A law firm is taking issue with how the Overseas Investment Office decides if a company is foreign or not.
The firm, Russell McVeagh, says the OIO is no longer "looking through" custodian or nominee companies.
It was treating shares in a listed company registered in the name of an overseas custodian or nominee as shares held by an overseas person under the Overseas Investment Act.
That included custodian companies of banks and brokers even where the custodian or nominee held most shares on bare trust for New Zealanders.
"In our view this interpretation is inconsistent with established market practice since the commencement of the act, which has been to look through custodians and nominees to the beneficial owner of the shares, thereby excluding shares held by the custodians on behalf of New Zealanders from the percentage overseas ownership of a listed company."
Broadly, a company is an overseas person under the Overseas Investment Act if 25 percent or more of any class of its shares are held by an overseas person.
Acquisitions by an overseas person of "significant business assets" or "sensitive land" require OIO consent.
"We believe that the position adopted by the OIO will be problematic for a number of listed issuers, for investors in listed issuers and for custodian and nominee companies," the law firm says.