Monitoring and enforcement

We've recently updated the OIO website content. If you have any questions please email Joanna Carr.

Find out more about our monitoring and enforcement functions.

Monitoring consent conditions

The OIO monitors consent holders for compliance with any conditions imposed on their consent. Consent holders are generally (as a condition of consent) required to report annually to the OIO for up to five years from consent, but if benefits are expected to occur after that five year period, monitoring will reflect the time span within which benefits will occur. Paragraphs 13 to 16 of the 8 December 2010 Directive Letter direct the OIO about the level of monitoring in relation to conditions of consent.

Conditions of consent can cover a wide range of matters, including:

  • specifying the date by which the consent holder must acquire its investment (consents normally expire after one year)
  • specifying what the consent holder must do with its investment (including requiring the consent holder to undertake certain developments)
  • requiring the consent holder and others to become ordinarily resident in New Zealand
  • requiring that the persons controlling the consent holder remain of good character
  • specifying when the consent holder must report to the OIO and what each report must contain
  • requiring the consent holder to dispose of its investment in certain circumstances.

Breaches of conditions of consent are uncommon. When they do occur, they can include:

  • failing to report (or reporting late)
  • failing to become ordinarily resident in New Zealand
  • failing to undertake the proposed developments.

The OIO has the power under the Overseas Investment Act 2005 (“the Act”) to require consent holders and others to provide us with information to help us to monitor consent conditions.  These powers can be invoked at any time.

  • Section 38 of the Act allows the OIO to require a consent holder to provide information or documents for monitoring purposes.
  • Section 39 of the Act allows the OIO to require any other person to provide information for monitoring compliance with conditions, or for statistical purposes.
  • Section 40 of the Act allows the OIO to require a consent holder to provide a statutory declaration verifying:
    • the extent to which the consent holder has complied with the conditions of the consent, and
    • if the consent holder is in breach of a condition or conditions, the reasons for the breach and the steps that the consent holder intends to take to remedy the breach.

Any declaration provided for the purpose of section 40 is inadmissible in evidence in any proceedings under the Act except proceedings under section 46 (offence of false or misleading statement or omission).

Find out about how to prepare a statutory declaration for us

Monitoring declined, lapsed, and withdrawn applications

The OIO monitors investments that were the subject of declined, lapsed or withdrawn applications, to ensure that those transactions did not go ahead.

Breaching the Act

The OIO can take enforcement action against anyone who is in breach of the Act.

Breaches of the Act can include:

  • breaching a condition of consent 
  • acquiring sensitive assets without consent
  • making a false statement
  • defeating, evading or circumventing the Act.

Breaching a condition of consent

It is an offence against section 45 of the Act to fail to comply with a condition of consent. Breaches of conditions of consent range from relatively minor to very serious. 

Examples:

  • An example of a minor breach is a consent holder providing an annual report a day or two late.
  • An example of a more serious breach is a consent holder failing to undertake a required development.

The OIO’s response to a breach of a condition of consent depends, among other things, on the severity of the breach, why the breach occurred, and whether the breach can be remedied. Minor breaches which can be quickly remedied might be subject to increased monitoring. More serious breaches (which are uncommon) might result in enforcement action.

Acquiring sensitive assets without consent

It is an offence against section 42 of the Act to acquire sensitive assets without OIO consent. Note that consent is normally required when an agreement for sale and purchase is signed, unless the agreement is made conditional upon an ‘OIO consent’ condition. 

Retrospective consent may be available in very limited circumstances under section 25(f) of the Act. 

In other cases, the OIO will consider prosecuting the owner or applying to the High Court for the imposition of a civil penalty of up to $300,000 (or more in some cases), and will normally require the disposal of the assets. If the owner is unwilling to dispose of the assets on an agreed basis, the OIO will consider applying to the High Court for an order for disposal.

Defeating, evading or circumventing the Act

It is an offence against section 43 of the Act to knowingly or recklessly enter into a transaction, sign a document or take any other step for the purpose of or having the effect of, defeating, evading, or circumventing the Act.

Failing to comply with a notice

It is an offence against section 45 of the Act to fail to comply with a notice (under sections 38-41) requiring the provision of documents or information.

In cases where the notice is complied with late, the OIO may impose a $500 administrative penalty under section 52.

Making a false statement

It is an offence against section 46 of the Act to knowingly or recklessly make a false or misleading statement or material omission in any communication with the OIO.

Breaches of section 46 are viewed very seriously. A person who breaches section 46 may have difficulty satisfying the OIO that he or she is of good character (one of the consent criteria), which may prevent them from investing in New Zealand in the future.

Investigations

The OIO investigates suspected breaches of the Act. Investigations can range in scale from small matters which result in retrospective applications being made, to large complex matters such as the investigation of the purchase of the Crafar farms by UBNZ and Natural Dairy. Refer to the document at the end of this page.

The OIO's main information gathering power is found in section 41 of the Act, which allows the OIO to require any person to provide information or documents for the purpose of detecting offences. Section 56 of the Act allows the OIO to apply for a search warrant under the Search and Surveillance Act 2012.

The OIO conducts formal recorded interviews where appropriate.

Remedies

Litigation remedies

The OIO can prosecute a person for offences under sections 42-46 of the Act. The maximum penalties on conviction are:

Section of the ActFineImprisonment
Section 42 - Acquiring sensitive assets without consent$300k fine12 months imprisonment for an individual
Section 43 - Defeating, evading, circumventing the Act $300k fine12 months imprisonment for an individual
Section 44 - Resisting, obstructing, deceiving$300k fine12 months imprisonment for an individual
Section 45 - Failing to comply with notice, requirement or condition$100k finen/a
Section 46 - False or misleading statement or material omission$300k finen/a

The OIO can apply to the High Court for an order requiring the payment of a civil penalty under section 48 of the Act. The maximum civil penalty is the higher of $300,000, any quantifiable gain in relation to the property, the cost of remedying the breach of condition, or the loss suffered by a person in relation to a breach of condition. The High Court can also require that interest be paid (section 50), and may order that a mortgage be granted to the Crown to secure the payment of a penalty (section 49).

The OIO can apply to the High Court for an order requiring the disposal of assets under section 47 of the Act. Where appropriate, we will try to reach an agreement about the disposal process with the investor prior to applying for an order from the Court. 
We can apply to the High Court for an order requiring a person to comply with conditions of consent under section 51.

Retrospective consent

Retrospective consent can be granted under section 25(f) of the Act.

We may require an applicant to pay an administrative penalty of up to $20,000 before consent is granted. A penalty is imposed in nearly every case. 

In cases where an administrative penalty is insufficient, we may apply to the High Court for the imposition of a civil penalty of up to $300,000 (or more in some cases).

Remedies in conditions of consent

Conditions of consent sometimes provide for what will happen if the conditions are breached. The most common remedy provided for is the disposal of the property. This condition is normally only included in respect of conditions which we consider critical to the granting of consent. For example, where consent has been granted on the basis that a person will become ordinarily resident in New Zealand, conditions of consent will require the person to dispose of the asset if they do not become ordinarily resident in New Zealand.

Formal warnings

In appropriate cases, we may formally warn a person instead of taking action against them. A warning may be appropriate when the breach of the Act is relatively minor, the person has cooperated with our investigation, and the assets have already been disposed of.

A person who has previously been warned is likely to be prosecuted if they breach the Act in the same way again.

Other penalties

In limited cases, it may not be practical to litigate breaches of the Act in the High Court. In such circumstances the OIO may consider whether the payment of a penalty to charity and the recovery of our investigation costs is an appropriate alternative to prosecution or civil penalties. This penalty may be employed in conjunction with other remedies, such as retrospective consent or the disposal of assets.

Last Updated: 28 July 2015