Doing business in New Zealand - Grant Thornton

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Regulatory environment Restrictions on foreign ownership New Zealand encourages foreign investment; nevertheless, consent is required for certain categories of investment in New Zealand by overseas persons. This process is administered by the Overseas Investment Office (OIO) on behalf of the government. The general categories for which OIO consent is required are investment in: • ‘sensitive’ land • business assets worth more than $100 million • fishing quota. For these purposes, overseas persons comprise individuals who are not New Zealand citizens and are not ordinarily resident in New Zealand, and companies that are either incorporated outside New Zealand or have 25% or more foreign ownership. For more information visit: www.linz.govt.nz/overseas-investment Government approvals and registration Most businesses require no Government approval. Overseas companies carrying on business in New Zealand and large 1 New Zealand companies that have 25% or greater foreign ownership must register and file audited accounts with the Registrar of Companies. These financial statements are filed on public record and can be viewed at: www.business.govt.nz Competition rules The Commerce Commission is New Zealand’s primary competition enforcement and regulatory agency. It is an independent Crown entity established by the Commerce Act 1986 and its role is to monitor commercial activity in New Zealand in order to ensure a competitive commercial environment. The Commerce Act 1986 aims to promote competition in New Zealand markets. It prohibits conduct that restricts competition (restrictive trade practices) and the purchase of a business’s shares or assets if that purchase is likely to lead to a substantial lessening of competition in that market. Practices specifically prohibited include: • Arrangements having a purpose or likely effect of lessening market competition (including price fixing and resale price maintenance) • Taking advantage of a substantial degree of market power to restrict entry to that market, or eliminate or deter other market competitors The Act also provides for the imposition of control, including pricing control over goods and services supplied in non-competitive markets. Consumer protection The Fair Trading Act 1986 was developed with the Commerce Act to encourage competition and to protect consumers from misleading and deceptive conduct and unfair trading practices. The Act applies to all aspects of the promotion and sale of goods and services – from advertising and pricing to sales techniques and finance agreements. Other consumer protection legislation includes: • The Consumer Guarantees Act 1993 This Act sets out minimum guarantees that goods and services must meet when sold in trade. For goods, this includes guarantees as to title, quality and fitness for any particular purpose that the consumer communicates. For services, this includes guarantees as to the exercise of reasonable care and skill, fitness for the particular purpose of which the services are sought, and that services are provided within a reasonable time and at a reasonable price. • The Sale of Goods Act 1908 This Act governs rights, obligations and remedies of parties to contracts for the sale of goods and addresses a number of aspects of such contracts that may result in dispute, including the transfer of title and risk, and rights and remedies of the parties in the event of non-performance. Doing business in New Zealand 6
• The Credit Contracts and Consumer Finance Act 2003 This Act is intended to prevent oppressive lending arrangements and conduct by lenders and requires that lending terms and funding costs are adequately disclosed to borrowers. Import and export controls The importation and exportation of goods may be subject to prohibition and control. Generally, the importation or exportation of weapons, endangered species, live animals, insects, meat, plants vegetables and drugs is prohibited without authorisation and is subject to strict controls. Price controls The Commerce Commission can impose price controls on goods and services where there is a lack of market competition, there is scope for the exercise of substantial market power, and the benefits of price regulation will exceed the costs. Industries subject to specific regulation include electricity lines services, telecommunications, dairy, gas pipelines, airport services, and financial services. Use of land The use of land is closely regulated. The Resource Management Act 1991 governs the use of land, water, minerals, the coastline, air and other physical resources. A number of consents may be required before a particular project can proceed. Local authorities administer controls on development, generally through various regional and district plans. Exchange control There are no exchange controls for the transfer of funds into or out of New Zealand. However, cash of NZD$10,000 or the equivalent in foreign currency being brought into or taken out of New Zealand must be declared. Government incentives There are very few fiscal or financial incentives provided by the Government to assist the development of business. The Government is nonetheless keen to promote investment into New Zealand and the development and global expansion of New Zealand businesses, and assistance is available in various forms from a number of Government agencies, including: • The Science and Innovation Group within the Ministry of Business, Innovation and Employment administers a number of initiatives designed to drive the science and innovation sector. These include TechNZ investments, the Technology Development Grant and Technology Transfer Voucher, and PreSeed Funding. For more information visit: www.msi.govt.nz • New Zealand Trade and Enterprise (NZTE) offer a range of programmes to help businesses develop and succeed globally. For more information visit: www.nzte.govt.nz/find-fundingassistance • The New Zealand Venture Investment Fund invests into venture capital funds and partners with angel investor groups to drive investment into exciting young New Zealand companies with high-growth potential. For more information visit: www.nzvif.com • Investment New Zealand aims to help link high-growth New Zealand businesses and international investors. For more information visit: www.investmentnz.govt.nz 1 Large is currently defined as entities that have two of the following three criteria: total revenue greater than $20 million; total assets greater than $10 million; and more than 50 full time equivalent employees Doing business in New Zealand 7
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Doing business in New Zealand - Grant Thornton

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