Change is on the way – Reform of the foreign investment regime
03 September 2025
The Government’s Overseas Investment (National Interest Test and Other Matters) Amendment Bill (the Bill) proposes significant reform to the Overseas Investment Act 2005 (the Act) and is part of the Government’s broader economic strategy to promote global trade and investment.
The Overseas Investment Amendment Bill aims to reduce compliance costs and to streamline decision-making processes, while ensuring that the government retains discretion and has the tools necessary to safeguard New Zealand’s national interest.
The scope of investments requiring consent remains largely unamended, however the Bill proposes to target screening towards more sensitive transactions, while applications for consent considered low risk are to be processed quickly via a new national interest test.
Summary of key changes to the Overseas Investment (National Interest Test and Other Matters) Amendment Bill
- Amendment to the purpose statement in the Act to expressly recognise the role of overseas investment in economic opportunity while retaining the core principle that is a privilege to invest in sensitive New Zealand assets.
- Consolidation of the current national interest, benefit to New Zealand and investor tests into a single, three stage national interest test, to be applied to all asset classes other than farmland, residential land and fishing quota, which will continue to be assessed under the existing pathways. This is set out in further detail below.
- Faster screening for applications (other than for farmland, residential land and fishing quota) which are considered low risk. The proposed amendments require the Overseas Investment Office (the OIO) to grant consent within 15 working days unless there are reasonable grounds to consider that a risk to national interest exists, in which case a full national interest assessment is required.
- Providing that only the relevant Minister can decline an application for investment if the transaction is considered contrary to the national interest. The power to decline cannot be delegated to the OIO.
While the shift to a single national interest test is likely to result in more streamlined processing, the discretionary nature of the test may cause uncertainty for more sensitive or complex investments. There is also scope for political ambiguity as the significant Ministerial discretion will enable the government of the day to have the flexibility to determine investments which are considered to present a risk to New Zealand. This approach aligns with overseas jurisdictions such as Australia, where Ministers have broad power to scrutinise and determine applications on a case-by-case basis.
More detail on the national interest test
The consolidated national interest test (which will be applicable to asset classes other than farmland, residential land and fishing quota) introduces a three-stage process:
Stage 1: An initial national risk assessment is to be undertaken by the OIO to consider whether the transaction may pose a risk to New Zealand’s national interest. This must be completed within 15 working days. If no concerns are identified, consent will be granted, with minimal or no conditions. Low risk investments are intended to be identified and authorised at this stage.
Stage 2: If concerns are identified at stage 1, a full national interest assessment will be carried out by the OIO, which will require mandatory consideration of:
- The new purpose statement;
- Risks to national security and public order;
- Whether risks can be managed under other regulatory regimes; and
- Any relevant directions from the Minister (which will be set out in a new Ministerial Directive letter to be published when the Bill is passed).
In addition, the OIO may consider non-mandatory factors such as the investor’s character and capability, the mitigation of risk through conditions on the investment, and whether the benefits of a transaction could offset national interest risks. If the OIO has reasonable grounds to consider that the investment may be contrary to New Zealand’s national interest, the application will proceed to stage 3.
Stage 3: The Minister (and not the OIO) will ultimately make a decision whether or not to decline consent to an application if it is determined to be contrary to New Zealand’s national interest.
The Bill does not currently include a statutory assessment timeframe for Stage 2 or Stage 3, and it is expected that will be set out in update regulations.
Other additional proposed changes
- Creation of a new repeat investor pathway to apply when an investor’s circumstances have not materially changed.
- Removal of the current consent requirement for investors seeking to increase their ownership or control interest from 75% to 100%, on the basis that there is no effective change in control (however this excludes investment in a strategically important business).
- The Minister will have the ability to grant retrospective exemptions to address accidental breaches of the Act, and to take proportionate compliance action.
- Increased delegation to the OIO – the majority of decision-making powers are automatically delegated to the OIO, with limited powers specifically reserved to the Minister.
- Creation of new regulatory powers to identify new types of strategically important business and to require mandatory notification of overseas investment in such businesses, replacing the current approach which is largely voluntary.
- There are also a number of targeted technical changes intended to improve the efficiency of the regime, including clarifications to support a more consistent interpretation and streamlined administration of the Act.
Investment in sensitive land
The Bill does not materially alter the existing tests which apply to farmland and residential land, however the Bill does propose to remove the special forestry test provisions and corresponding standing consent pathways. Investment in forestry will be assessed under the new consolidated national interest risk assessment process, as set out above.
Conversions of farmland to forestry will remain subject to the existing “farm land benefit” test. There are no proposed changes to the current advertising rules which apply before an overseas purchaser can enter a contract to buy farmland, which was signalled as a possibility when the amendments to the OIO were first proposed earlier in 2025.
Next Steps
In practice, we anticipate that the overall effectiveness of the proposed reforms will be largely determined by ancillary documents, such as supporting regulations, Ministerial directives and guidance provided by the OIO itself. We also note that the current application process is administratively taxing, with extensive supporting documentation required to be submitted with applications. It is not clear whether the current information requirements will remain or also be streamlined or reduced.
The Bill is currently before the Finance and Expenditure Select Committee, and public submissions have now closed. The Bill is expected to be passed into law by the end of 2025, with the new regime to be implemented by early 2026.
