4 Apr 2016

OIO law interpretation 'baffling'

11:28 am on 4 April 2016

A change to the way the Overseas Investment Office (OIO) is defining overseas investors could force increasing numbers of New Zealand-owned companies to apply for clearance to buy sensitive land or restricted assets.

Workers in office.

Photo: 123rf

Commercial law firm Russell McVeagh has highlighted a change of policy it said is delaying clearance of overseas investment deals and threatens to complicate commercial life for many local businesses.

Under the law, any company which has 25 percent or more of its shares held by foreign investors must seek approval to buy certain classes of land and other assets, including New Zealand companies.

However Russell McVeagh says the OIO has in the past couple of weeks started to classify shares owned by New Zealanders but held in a foreign owned nominee or trustee companies as foreign shares.

Joe Windmeyer, a partner in the law firm, said the new interpretation was nothing short of "baffling" and would tip many companies over the 25 percent threshold.

"Why they've done it, we don't know. Maybe a change of people, a change of views, we don't know."

He said the OIO had been granting exemptions to some trustee or nominee companies but the office had not publicised which were the exempted companies.

Mr Windmeyer said the OIO would have to rethink its approach.

"I think the OIO is probably going to get a lot of pressure to give a class exemption to take away this issue and take it back to the previous interpretation."

The Overseas Investment Office declined immediate reply, but said it would answer the concerns early this week.

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