Can Overseas Investors Buy Businesses in New Zealand?

With its transparent regulatory framework and strong ties to global markets, New Zealand has the potential to present significant opportunities for overseas investors. However, in addition to the usual finance, tax and visa considerations, there are important legal and regulatory considerations that foreign investors must be aware of before proceeding with the purchase of a business in New Zealand.

Current Foreign Investment Rules in New Zealand

Foreign investors can generally buy and operate businesses in New Zealand, but certain transactions may require approval under the Overseas Investment Act 2005 (OIA). The OIA is designed to regulate foreign investments that involve sensitive land, significant business assets, or fishing quota.

The key considerations for foreign investors are:

1. Significant Business Assets Test – If the business being acquired has assets worth more than NZ$100 million (or a higher threshold for certain trade partners), the transaction must be approved by the Overseas Investment Office (OIO).

2. Sensitive Land – If the business owns land deemed “sensitive” under the OIA (such as residential land, farmland, foreshore, or conservation land), OIO consent is required.

3. Fishing Quota – Foreign investment in commercial fishing quota is tightly regulated and requires specific approval.

Indicative Reforms to the Overseas Investment Act

The New Zealand government has recently signaled its intent to reduce the barriers to overseas investment. On 23 February 2025, Associate Finance Minister David Seymour announced significant reforms to the Overseas Investment Act (OIA) aimed at streamlining the investment process and attracting more foreign capital. These reforms are intended to enhance New Zealand's economic growth by making it more accessible to overseas investors.

Key aspects of the announced reforms include:

• Expedited Decision-Making: For investments not involving residential land, farmland, or fishing quotas, decisions will be made within 15 days, unless the application raises national interest concerns.

• Enhanced Autonomy for Land Information New Zealand (LINZ): LINZ will have increased authority to grant consents without requiring ministerial approval, thereby reducing bureaucratic delays

• Recognition of Economic Benefits: The reforms will place greater emphasis on the positive economic impacts that foreign investments can bring to New Zealand, acknowledging their role in boosting productivity and wages.

These changes are part of the government's broader strategy to address New Zealand's productivity challenges by attracting foreign investment.

Implications for Foreign Investors

For foreign investors, these reforms signal a more welcoming and efficient process for acquiring businesses in New Zealand. The expedited decision-making and reduced hurdles are likely to make New Zealand a more attractive destination for investment.

However, it's important to note that investments involving residential land, farmland, and fishing quotas will continue to face stricter scrutiny to protect national interests. Additionally, while the reforms aim to facilitate investment, foreign investors must still comply with existing regulations and ensure that their investments align with New Zealand's legal and economic frameworks.

Summary

Foreign investors can buy a business in New Zealand, but they must navigate regulatory requirements, visa considerations, and due diligence processes. For transactions involving significant business assets, sensitive land, or fishing quota, OIO approval may be required.

The recent statements by Associate Minister David Seymour marks a significant shift in New Zealand's approach to foreign investment. By streamlining processes and emphasising the economic benefits of overseas capital, the government aims to boost productivity and economic growth. Foreign investors looking to acquire businesses in New Zealand may find a more accommodating environment, though it's essential to remain mindful of the specific regulations that continue to apply to certain sensitive sectors.

If you are considering investing in a business in New Zealand, our experienced corporate and commercial law team can guide you through the legal requirements and help you structure your investment effectively.