On June 30, 2016 decree No. 820/2016 was published in the Official Gazette. This decree modifies decree No. 274/2012, which in turn regulates Law No. 26.737 which imposed restrictions and limits to the acquisition and ownership of rural lands in Argentina by foreign individuals and legal entities.
The decree is aimed to increase flexibility and to clarify certain issues which raised doubts and made the application of the regime difficult.
The main changes are as follows:
- a legal entity shall be considered as foreign when foreign individuals or legal entities, whether directly or indirectly, represent the majority of the votes, regardless of their shareholding or interest held. For the purpose of this regime, except for evidence revealing otherwise, a legal entity shall be considered as foreign when a foreign person or entity – or more than one in case of joint control –holds 51% of the shareholding or interest. Complex interpretative issues derived from prior rules, which included different situations and shareholding percentages, are thus eliminated;
- the cases in which the modification (direct or indirect) of the shareholding or interest of a legal entity owning rural lands shall be notified to the National Registry of Rural Lands, are reduced and specified;
- the authorization certificate shall
not be required in the following cases:
- modifications in the shareholding or interest of a legal entity owning rural lands (including transfer or a change of direct or indirect control);
- conveyance of rights in rem splitting the ownership (usufruct, surface right, right to use and habitation) and anthicresis, or transfer of said rights in rem;
- transfer of ownership of rural lands located at industrial zones, areas or parks; or
- transfer of ownership of rural lands by inheritance to foreign forced heirs;
- if, as a consequence of any of the modifications in point (c) (i) the legal limit of foreign ownership (section 10 of Law No. 26,737) is exceeded, this shall not lead to the nullity of the transfer, but owner or the controlling party shall have the obligation to adapt to the legal limit, by transferring equity interest, modifying the type of exploitation or disposing of the portion of rural land in excess of the legal limit;
- the regime shall not apply to foreign persons in co-habitation with Argentine citizens registered in accordance with section 512 of the National Civil and Commercial Code 5 (five) years prior to the conveyance or transfer of the related rights, and as long as they prove continuous, permanent and verified residence in the country for an equal period of time;
- the decree includes provisions related to calculation of the legal limit of ownership (section 10 of Law No. 27,737) in special situations (e.g. joint ownership, divided ownership, revocable ownership, foreclosures, among others). In the case of foreign legal entities, the calculation shall be apportioned among the individuals or legal entities according to their shareholding or interest in such foreign legal entity;
- the following parameters are established for being taken into account for the determination of equivalencies: use and productivity related to the soils, weather, and landscape, social, cultural and environmental value, which encompasses biodiversity, biomass, environmental services and other resources involved. In addition, the different types of exploitation of the rural lands involved should be considered;
- the equivalencies shall be determined by the Inter-ministerial Board of Rural Lands, after prior proposal of each province. The Inter-ministerial Board of Rural Lands may modify the system of equivalencies considering the changes related to the quality of the lands, the growth of urban areas, and the implementation of projects of general interest or of local, regional or national relevance, among others. The National Registry of Rural Lands shall not modify or alter the equivalencies of areas; and
- the term of validity of the authorization certificates is extended to 120 (one hundred and twenty) days.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.