In this schedule, an owner, in relation to a fresh or seawater interest, means—

Overseas person and their associate

(a)

the relevant overseas person that acquires the fresh or seawater interest as a result of an overseas investment in sensitive land; and

(b)

any owner (as defined in section 5(1) of the Land Transfer Act 2017) of the fresh or seawater interest that is an associate of the relevant overseas person; and

Other owners, but only if a notice is registered or covenant is entered into

(c)

if a water areas acquisition notice has been registered under clause 12 or 18 in relation to the fresh or seawater interest, any other owner (as defined in section 5(1) of the Land Transfer Act 2017) of that fresh or seawater interest; and

(d)

any owner (as defined in section 5(1) of the Land Transfer Act 2017) that enters into a water areas covenant in accordance with clause 19.

2 Interpretation

In this schedule,—

fresh or seawater area means any part of the relevant land that is marine or coastal area, the bed of a lake, or the bed of a river, and a reference to a fresh or seawater area is a reference to the whole or any part of that area

fresh or seawater interest means the freehold estate or pastoral lease interest that relates to the fresh or seawater area

owner has the meaning set out in clause 1(2)

pastoral lease has the meaning set out in section 2 of the Crown Pastoral Land Act 1998

prescribed manner means the manner prescribed in regulations under clause 21

record of title has the meaning set out in section 5(1) of the Land Transfer Act 2017

Registrar means the Registrar-General of Land

water areas acquisition notice means the notice under clause 12

water areas covenant means a covenant between an owner and the Crown under clause 19 on the terms and in the form prescribed by regulations

Part 2 Crown acquisition of fresh or seawater area

3 Crown must acquire fresh or seawater area

(1)

The Crown must acquire, and the owner must allow the Crown to acquire, the fresh or seawater area in accordance with this schedule.

(2)

The Crown must acquire the fresh or seawater area before the water areas acquisition notice expires (see clause 14).

(3)

However, the Crown need not acquire the fresh or seawater area if the owner is notified of a decision not to acquire in accordance with clause 4 or 5.

4 Acquisition not required if amenity and conservation value outweighed

(1)

The Crown may decide not to acquire a fresh or seawater area (in whole or in part) if the Minister for Land Information is not satisfied that the amenity and conservation value of the fresh or seawater area outweighs the potential risks, liability, and costs of acquisition and ownership of the area.

(2)

A decision not to acquire a fresh or seawater area must be notified in writing to the owner of the fresh or seawater interest.

(3)

The notice must be given no later than the date prescribed in regulations.

5 Acquisition not required if Minister not satisfied with amount of compensation to be paid

(1)

The Crown may decide not to acquire a fresh or seawater area (in whole or in part) if the Minister for Land Information is not satisfied with—

(a)

the amount of compensation to be paid under clauses 9 and 10; or

(b)

if the compensation payable under clause 10 has not yet been assessed, the amount of compensation to be paid under clause 9 and likely to be paid under clause 10.

(2)

A decision not to acquire a fresh or seawater area must be notified in writing to the owner of the fresh or seawater interest.

(3)

The notice must be given no later than the date the date prescribed in regulations.

6 Terms of acquisition

(1)

Unless the Crown and the owner of a fresh or seawater interest agree otherwise, the terms of the acquisition are those prescribed in regulations.

(2)

The Crown and the owner may agree amendments, additions, and deletions to the terms of the acquisition.

(3)

An agreement under subclause (2), when recorded in an instrument registered under clause 13, runs with and binds the land that is subject to the water areas acquisition notice.

7 Manner of acquisition

(1)

The Minister for Land Information may, by notice in the Gazette, vest a fresh or seawater area in the Crown.

(2)

Before making a notice under subclause (1), the Minister for Land Information must—

(a)

ensure that any requirements or steps prescribed in regulations are met or taken; and

(b)

agree or determine the amount of compensation to be paid to the owner in accordance with clause 9.

(3)

If a notice is made under subclause (1),—

(a)

any part of the fresh or seawater area that is the bed of a lake or a river vests in the Crown under the Land Act 1948; and

(b)

any part of the fresh or seawater area that is marine and coastal area vests in the Crown (and, to avoid doubt, becomes part of the common marine and coastal area under the Marine and Coastal Area (Takutai Moana) Act 2011).

(4)

The Minister for Land Information must give the notice to the Registrar.

(5)

On receipt of a notice, the Registrar must—

(a)

register the notice:

(b)

cancel any relevant water areas acquisition notice:

(c)

comply with clause 16 (if applicable).

8 Effect of acquisition on estates or interests in land

(1)

A fresh or seawater area is vested in the Crown free from all estates or interests in land including any encumbrances (without the necessity of any instrument of release or discharge or otherwise), except any estate or interest in land prescribed in regulations or specified in the notice under clause 7 as an interest to which the vesting does not apply.

(2)

However, if the owner’s fresh or seawater interest is not recorded in a record of title immediately prior to the vesting, subsection (1) only applies to the extent that there is no better claim to the fresh or seawater area than the claim that the owner had immediately prior to the vesting.

9 Compensation payable to owner of fresh or seawater interest

(1)

An owner of a fresh or seawater interest is entitled to claim compensation from the Crown.

(2)

The compensation may be claimed and must be determined in the manner prescribed by regulations.

(3)

However, the Crown and the owner may agree a different amount or procedure for determining an amount of compensation.

(4)

An agreement under subclause (3), when recorded in an instrument registered under clause 13, runs with and binds the land that is subject to the water areas acquisition notice.

10 Compensation payable for other registered interests in land

(1)

Any other registered owner of an estate or interest in land that is extinguished because of the operation of clause 8 is entitled to claim compensation from the Crown.

(2)

The compensation may be claimed and must be determined in the manner provided by the Public Works Act 1981 (with any necessary modifications) as if the person’s estate or interest was land taken for a public work.

(3)

However, a person is not entitled to compensation if either or both of the following apply:

(a)

the water areas acquisition notice has priority over the instrument relating to the person’s estate or interest (see section 35 of the Land Transfer Act 2017):

(b)

the person consented to the registration of the water areas acquisition notice.

Part 3 Water areas acquisition notice

11 Crown’s right is interest in land

The Crown’s right to acquire a fresh or seawater area under this schedule is an interest in land within the meaning of section 51 of the Land Transfer Act 2017.

12 Registration of water areas acquisition notice

(1)

The Crown’s right must be registered by lodging a water areas acquisition notice for registration with the Registrar in the prescribed manner.

(2)

The Registrar must register a water areas acquisition notice on receipt of a notice.

(3)

Every water areas acquisition notice, when registered, runs with and binds the land that is subject to the water areas acquisition notice.

(4)

Subclause (3) applies despite anything to the contrary in section 103 of the Land Transfer Act 2017.

13 Variation of water areas acquisition notice

(1)

The following may be registered by lodging an instrument varying the water areas acquisition notice with the Registrar in the prescribed manner:

(a)

an agreement under clause 6 (relating to the terms of the acquisition):

(b)

an agreement under clause 9 (relating to the compensation payable to the owner of the fresh or seawater interest):

(c)

an extension under clause 14 (relating to the term of the water areas acquisition notice).

(2)

The Registrar must register a variation instrument on receipt of an instrument.

(3)

The consent of a registered mortgagee of an estate or interest in the fresh or seawater area must be obtained before registration of the instrument.

14 Expiration of water areas acquisition notice

(1)

A water areas acquisition notice expires at the end of the term prescribed in regulations.

(2)

However, the Crown and the owner may agree an extension (but not a reduction) of the term of a water areas acquisition notice.

(3)

An extension under subclause (2), when recorded in an instrument registered under clause 13, runs with and binds the land that is subject to the water areas acquisition notice.

(4)

If an extension is recorded in an instrument registered under clause 13, the relevant water areas acquisition notice expires at the end of that extended term.

15 Cancellation of water areas acquisition notice

(1)

A water areas acquisition notice may be cancelled if—

(a)

the Crown gives a notice under clause 4 or 5:

(b)

the water areas acquisition notice has expired (see clause 14):

(c)

the Minister for Land Information is satisfied that a record of title does not contain any fresh or seawater areas:

(d)

any other event specified in regulations occurs.

(2)

The cancellation of a water areas acquisition notice may be registered by lodging an instrument cancelling the notice with the Registrar in the prescribed manner.

(3)

The Registrar must cancel a water areas acquisition notice on receipt of an instrument.

Part 4 Miscellaneous provisions

16 Cancellation and issue of records of title

If any record of title comprises any fresh or seawater area that is vested under clause 7 and any adjacent land (the adjacent land), the Registrar must, despite anything in the Land Transfer Act 2017,—

(a)

cancel the record of title that comprises the fresh or seawater area and the adjacent land; and

(b)

issue a record of title in the name of the owner of the adjacent land for the adjacent land; and

(c)

note any current registered interest or current registered notification that relates to the adjacent land against that record of title in the order in which it appears on the record of title cancelled under paragraph (a); and

(d)

issue a record of title for any current registered notification, or registered estate or interest not extinguished because of the operation of clause 8, that relates to the fresh or seawater area that was part of the record of title cancelled under paragraph (a).

17 Acquisition relating to Māori freehold land

If the owner’s acquisition of the relevant fresh or seawater interest is confirmed by the Maori Land Court under Te Ture Whenua Maori Act 1993 (the Maori Land Act 1993), that confirmation includes a confirmation of the Crown’s right to acquire the fresh or seawater area (and, for the avoidance of doubt, the notice under clause 7 and the water areas acquisition notice (including any variations to that notice) need not be separately confirmed by the court).

18 Acquisition relating to fresh or seawater interest held off-register: notice on adjacent title

(1)

This clause applies if a water areas acquisition notice cannot be registered against a record of title relating to a fresh or seawater area (for example, because there is no record of title for the fresh or seawater interest).

(2)

If the owner of the fresh or seawater interest is also the registered owner of a record of title relating to land adjoining the fresh or seawater area (an adjacent title), a water areas acquisition notice may instead be registered against the adjacent title.

19 Acquisition relating to fresh or seawater interest held off-register: water areas covenant

(1)

This clause applies if a water areas acquisition notice cannot be registered under clause 12 or 18 (for example, because there is no record of title for the fresh or seawater interest and no adjacent title).

(2)

The obligation to register a water areas acquisition notice in clause 12 is an obligation to enter into a water areas covenant in the prescribed manner.

(3)

References in clauses 3(2) and 14(1) and (2) to the water areas acquisition notice must be read as if they were a reference to the covenant.

(4)

An agreement under clause 6 or 9 or an extension under clause 14 may be recorded in a variation to the water areas covenant.

(5)

If an extension of the term of a water areas covenant is recorded in a variation to the covenant, the relevant covenant expires at the end of that extended term.

(6)

A water areas covenant may be varied or cancelled in the prescribed manner.

20 Acquisition is not subdivision

Nothing in section 11 or Part 10 of the Resource Management Act 1991 applies to—

(a)

any acquisition by the Crown of land as a direct or indirect consequence of the operation of this schedule; or

(b)

any matter incidental to, or required for the purpose of, any acquisition of that kind.

21 Regulations regarding acquisition of fresh or seawater areas

For the purposes of this schedule, the Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations for the purposes of this schedule that prescribe any or all of the following:

(a)

the terms and form of a water areas covenant (for example, a term imposing an obligation on the covenantor to obtain a covenant in the same form from any subsequent owner of the fresh or seawater interest):

(b)

the date before which a notice under clause 4 or 5 must be given:

(c)

the terms of the acquisition for the purposes of clause 6:

(d)

processes or steps for the purposes of clause 7 (for example, requirements to survey the fresh or seawater area or the adjacent land (as defined in clause 16)):

(e)

interests in land for the purposes of clause 8:

(f)

the process for claiming and determining compensation payable to an owner of a fresh or seawater interest for the purposes of clause 9, including—

(i)

the manner in which compensation may be claimed and the consequences of failure to claim compensation:

(ii)

a procedure for determining compensation:

(g)

an event for the purposes of clause 15:

(h)

for the purposes of any provision of this schedule that requires a thing to be done in a prescribed manner, the manner in which the thing must be done, including—

(i)

by whom, when, where, and how the thing must be done:

(ii)

any form that must be used in connection with doing the thing:

(iii)

any information or other evidence or documents that must be provided in connection with the thing.