Government moves to tighten foreign ownership rules amid Covid-19 pandemic

The Government is speeding up changes to foreign investor rules as the economy recovers from the fallout of the global Covid-19 pandemic.

Source: 1 NEWS

“We need to minimise the possibility that cornerstone businesses in our productive economy are sold in a way contrary to our national interest while the pandemic is causing the value of many businesses to fall,” Associate Finance Minister David Parker said.

The changes will fast-forward the introduction of a national interest test that was proposed last November.

The test will let ministers consider potential risks when deciding to grant consent to overseas investments. If it is found to be against the national interest of New Zealand, consent can be declined or conditions imposed.

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Q+A with Jack Tame look at the increase in prosecutions by the Overseas Investment Office. Source: Q+A

In addition, the changes announced today include the temporary application of that test to any foreign investments, regardless of dollar value, that result in more than 25 per cent ownership.

“It is important to have new rules that protect Kiwi businesses from being snapped up and opportunities potentially lost as they recover from the damage caused by the virus,” Mr Parker said.

The temporary power will be reviewed every 90 days.

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It’s part of the second wave of changes to the Overseas Investment Act. Source: 1 NEWS

Once the temporary measures end, a national interest test will remain for business transactions at a minimum threshold of $100 million, or higher if set by the terms of an international trade agreement, as well as investments in sensitive land and fishing quota.

The move comes as Australia has reduced its foreign investment threshold for screening to $0 and Canada and the EU have also recently strengthened their regimes.

“The changes we are introducing do not mean New Zealand is closing the door on foreign investment, only that the Government should have the ability to ensure that such investments are in line with our national interest and that we are well placed to grow once the Covid-19 crisis passes,” Mr Parker said.

“Like other countries, we must act quickly to protect our essential interests.”

The land change is intended to be in place by mid-June.