Learn about how we decide what and how to investigate when we believe people have broken the Overseas Investment Rules, and the tools and powers available to help us do this.
We will consider investigating and taking enforcement action when we believe people have broken the Overseas Investment Rules (Rules) or have not met their commitments.
Taking enforcement action ensures fair treatment for those who comply with the Rules, as well as ensuring that those who do break the Rules are held to account, and that others are deterred from doing so.
We will carry out our enforcement function through a range of activities including:
- educating people about the need to comply with the Rules before an overseas investment is made
- monitoring compliance with the conditions imposed on consent, including the steps taken to comply with representations and investment plans provided to us as part of an application. We do this in a number of ways, including through our own monitoring and surveillance activities, through information provided to us by informants and through our work with other regulatory and Government agencies. We also carefully review the information consent holders are required to provide to us. View a copy of our standard annual reporting template.
- carrying out surveillance activities, including through site inspections
- investigating possible breaches of the Rules, and
- taking enforcement action where we find that the Rules have been broken and it is appropriate to take action.
In carrying out our enforcement function we will:
- act independently
- act fairly and proportionately
- be as transparent as possible, recognising that sometimes we must protect the confidentiality of the information we hold to ensure fair process.
What we investigate is guided by our enforcement strategy and criteria which we use to prioritise our resources. Broadly, our investigations fall into the following types:
- failure to get consent for an overseas investment before the transaction is effected
- attempts to circumvent or evade the Rules
- failure to meet commitments made when the investor applied
- providing us with false, inaccurate or incomplete information
- failure to comply with notices requiring information to be produced.
When we believe a breach of the Rules has occurred, we assess the breach against our enforcement strategy and criteria and consider the full range of enforcement tools available to us to take the most appropriate and proportional response in the circumstances.
When we investigate a matter the steps we take and what you will need to do in response will depend on the circumstances of each case. Being upfront and honest with us is likely to speed up the investigation and your co-operation may be a factor in determining an appropriate and proportionate enforcement response.
When we investigate a possible breach of the Rules, we may:
- ask you to explain what has happened by letter or by informal discussion
- make inquiries using intelligence available to us from other agencies and from public resources
- analyse monitoring reports, including considering independent expert reports
- carry out site inspections
- issue notices requiring information be provided to us
- require a consent holder to provide a statutory declaration about how they have complied with the conditions of consent, the reasons for any breach and steps they intend to take to remedy the breach
- carry out formal interviews
- exercise our search and seizure powers under the Rules.
We expect quality investors will willingly provide us with information to enable us to monitor compliance with the conditions of consent. However, we can issue notices requiring:
- a consent holder to provide information for monitoring and certify it is correct
- any person to provide information relevant to the monitoring of conditions.
We can also issue notices requiring information and documents to be provided, where this is needed for us to carry out our monitoring and enforcement functions.
Anyone issued with such a notice has the same privileges in relation to the provision of the information or document as a witness in any court proceeding, such as the right to legal professional privilege.
It is an offence to fail to comply with a notice under the Rules without lawful excuse.
We find interviews a useful way to gather and clarify information. You are not under any obligation to attend an interview and you are entitled to end the interview at any time. We invite you to bring along a legal adviser or other support person.
Our preference is to record interviews, but we will always seek your permission if we intend to do so and will make a copy of the recording available to you.
Providing information to us
Any information you provide to us, whether orally or in writing, must be complete, accurate and truthful.
- it is a condition of every consent that all information provided to us in connection with an application for consent was correct at the time it was provided
- it is an offence to resist, obstruct or deceive us when we seek to exercise a power or function under the Rules
- it is an offence to knowingly or recklessly make any false or misleading statement or material omission in:
- any representation made for the purpose of the Rules or
- any information or document provided to us, or
- any communication with us.
What enforcement action will we take?
There is a range of regulatory tools or actions we can take if we believe the Rules have been broken. These range from informal engagement, through to seeking civil and criminal penalties through court proceedings.
In deciding which tools or options to use, we will consider what is the most appropriate and proportionate response in the circumstances. We will use our enforcement criteria to decide what tool to use, including considering:
- our strategic priorities
- the seriousness of the conduct
- the deterrence or disciplinary value of taking action
- the educational value of taking action
- our ability to give effect to any enforcement action, including consideration of any limitation issues,
- the precedent or clarification benefit of taking court action, and
- the most effective use of our resources and, where applicable, court resources whether the matter falls more appropriately within another agency’s jurisdiction.
We are more likely to take court action for serious breaches of the Rules and where we have strong evidence. We may also take cases to court though where clarification of the requirements of the Rules would be helpful.
Where a person can demonstrate that they inadvertently breached the Rules, and they agree to fully cooperate with us to sell the property, it may be appropriate for us to issue a disposal notice setting out our concerns and how their interest should be disposed of, rather than seek a court-ordered disposal and penalty. The notice is issued at our discretion and when we believe it will be complied with. The benefit of a disposal notice is that the land is quickly returned to the New Zealand market. The benefit for the owner is that by cooperating with us to sell the property, they do not face court-imposed penalties.
On some occasions we may have a choice as to whether to seek a criminal penalty or a civil penalty in court. We will only lay charges for a criminal offence where we consider the Solicitor-General’s prosecution guidelines are met and will usually (particularly if imprisonment may be ordered) take such action only for very serious breaches of the Rules, such as where there is a deliberate and reckless breach.
When seeking a civil penalty, we start from the position that effective deterrence requires that a wrongdoer does not benefit from their breach. Where someone stands to gain from their breach, we will ordinarily seek a penalty that takes account of the gain they have made in breach of the rules.
We will generally publish the outcome of the enforcement action we take. It is important we do this as part of our function to deter and educate people about the need to comply with the Rules.
The following table sets out the enforcement tools available to us.
This list is not exhaustive and we could pursue one or more tools, depending on the circumstances.
|Enforcement tool||When tool may be used|
|1||No further action warranted|
|2||Referral to another agency|
|3||Referral to disciplinary body, such as Law Society or Real Estate Agents Authority|
|4||Administrative penalty if late in providing documentation|
|5||Agreed variation to conditions|
|10||Seek court order to require compliance with condition, or exemption certificate|
|11||Settlement agreement, such as involving payment for public good and/or agreement to dispose of property|
|12||Issue a notice to get a person to dispose of their property within a specified period, and thereby avoid any further penalty.|
|13||Order to dispose of property|
|14||Seek court order to cancel transaction|
|15||Seek court order for a mortgage to be registered over land|
Civil penalty for being involved in the contravention of the Act or commission of an offence or failure to comply with the Act.
Conveyancer required to obtain and keep a residential land statement
|18||Civil proceeding. Can involve penalty (for instance, up to $300,000 or three times the quantifiable gain) and/or disposition of property|
|19||Prosecution for criminal offence. Penalties can include up to 12 months prison or fine up to $300,000|