The Cook Islands Business Trade Investment Board has ordered foreign operator, Tuanua Fishing, to cease all activity because it does not have approval to operate locally.
The Board's chief executive, Terry Rangi, says the company and its local operations were investigated after a complaint from local fishing operators.
Some crew from the Tuanua were reportedly seen selling fish off their boat and in some cases from the back of their truck.
Mr Rangi says this impinged on the ability of some Rarotonga fishermen to sell on the domestic market.
Tuanua Fishing was incorporated earlier this year and although it has a Cook Islands shareholder, Mr Rangi says it is deemed a foreign enterprise because two thirds of the company is owned overseas.
Cook Islands news says the Cook Islands Business Trade Investment Board has invited Tuanua Fishing to formally lodge an application to operate in the Cook Islands as a foreign enterprise.