The Investment Protocol to the New Zealand–Australia Closer Economic Relations Agreement will come into force on 1 March 2013, increasing substantially the thresholds for which non-government trans-Tasman investments will require regulatory approval.
The new Australian in-bound threshold will apply only to investments in business assets worth more than NZ$477 million. If the asset includes sensitive land and/or fishing quota, it will still come within the screening regime.
In general the exemption will not apply to Australians acting in any way on behalf of or under the direction, control or influence of a non-Australian investor. However, an Australian subsidiary or branch of an overseas company will qualify provided:
- it carries on “substantive business operations in Australia”, or
- is more than 75% owned or controlled, directly or indirectly, by Australian or New Zealand individuals.
The new in-bound threshold applies only to Australian non-government investors. The threshold will remain at NZ$100 million for Australian Government investments, at least for the first year.
There is provision for both thresholds to be adjusted annually to reflect movements in GDP in each country – these changes to be notified in the Gazette.
The Protocol will not affect the New Zealand Government’s ability to give preference to New Zealand investors in the planned partial asset sales programme.
The agreement was signed in February 2011 but has been awaiting the necessary regulations before coming into effect. The 1 March date was agreed by Prime Ministers John Key and Julia Gillard at the annual Australia-New Zealand Leaders’ meeting in Queenstown at the weekend.