An overseas investor has offered to buy a stake in our New Zealand company. I do not know whether there are restrictions on foreign ownership or approvals needed. What should we be thinking about before we agree?
Most business investments by overseas persons do not need approval, but the Overseas Investment Act 2005 requires consent for certain transactions, including acquiring significant business assets above specified value thresholds, sensitive land such as farmland or land near the coast, and in some cases investments in strategically important businesses. Thresholds and requirements differ by investor nationality, and free trade agreements can alter them. Also check tax consequences, exchange control is not an issue in New Zealand, and consider how to document the investment through a subscription agreement and a shareholders' agreement. Do your own due diligence on the investor and make sure the company remains compliant, including any requirement to have a New Zealand resident director. Get advice on the thresholds before signing.
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