The Overseas Investment Office says it will look very carefully at transactions that appear to have been artificially split to allow what is labelled as an initial stage of a transaction so that it appears to meet the ownership or control requirements of the Overseas Investment Act 2005.

In the latest issue of its PeriOIOcal newsletter, the Office says it has recently looked at instances where people have, "we would say", artificially split a transaction into two parts to first come below the ownership requirements of the Act (such as the 25% shareholding threshold) before seeking approval for the remainder of the transaction.

"In reality, there is only one transaction," it says.

The Office says it will examine the detail and context of both tranches to ensure there are two genuine stages of a transaction or a genuine commercial reason for the split.

"We will also carefully examine any arrangement that gives an overseas investor negative control, such as a right of veto, which appears to be greater than what their ownership interest might suggest. 

"For example, we consider a person may have a greater than 25% control of a company (even if they only own 24.9% of the shares) if the constitution requires all key decisions of that company to be passed by 75.1% of the shareholders, and includes an express requirement that the particular shareholder must be part of that 75.1% majority."