Government
encouragement for inwards capital investment has been boosted by a broad Court
of Appeal interpretation of what amounts to appropriate business experience
when seeking official approval. Proven
general business experience will suffice; it is not necessary that intending
investors have detailed experience in the business activity to be purchased.
The Overseas
Investment Act requires political consent for foreign purchases of New Zealand
farmland. A consortium backed by
businessmen Sir Michael Fay and David Richwhite sought to block the sale of
sixteen dairy farms to a Hong Kong registered company, Milk NZ, which had bid
for the farms put up for sale by receivers of Crafar Farms.
The Fay consortium,
having bid a lower price for the Crafar assets, argued owners of Milk NZ did
not have the necessary farming experience to manage the farms. The Act requires intending purchasers to have
“business experience and acumen relevant to” the business.
The Court of Appeal
ruled that it is sufficient in this case for the foreign investor to have experience
in managing large investments as an on-going business enterprise.
Mr Jiang, the
successful Chinese investor and entrepreneur backing Milk NZ, has experience in
agribusiness generally. It is proposed
that day to day management of the farms will be contracted out to New Zealand
based operators with industry specific experience, such as government-owned Landcorp.
Tiroa E & Te Hape
B Trusts v. Land Information – Court of Appeal (7.08.12)
12.023