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.