BRASILIA – Foreign companies and individuals who wish to buy land in Brazil, which exceeds an area larger than 5 hectares will have to seek permission from the government. The purchase of areas up to 5 hectares will be evaluated and authorized by a special body, the Conselho Nacional de Terras – Conater (National Land Council). Over 5 hectares, the purchase must be approved by Congress.
In both cases, the draft bill under consideration by the government to define “limits the acquisition of rural property by foreigners,” says that “foreign individual residing in a foreign country and authorized to operate in the country” will have to build a Sociedade de Propósito Específico – SPE (Special Purpose Company – SPC) to buy the land and offer the government a golden share. In practice this means that the government will partner with all foreign agribusiness.
Golden share is a special share which the company offers the government as a way for them to participate in strategic decisions – giving it even the right of veto on decisions.
Foreign individuals and foreign companies that are not authorized to operate in the country simply can not buy land. Brazilian companies controlled directly or indirectly by foreign funds or that receive foreign investment funds will also be subject to the rules of the new law.
An aide of President Rousseff said yesterday that the law being sent to Congress “will not create any barriers to foreign investment.”
The goal, he added, “is to create an instrument of control and supervision of by the government over land use.” The law, he said, is “very short” and “clear rules” to avoid a limit on area in each region of the country for the notification of purchase to the government.
The government recognizes that 5 ha is an area equivalent to an average size weekend-retreat in the outskirts of urban areas, but says that 50 thousand square meters will be used only as reference to set up overseas that are looking to buy land for investment.
“If the purchase involves investment, then the government must make a strategic management of the land sold to foreigners,” summarized an adviser to the Ministry of Agricultural Development (MDA).
An adviser to the Ministry of Agriculture cited the example of “strategic management” the interest of the government to encourage investments that increase production of ethanol. In this case, he explained, the “Land Council” could authorize a foreign company in Brazil or a national company under foreign control to buy “thousands of hectares.”
The bill is being studied under the direction of Gerald Law Union (AGU), the Civil House and at least two more ministries (Agriculture and Agrarian Development) and the National Institute of Colonization and Agrarian Reform (INCRA). The board will be created by decree after Congress approves the new law of the land purchase by foreigners.
The bill in Congress that will be considered is the third government action to control land sales to foreigners.
In August last year, an opinion of the Attorney General’s Office reaffirmed the limits imposed by law 5.709/1971 reference land purchases by foreigners, which were not clear based on another opinion, AGU also made in 1994.
Today, by law, foreign companies can buy up to 5 000 hectares, never exceeding 25% of the municipal area of the location of the farm. Citizens of the same foreign nationality can not together have more than 10% of the area of a municipality.
source: Agência Estado via Estadão
NOTE: This is still under study.