Reputation is key to unlocking opportunities for overseas investors

Insight

In line with the latest phase of Overseas Investment Act reform, buyer reputation is set to become a more prominent part of the conversation around overseas investment in New Zealand.

SenateSHJ’s latest Reputation Reality report highlights that reputation is now one of the hardest risks to manage.

The increasingly bright spotlight being shone by the Overseas Investment Office on the good character and business acumen of applicants points to these findings.

As the saying goes, what happens in Vegas stays on Google - and this is where the initial assessment of good character and business acumen occurs. Negative press coverage, criminal convictions, accusations of criminal and/or unethical behavior, legal issues or previous business failings concerning the business and/or key personnel, no matter how historic, will be taken into consideration as part of the application. This includes any parent companies, subsidiaries, and non-direct shareholders.

For both applicants and sellers, this means going into the process with eyes wide open, ready to address any material reputational risks that, if not clearly communicated, could fail to pass the first hurdle.

Skeletons in the closet don’t necessarily mean an application will be declined, but it does require that organisations be smart about building an application that “walks toward” any possible issue. 

SenateSHJ’s reputation management framework published in this year’s Reputation Reality report, outlines three elements that are relevant for an applicant needing to establish trust and confidence:

  1. Protection: Transparency is one of the top five drivers of good reputation. A reputational risk analysis early in the application process is integral to prepare for and front-foot any potential issues that may arise. This assessment needs to be far-reaching, covering off any ‘relevant overseas persons’ and ‘individuals with control’ as stated in the Act. This process demands a high level of diligence, given that even unfounded allegations of bad character can cause complications that need to be managed carefully through strategic, transparent communication.

  2. Promotion: Ensure there is a balanced and robust narrative capable of promoting the benefits while addressing any issue with meaningful and relevant information.  Building a story weighted toward positive economic benefits alone won’t necessarily be enough where there is a sensitive environmental, social and / or cultural consideration at stake. As the Minister of Finance indicated early in the current reform process overseas investment is welcomed where it supports New Zealanders’ wellbeing.

  3. Engagement: Throughout the application process engagement with all relevent stakeholders needs to be well planned and prepared to ensure that a clear and compelling message is consistently delivered.

Potential overseas investors who have a lot to offer New Zealand will do well to ensure they have covered off the three key areas of reputational focus and deliver applications to the OIA with a strong and transparent strategic narrative that manages any reputation-related risk.