This note is not part of the regulations, but is intended to indicate their general effect.
These regulations come into force on 1 March 2013. They amend the Overseas Investment Regulations 2005.
The purpose of the regulations is to implement an obligation under the Protocol on Investment to the New Zealand–Australia Closer Economic Relations Trade Agreement signed at Wellington on 16 February 2011. The text of that Protocol can be found at www.mfat.govt.nz/Trade-and-Economic-Relations/2-Trade-Relationships-and-Agreements/Australia/index.php.
One intention of the Protocol is to treat certain Australian investors in New Zealand significant business assets as if they were New Zealand investors, subject to certain conditions. The threshold for overseas investments in significant business assets under the Overseas Investment Act 2005 is $100 million and, if the investment is more than that, consent is required under that Act. Under these regulations, certain Australian investors will be exempt from the requirement to obtain consent, subject to conditions that relate to the amount of the investment and the type of investor, as follows:
The new thresholds are to be adjusted to a new amount each year, if an inflation-based formula produces an amount greater than the previous year's amount. The amounts of the new thresholds are to be published by the regulator on the Internet and in the Gazette.
In general terms, an investor qualifies as an Australian non-Government investor if the investor is an Australian individual or if the investor is located in Australia and carries on substantive business operations in Australia or is more than 75% owned or controlled by Australian individuals or New Zealanders. The investor must not be owned or controlled by the Australian Government or a foreign Government.
In general terms, an investor qualifies as an Australian Government investor if the investor is either the Australian Government or an entity or a branch located in Australia and 25% or more owned or controlled by the Australian Government. The investor must not be a foreign Government or 25% or more owned or controlled by a foreign Government.
In general terms, investments do not qualify for the exemption if, as a result of the transaction, an associate of the Australian investor that is not itself an Australian investor will acquire a 25% or more ownership or control interest of a type governed by the Act. However, different rules apply where the Australian investor is a subsidiary of an overseas person. In general terms, the existing rule under the Act is that an overseas parent triggers the consent provisions of the Act, but an overseas non-Government parent does not automatically disqualify an Australian investor from the benefit of these regulations.