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The importance of maintaining a 'good character' in Overseas Investments in New Zealand

By Steven Lee and Genelle Seah - 12 Jun 2019

By law, overseas investors in sensitive land and significant business assets in New Zealand must be of (and must maintain) 'good character'. The Overseas Investment Office (OIO) considers many factors when assessing an overseas investor's character. The term 'good character' generally means acting appropriately, including but not limited to not committing any offences nor contravening any laws.

It is important that overseas investors take care not to breach their 'good character' condition as it may result in hefty penalties. This is illustrated in Chief Executive of Land Information New Zealand v Agria (Singapore) Pte Limited [2019] NZHC 514.

Agria (Singapore) Pte Limited (Agria Singapore) received consent in 2009 and 2011 to acquire a 50.22 percent shareholding in PGG Wrightson Limited (PGW), an agricultural supply business based in New Zealand. It is currently the biggest shareholder of PGW.

On 21 March 2019, the High Court decided that Agria Singapore had breached its ongoing 'good character' condition due to charges made against Agria Corporation and Mr Aan Lai by the United States Securities and Exchange Commission (SEC) for violating antifraud provisions of the United States securities law. Agria Corporation and Mr Alan Lai paid the SEC $3 million to settle the charges.

The High Court imposed penalties of a total of $220,000 against Agria Singapore and Mr Alan Lai in relation to the breach.

In deciding the size of the penalty, the High Court considered the nature and extent of the violations. The heavy penalties therefore reflect the serious nature and extent of the breaches.

This High Court judgment reinforces that there are on-going responsibilities and conditions that overseas investors must observe and comply with when they invest in New Zealand. Maintaining good character is just one of these.

If you are require any assistance or clarification regarding requirements under the Overseas Investment Act 2005, please contact Melissa Clark, Steven Lee or Genelle Seah.


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