New Zealand Legislation: Regulations

34 Exemption for persons connected to portfolio investors or New Zealand controlled persons

• (1) Every specified person is exempt from the requirement for consent provisions of the Act.

  (2) The exemption under subclause (1) also applies to a specified person if—

  • (a) the exemption does not apply under that subclause only because 1 or more persons (which may include the specified person) are incorporated outside New Zealand; and

  • (b) each of those persons incorporated outside New Zealand is directly or indirectly wholly-owned by a person listed in Schedule 3 or Schedule 4.

  (3) However, the exemption under subclause (1) does not apply to a specified person if 1 person listed in Schedule 3 has 25% control, or 2 or more overseas persons (including persons listed in Schedule 3, but not persons listed in Schedule 4) have cumulatively 75% control, of the specified person by having (directly or indirectly)—

  • (a) a beneficial entitlement to, or a beneficial interest in, 25% or more or 75% or more (as the case may be) of the specified securities of the specified person; or

  • (b) the right to exercise or control the exercise of 25% or more or 75% or more (as the case may be) of the voting power at a meeting of the specified person; or

  • (c) the right to appoint or control the appointment of 25% or more or 75% or more (as the case may be) of the board of directors (or other persons or body exercising powers of management, however described) of the specified person.

  Example 1

  Company A holds 20% and Company B holds 5% of Company X’s shares. Both Company A and Company B are overseas persons but Company A is listed in Schedule 3.

  So Company X is exempt under regulation 34 (if there is no other reason why Company X is an overseas person).

  Example 2

  Company C buys 25% of Company X’s shares. Company C is an overseas person because it is a subsidiary of a company listed in Schedule 4 (and is not an overseas person for any other reason).

  So Company X is still exempt under regulation 34 (if there is no other reason why Company X is an overseas person).

  Example 3

  Company D buys 25% of Company X’s shares. Company D is an overseas person and is not listed in Schedule 3 or 4.

  So Company X no longer qualifies for the exemption under regulation 34.

  Example 4

  Company A increases its shareholding in Company X to 25%. Company A is listed in Schedule 3.

  So Company X no longer qualifies for the exemption under regulation 34.