Two property companies part-owned by Chinese offshore interests were ordered to pay fines totalling $123,000 after breaching the Overseas Investment Act; land purchased for subdivision on Auckland’s North Shore adjoined a reserve, triggering the need for Overseas Investment Office consent.
Kauri Glen Reserve in Birkenhead is listed in the Reserves Act. Neighbouring land is deemed ‘sensitive land’ requiring government consent before purchase by overseas interests. In 2013, FFG Investment Ltd purchased 2.8 hectares adjoining Kauri Glen. FFG was owned forty per cent by Fei Wen, a Chinese national. As an ‘overseas person’ Mr Wen’s stake made FFG also an ‘overseas person.’ A company is an overseas person if more than 25 per cent is owned by overseas interests. FFG Investment was not aware it needed government consent.
The High Court was told cost overruns on a planned 27 lot subdivision resulted in FFG selling its assets to a new company: Grand Sky Ltd. It too was an ‘overseas person.’ Mr Wen similarly held a forty per cent stake in Grand Sky.
The two companies negotiated an agreed penalty of $123,000 for their breach of overseas investment rules. The penalty payable was reduced because both companies co-operated fully in the Overseas Investment Office investigation.
Land Information v. FFG Investment Ltd – High Court (13.12.19)
20.013