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The surprise removal of a private exemption from the Overseas Investment Amendment Bill (the Bill) by New Zealand's Speaker of the House has raised the possibility developers could consider seeking exemptions from the Act through a separate, private bill.
The Bill as reported back from the Finance and Expenditure Committee (FEC) yesterday included a specific exemption for one development, the Te Arai development near Mangawhai, for 15 years from the date that the Bill comes into force. (See update: New leniency for foreign buyers in Overseas Investment Act overhaul but redraft raises fresh issues)
But it also noted the views of opposition Members of Parliament that the inclusion in the primary legislation of a private exemption was inappropriate. It now appears that the Speaker of the House is of the same view as that noted by opposition members. The Speaker declared the amendment dealing with Te Arai "out of order" and required that the Bill be reprinted with the exemption struck out.
The Speaker noted that:
"Bills that come before the House are one of three kinds: public bills, which include Government and members' bills; private bills; or local bills. A bill may not be a hybrid of two types, as is permitted in the UK House of Commons. Accordingly, matters that should be in one kind of bill cannot be introduced to another kind of bill by way of amendment."
As far as the merits of the proposed special exemption, the Speaker appeared sympathetic to the reasons for such an exemption saying:
"I appreciate that the amendment was made by the Finance and Expenditure Committee at the request of the landowner in order to preserve the value of the land purchased as commercial redress following Treaty of Waitangi settlements. The committee was motivated by a desire to assist and to be fair to the landowner. They'd received a submission, and the majority felt it made a good case and was presented as being unique. The project was advanced, with a significant reserve established, one world-class golf course open, another planned, and various high yield tourism and recreation activities."
It is significant for others in a similar position to note the Speaker's comment that:
"What the committee failed to establish was whether there may have been any other developments similarly advanced and whether significant actual losses could occur."
The Bill proposes fairly wide powers for exemptions to be granted, exempting a transaction, person or interest as well as the possibility of individual exemptions.
A private bill?
It would seem that exemptions for specified projects could be applied for under the exempting provisions or that if a project was to be excluded it may be more appropriate that this be done by way of a private bill. Other developers may want to pursue the possibility of their development being included.
If you have any questions on the proposed changes or would like to discuss how the changes may affect your current or proposed transactions, please contact us.