Mayne Wetherell has produced a guide to doing business in New Zealand to provide overseas investors, and their advisers, with information about investing here.
The guide summarises inbound investment, immigration, investment structures, financial services regulation, tax, securities, takeovers, intellectual property, employment, land law, and trade practices.
Useful links to market events and commentary.
FMA statement on director liability and continuous disclosure
The Financial Markets Authority (FMA) has considered the need for regulatory relief in relation to director liability thresholds, following changes in Australia. The Australian Government has, for a period of six months from 26 May 2020, relaxed the liability threshold for assessing the materiality of information to be disclosed to the market from a "reasonable person" test to one of "knowledge, recklessness or negligence" (civil proceedings). The move is to encourage Australian listed issuers to provide guidance and forward-looking information to the market, and to reduce the risk of "opportunistic" class actions for potential breaches of continuous disclosure obligations. The FMA believes New Zealand’s current legislative settings, and the manner in which they are applied, remain appropriate for the COVID-19 environment, and should already afford listed issuers and their officers’ sufficient protection to encourage disclosure. The FMA intends to consult with Ministry of Business, Innovation and Employment (MBIE) and other stakeholders on the appropriate steps to reduce the risk of speculative class actions proliferating.
Government to introduce stronger laws to prevent anti-competitive conduct
On 8 June 2020 the Government announced it has agreed on changes to the Commerce Act to ensure New Zealand business can compete on a level playing field, and that competition law remains effective for the long-term benefit of consumers. The main change involves amending section 36 of the Act. Section 36 is designed to prevent businesses with substantive market power from suppressing competition. Section 36, as it is currently drafted, has tilted the playing field in favour of incumbent firms and distorted competition. Determining whether a business has misused its market power is costly and difficult to establish, and this reduces incentives to comply with the law.
High Court halts shareholder vote on the takeover of Metlifecare
Stuff reports that the High Court has halted a shareholder vote on the $1.4 billion takeover of giant retirement village operator Metlifecare by Swedish investor Asia Pacific Village Group (APVG), with the Court saying the dispute between Metlifecare and the APVG on the legality of APVG terminating the takeover bid should be settled before shareholders voted. Metlifecare was seeking court approval for shareholders to vote on the scheme plan in late June or early July but will now hold a meeting of shareholders in mid-July to seek endorsement of the board’s intention to continue legal action on behalf of shareholders challenging the validity of APVG’s notice to terminate the Scheme Implementation Agreement (SIA) signed on 29 December 2019. The High Court has set an expedited court timetable for the dispute, with the trial scheduled to start in Auckland on 23 November 2020.
ANZ sells UDC to Shinsei Bank Group
Stuff reports that ANZ Bank has agreed to sell its asset finance business, UDC Finance, to Japan's Shinsei Bank for $762 million. ANZ NZ chief executive Antonia Watson is reported to say that Shinsei intended to retain UDC’s operations and employees, and maintain customer lending in New Zealand. The sale will release over $2 billion of funding for ANZ, further strengthening ANZ's balance sheet in New Zealand.
RBNZ: Financial system will benefit supporting economic recovery
The Reserve Bank of New Zealand's published the May Financial Stability Report on 27 May. Adrian Orr, RBNZ Governor, said, whenh releaseing the report, that New Zealand's financial system is in a solid position to both weather the significant economic impact caused by the COVID-19 pandemic and support New Zealand’s recover". “At the outset of the pandemic the banking system had significant capital and liquidity buffers, built up due to both regulatory requirements and several years of favourable banking conditions. These buffers can now be used to support their customers’ long-term economic future. Our economic stress test analysis suggest banks can continue to lend and prosper through a broad range of adverse scenarios,” Mr Orr says.
Step by step guide to Business Debt Hibernation
A step-by-step guide to business debt hibernation has been published on the business.govt.nz website. Links to the relevant forms for "entry notice", "creditor decision notice - approved" and "creditor decision notice - not approved" on the Companies Office website are included on the page, along with case studies and a warning that "[g]etting help from your lawyer or accountant is a good way to ensure you meet your obligations and don’t become liable as a result of any errors in your process".