ASX-listed Carbon Conscious falls foul of NZ foreign investor rules

ASX-listed carbon emissions abatement firm Carbon Conscious has fallen foul of the New Zealand Overseas Investment Office for using a New Zealand company to invest in sensitive rural land to speed up its plans to plant trees on the property.

"While both companies appear to have attempted to delay – or forego the need for – consent, we consider that they acted on poor legal advice and did not realise they were breaking the law," said Annelies McClure, the manager of the OIO, which vets applications from foreign investors seeking to buy so-called "sensitive" land, which includes farmland. "Because of this, we have taken the view that pursuing a civil penalty is more appropriate than prosecution."

The OIO is seeking penalties in the High Court of up to $300,000 for the alleged breach.

Carbon Conscious says on its website that it has been involving in reforestation projects since 2006, with 18,000 hectares of eucalyptus plantations in Australia, and 800 hectares of pine plantations in New Zealand. It uses the forests to generate carbon credits that are compliant with the Kyoto Protocol, an international climate change agreement.

The OIO is pursuing Carbon Conscious's New Zealand subsidiary and New Zealand-owned Katey LR Investments, alleging breaches of the Overseas Investment Act 2005 in relation to a 115 hectare property near Stratford in August 2012.

Katey LR bought the property in 2012 and agreed to onsell it to Carbon Conscious, triggering the need for OIO approval, McClure said in a statement.

"Carbon Conscious did not have time to obtain consent prior to the end of the 2012 planting season. Carbon Conscious instead funded the purchase of the property by Katey LR in exchange for the use of the property to plant trees, with the intention of obtaining consent and acquiring the property from Katey LR later.

"The OIO learned of the purchase in 2013, when Carbon Conscious sought consent to buy the land from Katey LR.

"Although the sole shareholder of Katey LR is not an overseas person, we consider that her relationship with Carbon Conscious – and the joint manner in which Carbon Conscious and Katey LR acted to acquire the property – makes Katey LR an associate of an overseas person," said McClure. "Therefore Katey LR required consent to purchase sensitive land."

(BusinessDesk)