A company with local ties has been slapped with a $125,000 penalty for breaking overseas investment rules when it bought land in Drury.
West Drury Holding Limited (WDHL) was this month ordered by the High Court at Auckland to pay a penalty of $125,000 and $15,000 in legal costs.
The New Zealand Companies Office register lists three WDHL directors, two of whom had – and may still have – addresses in Flat Bush and Mellons Bay.
The companies register shows Zhufeng Yin was based in Chateau Rise and held a 39 per cent share allocation of WDHL while Guanxing Zhong occupied an address in Bleakhouse Road and holds a 38 per cent stake in the company. The third shareholder is listed as being in Daisy Hill, Queensland.
Zhong appears to have changed the registered address details in July 2018. The new address is given as Great South Road, Ramarama.
The Times contacted Zhong and was told they did not wish to comment.
A decision by the court found WDHL breached the Overseas Investment Act rules when purchasing sensitive land in Drury in June 2017.
WDHL admitted that a shareholder who held 39 per cent of its shares was an overseas person when the company purchased the $9.2 million property in Drury.
However the company is considered to be an overseas person and it should have sought consent to buy the property.
The company told the court it didn’t know it needed to apply for consent because the shareholder held a residence class visa.
But the shareholder did not meet the definition of ordinarily resident under the Overseas Investment Act as he was not residing in New Zealand with the intention of residing here indefinitely.
While the court acknowledged there was a misunderstanding of the rules, Justice Gerard van Bohemen said, “The mistake should have been avoided by undertaking appropriate enquiries.”
Overseas Investment Office group manager Anna Wilson-Farrell said, “The case demonstrates the need for overseas investors to get specialist legal advice on the Overseas Investment Act. When we discover that someone has broken the rules, we take appropriate enforcement action.”
The court noted that over the last four years the company had benefited from owning the property.
