• Rachel Dunne is a partner at law firm Chapman Tripp
Investment by foreigners in sensitive land or business assets worth $100 million or more requires government consent under the Overseas Investment Act (OIO). The law's purpose is to "acknowledge that it is a privilege for overseas persons to own or control sensitive New Zealand assets". So far, so good.
While many New Zealanders probably agree, few would realise that some well-known New Zealand listed companies, such as Fletcher Building, are classed as foreign and made subject to the OIO regime.
They find themselves in this strange position not by virtue of having one or more significant foreign shareholders with actual influence over strategy or operations, but because their shareholding base includes many unrelated foreign shareholders who individually hold truly insignificant amounts but together account for 25 per cent or more of their ownership.
This is a peculiar outcome for our capital markets and our foreign investment regime. New Zealand companies are forced to obtain OIO consent for actions that are part of their everyday operations (like renewing or entering into leases that may include sensitive land) or for acquisitions that will drive growth.