The Government has released a new Ministerial Directive Letter to coincide with the changes to the Overseas Investment Act that are coming into force on 6 March 2026.
The Directive resets the way the Overseas Investment Office (OIO) will apply the Overseas Investment Act, particularly when assessing applications under the new consolidated national interest test. It confirms a pro-investment stance, promising faster, cheaper clearances for low-risk deals, while sharpening scrutiny of transactions that could affect national security, public order or other core New Zealand interests.
The OIO has been given a clear mandate, to take a risk-based approach to assessing applications, and where the transaction is unlikely to ever present a risk to the national interest, consent should be granted as quickly as possible.
The Ministerial Directive is important as it provides a mandatory direction to the OIO in terms of how the Government of the day expects the OIO to implement the Act and how to make decisions against the legislative framework.
The Government’s Investment Policy and why it matters
A liberalising agenda focused on growth
The Directive sits within the Government’s “Going for Growth” programme, which treats foreign capital as integral to New Zealand's productivity. It instructs the OIO to keep compliance obligations “no broader than necessary”, to concentrate resources on genuinely higher risk deals and to use existing domestic regulation, rather than bespoke conditions, wherever possible. This signals an environment in which well prepared, low risk applications should move rapidly to approval, enabling the OIO to devote attention to transactions with potential national interest implications.
The three stage National Interest Test
The Directive provides further insight into how the OIO is expected to assess national interest risks under the new consolidated national interest test.
Stage One – initial risk screen under section 19A
The OIO must form a quick view, within five working days for 80 per cent of cases, on whether a full national interest assessment is warranted. If the asset, investor and deal structure are clearly low risk, consent should be issued promptly without further inquiry.
Stage Two – substantive national interest assessment
Where Stage One flags potential concerns, the OIO will consider factors such as whether foreign ownership or control could threaten national security, public order or other interests. Particular attention will be paid to critical infrastructure, holders of extensive personal data and "strategically important businesses". The OIO will also test whether identified risks are already mitigated by other domestic laws.
Stage Three – ministerial decision
If unresolved risk remains, the responsible Minister decides whether to decline consent. The Directive does not alter the statutory threshold but stresses that refusal should remain exceptional and confined to genuine national interest threats.
How the OIO will assess investor risk
Approach to national interest risk
In considering risks under the national interest test, the OIO should consider whether the risk is material to New Zealand as a whole, or related to national security and public order. The OIO should also consider risks that may adversely affect New Zealand's international relations or reputation, or that relate to land that may have national significance (for example, land with significant conservation value, Treaty of Waitangi claims, heritage places, or Wahi Taupu land).
While this direction is helpful on its face, we had hoped that the Directive may have provided more concrete detail on what is, and importantly is not, in the national interest, which would have provided certainty to investors when preparing applications. The Directive still gives the OIO a fair amount of latitude in determining what could be a risk to New Zealand's national interest. We anticipate the first 6 months of the OIO implementing the new regime will give us a better sense of how the OIO is applying the test, more so than this Directive.
Transparency and track record
The Directive urges the OIO to show restraint when scrutinising investors under the national interest test. For New Zealand based investors or repeat investors with a strong compliance record, the OIO is expected to “consider options to reduce cost”, rely on the information supplied and limit verification work. By contrast, investors that have opaque ownership structures, newly formed or foreign state linked should anticipate escalation to Stage Two.
This is good to see and aligns with what we as a firm have been pushing for, to recognise that high quality, repeat investors bring significant benefits to the broader economy.
Focus on capacity to misuse the asset
Investor vetting is justified only if the target asset could be used in a way that could harm the national interest, for example, by disrupting essential services or giving access to sensitive data. Routine commercial assets should not trigger deep dives.
Aggregation and foreign state influence
The OIO has been instructed to consider whether the transaction, in combination with existing foreign holdings, could consolidate influence in a critical sector. Foreign governments and their associates are singled out as potentially presenting heightened aggregation risks.
Sector specific signals
Grocery: green light for competitive capital
To bolster supermarket competition, the OIO has been told to “streamline approvals”, issue standing consents and coordinate with fast-track resource management processes. Well-structured investments that expand or disrupt the grocery supply chain should benefit from the expedited approach.
Forestry: national interest pathway now open
Purchases of land already in (or nearly wholly devoted to) forestry activities move from the “special forestry test” to the national interest test. Consent will still be granted where conditions ensure continued forestry use, harvesting and replanting, or where environmental conversion to less intensive forestry is justified. Investors must be ready to accept tailored conditions, particularly on non-occupation and log supply.
In order to provide additional certainty to the forestry sector, the OIO has been directed to engage with the Ministry for Primary Industries to develop forestry guidelines, to outline how the Act will treat investments in other (non-production) types of forestry assets.
Farmland advertising exemptions
The Directive encourages the OIO to grant farmland advertising exemptions where open market sale would be futile or commercially damaging, such as boundary adjustments or single buyer situations. This aligns with the approach taken on recent transactions involving significant tracks of farmland.
Practical process and timing expectations
Compressed statutory timeframes
The Directive instructs the OIO to complete 80% of Stage One national interest identification screenings in five working days and 80% of full consent decisions (Stage Two / Three) in half the statutory review timeframe.
Information quality is paramount
Because officials are directed to “rely on the information provided by the investor unless there is reason to question it”, applicants who supply clear, complete and verifiable data stand to benefit most. Poorly assembled applications risk immediate escalation to Stage Two.
Visa linked residential acquisitions
Holders of Active Investor Plus or Investor 1 or 2 resident visas may now acquire residential land worth more than NZD 5 million. The OIO must grant these with minimal delay, imposing only narrow construction conditions to confirm build out within price parameters.
Conclusion
The 2026 Ministerial Directive Letter heralds a more permissive yet sharply risk focussed overseas investment regime. Low risk transactions, especially those advancing Government growth goals or fostering competition, should be granted consent quickly, while transactions involving opaque structures or strategically sensitive assets will face deeper scrutiny and potentially require bespoke conditions to manage national interest risks.
The Directive revokes all prior directives with effect from 6 March 2026. Investors should rely only on the new Directive when structuring or filing applications from that date.