An overseas investor that purchased an Auckland property without Overseas Investment Office consent is being fined nearly $540,000.
Photo: 123rf.com
Foreign investor Chor Ltd will be fined $539,914.47 following a penalty judgment released by the High Court on 8 June.
In September 2016, Chor Ltd, as trustee of Chor Trust, entered an agreement to purchase in Karaka, Auckland.
The shareholders of Chor Ltd, Bingyan Zhou and Xirong Zhou, first acquired the property in 2013 for $2.550m.
They later sold the property to Chor Ltd, as trustee of Chor Trust, for $3.2m.
Chor Ltd required Overseas Investment Office consent in order to purchase the property as the property is sensitive land under the Overseas Investment Act - it is greater than 0.4 hectares and adjoins a reserve as well as the foreshore.
Due to failures by Chor Ltd's legal advisors, consent was not sought.
"Following an anonymous tip-off to the Overseas Investment Office, Chor Ltd admitted breaching the Act," Vanessa Horne, group manager of the Overseas Investment Office said in a statement.
"The property has since been sold - with Overseas Investment Office approval - to an unrelated third party. Chor Ltd must now pay the net quantifiable gain from the sale as a penalty to the Crown. This is an amount of $539,914.47, plus $15,000 towards the Overseas Investment Office's costs.
"The High Court decision recognises that, from the time the property was first acquired by Mr and Mrs Zhou in 2013 until it was sold by Chor Ltd to a third party in late 2018, the property had been held for beneficiaries of Chor Trust.
"The Overseas Investment Office will continue to enforce New Zealand's overseas investment law and take strong action against anyone who breaks the rules. This includes trusts and corporate trustees used to acquire and hold property without consent being obtained under the Overseas Investment Act."