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.
Infrastructure Funding and Financing Act passed into law
The Infrastructure Funding and Financing Act establishes the Infrastructure Levy Model, which the Government has developed in partnership with high-growth councils. A key feature of the model is the establishment of an entity called a Special Purpose Vehicle (SPV), a financing tool that enables debt finance to be raised from the private sector and ring-fenced from a council’s balance sheet, not affecting their debt levels or credit rating. The SPV will be responsible for financing and constructing the infrastructure and, post-construction, the infrastructure will be transferred to the relevant council for its ongoing operation and maintenance. A central element of the model is the levy paid annually, for up to 50 years, by the future homeowners who benefit from the infrastructure, to fund the finance raised for its construction.
Metlifecare comes to agreement with EQT to buy its shares for $6 a share
Metlifecare Limited has entered into a new Scheme Implementation Agreement (SIA) under which Asia Pacific Village Group, an entity owned by EQT Infrastructure IV Fund and managed by EQT Fund Management S.a.r.l., has agreed to acquire all Metlifecare’s shares for NZ$6.00 per share. The parties have also agreed to discontinue all litigation and settle all disputes related to the original SIA with the parties to cover their own costs in relation to the litigation.
Court of Appeal issues ruling in case regarding Harmoney’s lending model
The Court of Appeal has largely dismissed peer to peer lender Harmoney’s appeal against a High Court opinion on a question of law, and upheld the Commerce Commission’s cross appeal. Harmoney Limited was appealing the High Court’s May 2018 findings which included that Harmoney’s “platform fee” is a credit fee under the Credit Contracts and Consumer Finance Act 2003 (CCCF Act). In a judgment issued on 8 July the Court confirmed that: 1) Harmoney Limited is a creditor; 2) its contracts are consumer credit contracts which are subject to the requirements of the CCCF Act; and 3) its platform fee is therefore a credit fee that is required by the CCCF Act to be reasonable.
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.