February 20 2017
Five new class exemptions recently announced by the Overseas Investment Office are changing the way it goes about its business. The OIO is also looking at a few other potential exemptions, all of which – with the right safeguards – should be welcome news. Here are the changes that have been made.
The new class exemptions came into force on 1 February 2017 to cover:
- Lease renewals
- Situations where land has previously been the subject of an OIO consent, remains in overseas ownership, and continues to be used for the same activity
- Transactions due to the Public Works Act 1981
- Situations where a custodian is investing on behalf of another person
- Situations where a company is considered an overseas person only because an overseas custodian holds rights or interests in the company’s shares
The changes made to the consent application process are all aimed at reducing the overall time it takes to deal with an application, without compromising the quality of decision-making. These are the key changes:
- The OIO is promoting pre-application meetings for early discussion of high level matters.
- They are finalising new application templates which should become available in February.
- Senior staff are triaging applications with more of a risk-based approach to the assessment of applications that come through the OIO’s doors. Complex and higher risk applications may take longer; more straightforward or lower risk applications should be turned around faster.
Overseas investors should be aware that the OIO is stepping up its surveillance and investigation function. This will include looking into situations where commitments have been made but not delivered on.
There are other changes happening in the background. The OIO is also looking at changing some of the existing class exemptions and adding some potential new exemptions. Some possibilities include:
- Greater flexibility for overseas investors to increase their shareholding in a company without needing consent
- Exempting certain sale and leaseback transactions from the need to get consent
- Exempting certain transactions where the only sensitive land in question is common property, such as hotel or resort-type developments
There is a good case for these exemptions and we hope to hear more from the OIO soon.