Overseas Investment Amendment Act – profits à prendre and impacts for the horticulture sector
On Wednesday last week (22 August 2018), the Overseas Investment Amendment Act 2018 (Amendment Act) became law. The new laws will come into force on or before 22 October 2018.
The Amendment Act brings “residential land” within the Overseas Investment Act and a general overview of the new residential land provisions is contained in our separate update: New OIO laws bring changes for residential land, forestry and horticulture.
However, the Amendment Act also brings in changes for the forestry and horticulture sectors, and enhances the enforcement and information gathering powers of the Overseas Investment Office (OIO).
Currently, an overseas person does not need to obtain OIO consent to acquire a profit à prendre – generally described as a right to enter onto another person’s land and to take some natural resource, such a mineral deposits, timber, crops or pasture.
This exclusion has meant that forestry rights have not required OIO consent, as they are defined as profits à prendre under the Forestry Rights Registration Act 1993.
The Amendment Act brings forestry rights into the OIO regime by removing the exclusion for profits à prendre generally. This means that the acquisition of profits à prendre in other sectors, such as horticulture, will also be captured and require OIO consent if the term of the profit à prendre exceeds 3 years.
While the inclusion of forestry rights in the OIO regime is to some extent offset by the introduction of new streamlined tests for forestry investments generally, these are not available for other profits à prendre.
The area threshold for other profits à prendre is also much lower than that for forestry rights – consent for all other profits à prendre will be required if the area of all adjoining profits à prendre held by the investor (and their related parties) is 5 hectares or more.
Profits à prendre already held when the new rules come into force will be included in this calculation, and the calculation does not reset to zero every 12 months (as it does for forestry rights).
The new standing consent regime introduced by the Amendment Act is not currently available for investments in profits à prendre other than forestry rights.
For further information about please contact a member of our overseas investment team.
Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.