The Overseas Investment Act regulates the ability for overseas persons to own or control New Zealand assets. The Act requires overseas persons investing or purchasing specific assets in New Zealand to meet certain criteria in order for consent to the transaction to be granted.

Proposed changes to the Act will likely impact Māori businesses and iwi involved in the forestry industry who are reliant on investment from overseas partners.

In particular, changes to the Act will require those overseas persons who wish to purchase or invest in forestry rights (including new plantations and existing plantations) to obtain consent from the Overseas Investment Office.

Consent will be required not only for overseas persons who purchase the land, but includes owning or investing in the product on the land, for example, growing trees and the cutting rights to those trees without conceding ownership of the underlying land.

The consent process does not apply to forestry interests which cover an area less than 1,000 hectares, or if the investment is for a term of less than three years (including any rights of renewal).

While the process for investing will be somewhat streamlined, the onus will be on the overseas person to show that the purchase or investment will have a substantial and identifiable benefit to New Zealand.

According to the Ministry of Foreign Affairs and Trade, Māori businesses account for 40% of the country’s forestry production and accordingly any changes will impact Māori land owners as well.

Māori land owners will need to watch this space and ensure that potential overseas partners are aware of, and can comply with, the proposed criteria … should they be enacted.

Peter Johnston

Partner

Wellington