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New Zealand law explained for everyone

Commerce Act 1986

Business acquisitions

47A: Declaration relating to acquisition by overseas person

You could also call this:

"When someone from overseas buys a New Zealand company, a court can make a special statement if it affects competition."

Illustration for Commerce Act 1986

If you are from another country and you want to buy a New Zealand company, the Commission might ask the High Court to make a special statement. This can happen if you buy a company's assets or shares from outside New Zealand and this gives you control over the company. The High Court will make this statement if they think you now control the company and this could reduce competition in New Zealand.

You can't get this statement if the Commission asks for it more than 12 months after you bought the company. It also can't happen if the Commission has already said it's okay for you to buy the company under Part 5 (see section 69). The Commission has other jobs and powers under the law, and this section does not limit them.

If you are from another country, you have a controlling interest in a New Zealand company if you can control who is on the company's board, or if you have a lot of voting power. You also have a controlling interest if you own more than 20% of the company's shares, or if you get more than 20% of the company's dividends. A New Zealand body corporate is a company that does business in New Zealand, and an overseas person is someone who does not live or do business in New Zealand. The Commission can still use other parts of the law, like sections 47B to 47D, when looking at your purchase of a New Zealand company.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7415526.

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47: Certain acquisitions prohibited, or

"You can't buy a business if it would make the market less competitive."

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47B: Orders against New Zealand bodies corporate following declaration under section 47A, or

"Courts can order New Zealand companies to follow rules if they're controlled by someone overseas."

Part 3Business acquisitions

47ADeclaration relating to acquisition by overseas person

  1. The Commission may apply to the High Court for a declaration under this section if an overseas person acquires, whether directly or indirectly, a controlling interest in a New Zealand body corporate through the acquisition outside New Zealand of the assets of a business or shares.

  2. The High Court may make a declaration that it is satisfied that—

  3. the overseas person has acquired a controlling interest in a New Zealand body corporate through the acquisition outside New Zealand of the assets of a business or shares; and
    1. the acquisition of that controlling interest has, or is likely to have, the effect of substantially lessening competition in a market in New Zealand.

      1. A declaration may not be made in respect of an acquisition if—

      2. the application for the declaration is made more than 12 months after the date of the acquisition; or
        1. the Commission has given a clearance, or granted an authorisation, under Part 5 in respect of the acquisition (see section 69).

          1. Nothing in this section limits the Commission's functions or powers under any other provision of this Act.

          2. In this section and in sections 47B to 47D,—

            controlling interest means, in the context of an overseas person having a controlling interest in a New Zealand body corporate, that the overseas person—

            1. controls the composition of the board of the body corporate; or
              1. is in a position to exercise, or control the exercise of, more than 20% of the maximum number of votes that can be exercised at a meeting of the body corporate; or
                1. holds more than 20% of the issued shares of the body corporate, other than shares that carry no right to participate beyond an entitlement to a specified amount in a distribution of either profits or capital; or
                  1. is entitled to receive more than 20% of every dividend paid on shares issued by the body corporate, other than shares that carry no right to participate beyond an entitlement to a specified amount in a distribution of either profits or capital; or
                    1. is the holding company (as defined in section 5(2) of the Companies Act 1993) of the body corporate; or
                      1. holds assets in circumstances where the holding of those assets results in the overseas person having effective control of the body corporate

                        New Zealand body corporate means a body corporate (whether incorporated overseas or in New Zealand) that carries on business in New Zealand

                          overseas person means a person, whether a body corporate or otherwise, that is neither resident nor carrying on business in New Zealand.

                          Notes
                          • Section 47A: inserted, on , by section 11 of the Commerce (Cartels and Other Matters) Amendment Act 2017 (2017 No 40).