On December 22, 2011 the Argentine Congress enacted Law No. 26.737 denominated “Protection Regime of the National Domain of Property, Possession or Holding of Rural Land” (hereinafter, the “Law”) aimed at limiting foreign ownership on rural land in Argentina.
The first noteworthy obligation is that the Law requires foreign owners of land, whether they are individuals or legal entities, to report such ownership to the Enforcement Authority within one hundred eighty (180) days as of the date the law came into force, December 27, 2011. Such term will expire on June 27, 2012.
The main highlight of the Law is that it sets forth a limit of fifteen percent (15%) to any ownership by foreign individuals or entities of rural properties in Argentina. This limit percentage is also calculated on the territory of the province, municipality or equivalent administrative unit. Foreign ownership means any acquisition, transfer, and assignment of rights in favor of, among others:
(i) Individuals of foreign nationality.
(ii) Foreign or domestic companies whose capital is owned by individuals or foreign companies, in a percentage higher than fifty-one percent (51%), or in proportions necessary to control the corporate will regardless their relevant shareholding percentage.
(iii) Companies related to or controlled by a foreign company or cooperative, in a percentage higher than twenty-five percent (25%), or such companies having the necessary votes to control the corporate will regardless their shareholding percentage.
(iv) Individuals or legal entities that, without formally being registered as partners, act in a company as if they were.
(v) Companies which have issued bonds or debentures, and this allow the holder to increase his/her shareholding in a percentage higher than twenty-five percent (25%), and provided such holders are foreign individuals or entities.
(vi) Foreign legal entities governed by foreign public law.
The following natural persons of foreign nationality are excluded from the application of the Law:
(i) Individuals who have at least ten (10) years of continuous, permanent, and proved residence in Argentina.
(ii) Individuals who have Argentine children and demonstrate a continuous and permanent residence of at least five (5) years in Argentina.
(iii) Individuals in wedlock with an Argentinean citizen, five (5) years earlier to the transfer of the relevant ownership rights and demonstrate a continuous and permanent residence.
The Law also stipulates that rural land owned by the same foreign owner may not exceed one thousand hectares (1,000 has.) in the core area or equivalent area, depending on geographical location.
This equivalent area is determined by the Ministerial Council of Rural Lands according to the location of the land and its proportion in relation to the rest of the municipality, department, and province, and the capacity and quality of the land for its exploitation.
Additionally, foreign legal entities or individuals shall not be owners of rural lands that comprise or are located beside permanent and significant bodies of water.
The Law requires foreign owners of land, whether they are individuals or legal entities, to report such ownership to the Enforcement Authority within one hundred eighty (180) days as of the date the law came into force, December 27, 2011. Such term will expire on June 27, 2012.
The Law provides for the creation of a National Rural Land Registry in the jurisdiction of the Ministry of Justice and Human Rights. Some of its specific functions are:
(i) Granting certificates to authorize any act by which ownership or possession over rural lands is transferred.
(ii) Control the compliance of the Law with standing to act before administrative and judicial authorities.
Moreover, the Law provides for the creation of a cadastral and property survey of rural land which will be done within one hundred eighty (180) days from the creation of the National Registry of Rural Lands.
The Law explicitly clarifies that it does not affect existing rights, and establishes a temporary clause which provides that any acquisition, transfer or assignment of the rights to be made between the Law’s effective date and the date of its implementing regulations is reached by the Law.
The Law was promulgated by the Executive Power on December 27, 2011.