Overseas Investment Amendment Regulations 2018

18 New Parts 3 and 4 inserted

After regulation 38, insert:

Part 3 Miscellaneous

Subpart 1—When person who relies on exemption to acquire property becomes subject to existing consent or exemption conditions

65 Application of, and interpretation for, subpart

(1)

This subpart prescribes matters for the purposes of section 61G of the Act and applies if—

(a)

a person (B) acquires property (the relevant property) in reliance on an exemption listed in subclause (2); and

(b)

existing conditions apply in connection with the relevant property (whether or not they also apply in connection with other property).

(2)

The listed exemptions are as follows:

(a)

regulation 37(1)(a) (which relates to transactions within a group where 1 overseas person owns 95% of the group):

(b)

regulation 37(1)(b) (which relates to acquisitions if no increase in ultimate ownership and control by overseas persons):

(c)

regulation 37(1)(d) (which relates to amalgamations):

(d)

regulation 40(1)(a) (which relates to changes of trustees):

(e)

regulation 40(1)(b) (which relates to estates of deceased persons):

(f)

regulation 40(1)(c) (which relates to transfers by trusts to an overseas person who is a beneficiary).

Example

New trustees (B1) are appointed to a trust.

They acquire trust property in reliance on the exemption in regulation 40(1)(a).

Existing conditions of consent apply in connection with the trust property.

So this subpart applies.

(3)

In this subpart, existing conditions means any of the following:

(a)

conditions of consent:

(b)

conditions of an exemption in the Act or in these regulations:

(c)

conditions to which, because of the previous operation of section 61G of the Act, a person is treated as being subject.

(4)

In this subpart, unless the context otherwise requires,—

A means a person A in section 61G(1)(a) of the Act

B means the person who acquires the relevant property as described in subclause (1)

continuing condition has the meaning given to it by regulation 66(2)

listed exemptions means the exemptions listed, for the purpose of section 61G of the Act, in subclause (2)

relevant property means the property acquired by B as described in subclause (1).

66 B treated as subject to existing conditions that are continuing conditions

(1)

In addition to the conditions (if any) of the listed exemption relied on by B, B is treated under section 61G of the Act as being subject to all existing conditions that apply in connection with the relevant property (if any) that are continuing conditions.

Example (continued)

The previous trustees (A) are the consent holders in relation to the trust property that is acquired by B1 (the new trustees), without consent, in reliance on the exemption in regulation 40(1)(a) (a listed exemption).

So B1 is treated as subject to all conditions of A’s consent that are continuing conditions.

Example (continued)

The trustees change again. The new trustees (B2) acquire the trust property from B1 in reliance on the exemption in regulation 40(1)(a).

B1,—

  • because of the previous operation of section 61G of the Act, is treated as subject to all conditions of A’s consent that are continuing conditions; and

  • relied on an exemption in these regulations to acquire the trust property (the exemption in regulation 40(1)(a)).

So B2 becomes subject to all conditions of A’s consent, and all conditions of the exemption that B1 relied on (if any), that are continuing conditions.

(2)

For the purposes of this subpart, every existing condition is a continuing condition, except to the extent that it has been met at the date that B acquires the relevant property and is not ongoing.

Example (continued)

The conditions of A’s consent include—

ConditionDetailsRequired date
1A must acquire the property by 1 January 20181 January 2018
2A must tell the regulator in writing that A has acquired the propertyWithin 2 months of settlement
3The individuals who control the trust must continue to meet certain good character and Immigration Act 2009 criteriaOngoing
4A must allow the regulator to visit the property that is land to monitor compliance with conditionsOngoing
5A must tell the regulator if A disposes of the property or any part of it.Within 20 working days of disposal

Condition 1 is not a continuing condition.

Condition 2 is not a continuing condition if the required date is in the past and A met the condition.

Conditions 3 to 5 are continuing conditions.

(3)

Subclause (1) specifies the class of conditions to which section 61G(3) of the Act applies.

(4)

See also section 61G(4) of the Act for when B is treated as a consent holder in respect of continuing conditions.

67 A ceases to be subject to existing conditions to extent B becomes subject

(1)

A ceases to be subject to existing conditions to the extent that (including on and from the date that) B is treated as subject to the conditions.

(2)

However, subclause (1) does not release A from liability for performance of, or any breach of, a condition before the date that B becomes treated as subject to the condition.

New example

The trustee (A) of a trust that is an overseas person transfers to an overseas person who is a beneficiary (B) interests in securities under that trust. The acquisition of the interests in securities was previously consented to under the Act and the transfer is not contrary to any conditions of A’s consent. B relies on the exemption in regulation 40(1)(c) to acquire the interests in securities.

A’s consent also relates to other interests in securities.

A’s consent relates to:B acquires from A:B treated as subject to:A is subject to:
100 shares in Company Ltd50 shares in Company Ltd, on 1 January 2019Conditions of A’s consent that apply in connection with the 50 shares and are continuing conditions, on and from 1 January 2019•

All conditions of A’s consent up to 1 January 2019

•

On and from 1 January 2019, all conditions of A’s consent to the extent that B is not treated as subject to those conditions

Subpart 2—Notices

Notices

68 Relevant Minister or Ministers or regulator may give notice of exercise of powers

(1)

The relevant Minister or Ministers or the regulator may give notice of the exercise of any powers under the Act or these regulations.

(2)

A notice under subclause (1) may be given—

(a)

in the Gazette:

(b)

to a particular person.

(3)

Every person is bound by a notice given under subclause (1).

(4)

A notice under subclause (1) may at any time be amended or revoked.

Service of notices

69 Service of notices

See sections 54 to 55A of the Act.

Part 4 Exemptions in respect of overseas investments in sensitive land to implement obligations under international agreements

Subpart 1—Introduction and definitions

70 Introduction to this Part

(1)

This Part, which is made under section 61(1)(i) of the Act, is for the purpose of implementing obligations that have entered into force for New Zealand under certain international agreements to which New Zealand is a party and that relate to overseas investments in sensitive land.

(2)

Subpart 2 relates to the Protocol on Investment to the New Zealand–Australia Closer Economic Relations Trade Agreement done at Wellington on 16 February 2011 (the Australian CER Investment Protocol).

(3)

Subpart 3 relates to the Agreement between New Zealand and Singapore on a Closer Economic Partnership done at Singapore on 14 November 2000 (the Singapore CEP).

71 Definitions

(1)

In this Part, unless the context otherwise requires,—

Australian CER Investment Protocol is to be read in accordance with regulation 70(2)

Australian individual is to be read in accordance with regulation 74

Australian investor is to be read in accordance with regulation 78

enterprise means any of the following, whether acting for profit or not:

(a)

a body corporate:

(b)

a trust (including a unit trust):

(c)

a partnership:

(d)

a sole proprietorship:

(e)

a joint venture:

(f)

any other unincorporated body of persons

non-NZ enterprise means an enterprise that is neither constituted nor organised under the law of New Zealand

NZ branch means a branch of an enterprise if the branch is located in New Zealand

NZ individual means—

(a)

a New Zealand citizen; or

(b)

a natural person who is ordinarily resident in New Zealand

ordinarily resident in New Zealand has the relevant meaning in section 6(2)(a) or (b) of the Act, as the case requires, except that the requirement to hold a residence class visa granted under the Immigration Act 2009 does not apply

ownership and control test is to be read in accordance with regulation 72

relevant investor, in relation to a transaction, means—

(a)

an overseas person if, as a result of the transaction and either alone or with any other person, the overseas person—

(i)

acquires an interest in land referred to in section 12(a) of the Act; or

(ii)

acquires rights or interests in securities of a person (A) if A owns or controls (directly or indirectly) an interest in land described in section 12(a) of the Act; or

(b)

an associate of an overseas person if, as a result of the transaction and either alone or with any other person, the associate—

(i)

acquires an interest in land referred to in section 12(a) of the Act; or

(ii)

acquires rights or interests in securities of a person (A) if A owns or controls (directly or indirectly) an interest in land described in section 12(a) of the Act

Singapore CEP is to be read in accordance with regulation 70(3)

Singaporean individual is to be read in accordance with regulation 80

Singaporean investor is to be read in accordance with regulation 83.

(2)

See regulation 74 for further definitions that apply in subpart 2.

(3)

See regulation 80 for further definitions that apply in subpart 3.

72 Definition of ownership and control test

(1)

For the purposes of this Part, an enterprise meets the ownership and control test (subject to subclauses (3) to (5)) if—

(a)

the enterprise is a body corporate (S) and a qualifying person or persons have, directly or indirectly,—

(i)

a beneficial entitlement to, or a beneficial interest in, more than 75% of S’s securities; and

(ii)

the power to control the composition of more than 75% of S’s governing body; and

(iii)

the right to exercise, or to control the exercise of, more than 75% of the voting power at a meeting of S; or

(b)

the enterprise is a trust (T) that is not a unit trust and—

(i)

more than 75% of T’s governing body are qualifying persons; and

(ii)

a qualifying person or persons have, directly or indirectly, a beneficial entitlement to, or a beneficial interest in, more than 75% of T’s trust property; and

(iii)

more than 75% of the persons having, directly or indirectly, the right to amend, or to control the amendment of, T’s trust deed are qualifying persons; and

(iv)

more than 75% of the persons having, directly or indirectly, the right to control the composition of T’s governing body are qualifying persons; or

(c)

the enterprise is a unit trust (U) and—

(i)

the manager or trustee (or both) is a qualifying person; and

(ii)

a qualifying person or persons have, directly or indirectly, a beneficial entitlement to, or a beneficial interest in, more than 75% of U’s trust property; or

(d)

the enterprise is a partnership, an unincorporated joint venture, or any other unincorporated body of persons (V) that is not a trust and—

(i)

more than 75% of V’s partners or members are qualifying persons; and

(ii)

a qualifying person or persons have, directly or indirectly,—

(A)

a beneficial entitlement to, or a beneficial interest in, more than 75% of V’s profits or assets (including on V’s winding up); and

(B)

the right to exercise, or to control the exercise of, more than 75% of the voting power at a meeting of V.

(2)

In subclause (1), qualifying person means—

(a)

an NZ individual or an Australian individual, if this regulation is being applied for the purposes of subpart 2; or

(b)

an NZ individual or a Singaporean individual, if this regulation is being applied for the purposes of subpart 3.

(3)

If this regulation is being applied for the purpose of subpart 2, an enterprise cannot meet the ownership and control test in relation to a transaction if, in relation to the transaction, the enterprise—

(a)

is an agent, a trustee, or a representative of an overseas person who is not an Australian investor; or

(b)

acts in any way on behalf of an overseas person who is not an Australian investor; or

(c)

is subject to the direction, control, or influence of an overseas person who is not an Australian investor.

Example

A company is constituted under Australian law. It does not have substantive business operations in Australia so, in order to be an Australian investor under regulation 78, it must meet the ownership and control test.

It is entering into a transaction to acquire the freehold estate in residential (but not otherwise sensitive) land.

Only New Zealand individuals and Australian individuals are shareholders of the company, and they have all the beneficial entitlement to and interest in the company’s securities, the power to control the composition of all of the company’s governing body, and the right to exercise all of the voting power at a meeting of the company.

However, in relation to the transaction, the company is acquiring the land as trustee for a overseas person who is not an Australian investor. The ownership and control test is not met in relation to the transaction and the company cannot rely on the exemption in regulation 75.

In addition, the beneficiary would also be a relevant investor under paragraph (b) of the definition of relevant investor in regulation 71, and is an overseas person who is not an Australian investor. That is another reason why the exemption in regulation 75 could not be relied upon.

(4)

If this regulation is being applied for the purpose of subpart 3, an enterprise cannot meet the ownership and control test in relation to a transaction if, in relation to the transaction, the enterprise—

(a)

is an agent, a trustee, or a representative of an overseas person who is not a Singaporean investor; or

(b)

acts in any way on behalf of an overseas person who is not a Singaporean investor; or

(c)

is subject to the direction, control, or influence of an overseas person who is not a Singaporean investor.

(5)

In subclauses (3) and (4), references to the enterprise include, if the enterprise is a trust, the trustees of the trust.

Subpart 2—Implementation of Australian CER Investment Protocol

Introduction and definitions

73 Introduction to subpart 2

The purpose of this subpart is to implement obligations in the Australian CER Investment Protocol in relation to overseas investments in sensitive land where—

(a)

the relevant land is residential (but not otherwise sensitive) land; or

(b)

the interest in land described in section 12(a) of the Act is a regulated profit à prendre.

74 Definitions for subpart 2

In this subpart, unless the context otherwise requires,—

Australia does not include its external territories

Australian branch means a branch of an enterprise if the branch—

(a)

is located in Australia; and

(b)

is carrying out business activities in Australia

Australian enterprise means an enterprise that is constituted or organised under Australian law

Australian Government includes—

(a)

the Crown in right of Australia; and

(b)

an Australian State or territory; and

(c)

Australian regional or local government

Australian individual means a natural person who is—

(a)

an Australian citizen under Australian law; or

(b)

a permanent resident of Australia under Australian law and who is ordinarily resident in New Zealand

Australian investor is to be read in accordance with regulation 78.

Exemptions for Australian investors

75 Exemption for Australian investors in respect of residential (but not otherwise sensitive) land

A transaction does not require consent for the purposes of section 10(1)(a) of the Act to the extent that—

(a)

it will result in an overseas investment in sensitive land where the relevant land is residential (but not otherwise sensitive) land; and

(b)

every relevant investor either is an Australian investor or is not an overseas person.

Example 1

A New Zealand citizen acquires the freehold estate in residential (but not otherwise sensitive) land as the agent for an Australian citizen, such that the New Zealand citizen is a relevant investor under paragraph (b) of the definition of relevant investor in regulation 71, and the Australian citizen is a relevant investor under paragraph (a) of that definition. There are no other associates.

The exemption can be relied upon because the New Zealand citizen is not an overseas person (see section 7(2)(a) of the Act) and the Australian citizen is an Australian investor.

Example 2

A trust is organised under Australian law. The trustees, who are all Australian individuals, are entering into a transaction to acquire the freehold estate in residential (but not otherwise sensitive) land. The trustees will hold the land on trust for an overseas person who is not an Australian investor. That beneficiary’s equitable interest in the land is enough to make that beneficiary a relevant investor under paragraph (a) of the definition of relevant investor in regulation 71. As not all of the relevant investors are Australian investors, the exemption cannot be relied upon.

This is the case regardless of whether (and why) the trust is an Australian investor under regulation 78 (ie, regardless of whether it has substantive business operations in Australia or meets the ownership and control test under regulation 72).

76 Exemption for Australian investors in respect of regulated profit à prendre

A transaction does not require consent for the purposes of section 10(1)(a) of the Act to the extent that—

(a)

it will result in an overseas investment in sensitive land where the interest in land described in section 12(a) of the Act is a regulated profit à prendre; and

(b)

every relevant investor either is an Australian investor or is not an overseas person.

77 Exemption for Australian investors in respect of relationship property

(1)

A transaction does not require consent for the purposes of section 10(1)(a) of the Act to the extent that—

(a)

the transaction will result in an overseas investment in sensitive land where the relevant land is residential (but not otherwise sensitive) land or where the interest in land described in section 12(a) of the Act is a regulated profit à prendre or both (the exempted land); and

(b)

the transaction will result in either of the following:

(i)

the acquisition by an overseas person of exempted land if—

(A)

the exempted land is, or will be as a result of the acquisition, relationship property of the overseas person and the overseas person’s spouse or partner; and

(B)

the overseas person’s spouse or partner is an Australian individual:

(ii)

the acquisition by a company incorporated in New Zealand (A Co) of exempted land if—

(A)

all of the securities in A Co are wholly owned as relationship property by a person (B) and B’s spouse or partner; and

(B)

B is an Australian individual.

(2)

In this regulation,—

relationship property means relationship property as defined in section 8 of the Property (Relationships) Act 1976

spouse or partner means spouse, civil union partner, or de facto partner.

78 Definition of Australian investor

In this subpart, Australian investor—

(a)

means—

(i)

an Australian individual; or

(ii)

the Australian Government; or

(iii)

an Australian enterprise, if the enterprise—

(A)

carries on substantive business operations in Australia; or

(B)

meets the ownership and control test; or

(iv)

a non-NZ enterprise that is acting through an Australian branch of the enterprise if—

(A)

the branch carries on substantive business operations in Australia; or

(B)

the enterprise meets the ownership and control test; but

(b)

does not include an enterprise that is acting through an NZ branch of the enterprise.

Subpart 3—Implementation of Singapore CEP

Introduction and definitions

79 Introduction to subpart 3

The purpose of this subpart is to implement obligations in the Singapore CEP in relation to overseas investments in sensitive land where the relevant land is residential (but not otherwise sensitive) land.

80 Definitions for subpart 3

In this subpart, unless the context otherwise requires,—

Singaporean branch means a branch of an enterprise if the branch—

(a)

is located in Singapore; and

(b)

is carrying out business activities in Singapore

Singaporean enterprise means an enterprise that is constituted or organised under Singaporean law

Singaporean individual means a natural person who is—

(a)

a national of Singapore under Singaporean law; or

(b)

a permanent resident of Singapore under Singaporean law and who is ordinarily resident in New Zealand

Singaporean investor is to be read in accordance with regulation 83.

Exemptions for Singaporean investors

81 Exemption for Singaporean investors in respect of residential (but not otherwise sensitive) land

A transaction does not require consent for the purposes of section 10(1)(a) of the Act to the extent that—

(a)

the transaction will result in an overseas investment in sensitive land where the relevant land is residential (but not otherwise sensitive) land; and

(b)

every relevant investor either is a Singaporean investor or is not an overseas person.

82 Exemption for Singaporean investors in respect of relationship property

(1)

A transaction does not require consent for the purposes of section 10(1)(a) of the Act to the extent that—

(a)

the transaction will result in an overseas investment in sensitive land where the relevant land is residential (but not otherwise sensitive) land (the exempted land); and

(b)

the transaction will result in either of the following:

(i)

the acquisition by an overseas person of exempted land if—

(A)

the exempted land is, or will be as a result of the acquisition, relationship property of the overseas person and the overseas person’s spouse or partner; and

(B)

the overseas person’s spouse or partner is a Singaporean individual:

(ii)

the acquisition by a company incorporated in New Zealand (A Co) of exempted land if—

(A)

all of the securities in A Co are wholly owned as relationship property by a person (B) and B’s spouse or partner; and

(B)

B is a Singaporean individual.

(2)

In this regulation,—

relationship property means relationship property as defined in section 8 of the Property (Relationships) Act 1976

spouse or partner means spouse, civil union partner, or de facto partner.

83 Definition of Singaporean investor

In this subpart, Singaporean investor—

(a)

means—

(i)

a Singaporean individual; or

(ii)

a Singaporean enterprise, if the enterprise—

(A)

carries on substantive business operations in Singapore; or

(B)

meets the ownership and control test; or

(iii)

a non-NZ enterprise that is acting through a Singaporean branch of the enterprise if—

(A)

the branch carries on substantive business operations in Singapore; or

(B)

the enterprise meets the ownership and control test; but

(b)

does not include an enterprise that is acting through an NZ branch of the enterprise.