Explanatory note
This note is not part of the regulations, but is intended to indicate their general effect.
Overview of regulations
Introduction
These regulations are made under sections 61 and 61A of the Overseas Investment Act 2005 (the Act) and amend the Overseas Investment Regulations 2005 (the principal regulations).
Section 61A of the Act is inserted into the Act by section 69 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Amendment Act 2018 (the CPTPP Amendment Act). The CPTPP Amendment Act implements, for New Zealand, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership done at Santiago on 8 March 2018 (the CPTPP Agreement). The text of the CPTPP Agreement can be found at the Ministry of Foreign Affairs and Trade website, www.mfat.govt.nz/cptpp.
Section 13 of the Act (overseas investments in significant business assets) sets out monetary thresholds (ie, value thresholds) for the purpose of determining whether overseas investments in business assets require consent under the Act. These regulations provide for alternative monetary thresholds for the purpose of implementing New Zealand’s obligations under the CPTPP Agreement and the following other international agreements:
Commencement and application
These regulations come into force on 30 December 2018. This is the same date as the date on which the CPTPP Agreement enters into force for New Zealand.
The amendments to the principal regulations made by these regulations apply only to the acquisition of rights or interests in securities or of other property, or the establishment of any business, after the commencement of these regulations (see clause 11 of Schedule 1AA of the Act and new clause 5 of Schedule 1AA of the principal regulations inserted by regulation 6).
Amendments to principal regulations
Regulation 5 is made under section 61A of the Act. It inserts new Part 5 into the principal regulations. New Part 5 is discussed in more detail in the notes below.
Regulations 4 and 7 are made under section 61 of the Act and revoke regulation 36A and Schedule 5 of the principal regulations. The revoked provisions implemented the Australian CER Investment Protocol and are superseded by new subpart 3 of new Part 5 (see notes below).
New Part 5 of principal regulations
New subpart 1—Introduction and definitions
New regulation 84 is an introductory provision.
New regulations 85 to 87 contain definitions that apply for the purposes of new Part 5.
New subpart 2—Implementation of CPTPP Agreement, Korea FTA, ANZTEC, Hong Kong CEP, China FTA, and P4 Agreement
Under the CPTPP Agreement, New Zealand is obliged to increase the monetary thresholds in section 13 of the Act from $100 million to $200 million for investors from other parties to the CPTPP Agreement. This obligation on New Zealand under the CPTPP Agreement also triggers “most favoured nation”
obligations that New Zealand has under the Korea FTA, ANZTEC, the Hong Kong CEP, the China FTA, and the P4 Agreement. These “most favoured nation”
obligations require New Zealand to treat investors from the other parties to those agreements in the same way as, or in a similar way to, investors from other parties to the CPTPP Agreement. The purpose of new subpart 2 is to implement New Zealand’s obligation under the CPTPP Agreement in relation to section 13 of the Act and New Zealand’s “most favoured nation”
obligations as triggered under the other agreements.
New subpart 2 is structured according to the “types”
of investors to whom New Zealand is obliged to apply the $200 million alternative monetary threshold. Broadly speaking, these “types”
of investors are as follows:
type 1 investors: non-government investors from other parties to the CPTPP Agreement, Chinese Taipei, or the Republic of Korea:
type 2 investors: non-government investors that are service suppliers investing in a commercial presence in New Zealand and that are from Hong Kong or from any of the other parties to the CPTPP Agreement, Chinese Taipei, the Republic of Korea, Brunei Darussalam, or Chile:
type 3 investors: non-government investors that are service suppliers investing in a commercial presence in New Zealand in a sector listed in Annex 9 of the China FTA and that are from the People’s Republic of China or from any of the other parties to the CPTPP Agreement, Chinese Taipei, the Republic of Korea, Hong Kong, Brunei Darussalam, or Chile:
type 4 investors: non-government investors that are not service suppliers and that are from the People’s Republic of China or from any of the other parties to the CPTPP Agreement, Chinese Taipei, or the Republic of Korea.
New regulation 88 is an introductory provision.
New regulation 89 relates to type 1 investors. If every relevant investor (as defined in new regulation 85(1)) in relation to a transaction is a type 1 investor (as defined in new regulation 90), the alternative monetary threshold of $200 million applies for the transaction, subject to the additional rule in new regulation 89(3) that applies for the purposes of section 13(1)(a)(ii) of the Act.
New regulation 90 defines type 1 investor. The definition needs to be read with other relevant definitions in new subpart 1.
New regulation 91 relates to type 2 investors. If every relevant investor (as defined in new regulation 85(1)) in relation to a transaction is a type 2 investor (as defined in new regulation 92), the alternative monetary threshold of $200 million applies for the transaction, subject to the additional rule in new regulation 91(3) that applies for the purposes of section 13(1)(a)(ii) of the Act.
New regulation 92 defines type 2 investor. The definition needs to be read with other relevant definitions in new subpart 1.
New regulation 93 relates to type 3 investors. If every relevant investor (as defined in new regulation 85(1)) in relation to a transaction is a type 3 investor (as defined in new regulation 94), the alternative monetary threshold of $200 million applies for the transaction, subject to the additional rule in new regulation 93(3) that applies for the purposes of section 13(1)(a)(ii) of the Act.
New regulation 94 defines type 3 investor. The definition needs to be read with other relevant definitions in new subpart 1.
New regulation 95 relates to type 4 investors. If every relevant investor (as defined in new regulation 85(1)) in relation to a transaction is a type 4 investor (as defined in new regulation 96), the alternative monetary threshold of $200 million applies for the transaction, subject to the additional rule in new regulation 95(3) that applies for the purposes of section 13(1)(a)(ii) of the Act.
New regulation 96 defines type 4 investor. The definition needs to be read with other relevant definitions in new subpart 1.
New subpart 3—Implementation of Australian CER Investment Protocol
New subpart 3 reflects the provisions that were contained in Schedule 5 of the principal regulations that implemented the Australian CER Investment Protocol. As mentioned above, Schedule 5 is revoked.
Issued under the authority of the Legislation Act 2012.
Date of notification in Gazette: 15 November 2018.
These regulations are administered by the Treasury.