Regulation of the Rural Land Law

Decree No 274/2012 (the “Decree”) implemented law No 26,737 that sets forth the Protection Regime of the National Domain over the Property, Possession or Control of Rural Land (the “Law”); which restricted the sale of land to non-argentines to fifteen percent (15%) of the national territory of arable land. The Decree was published in the Official Gazette on February 29, 2012.

The Decree regards rural land those lands that emerge from subtracting the area corresponding to the urban suburbs determined by the relevant constitutions, provincial decrees or laws, organic letters or municipal ordinances to the entire relevant provincial territory.

The Decree sets forth a system by means of which within sixty (60) days following its implementation, Argentine provinces shall communicate to the National Register of Rural Land (the “Enforcement Authority”) the total area of each one of these provinces discriminating the corresponding rural and urban land.

In addition, provinces shall inform all rural properties owned or possessed by foreign individuals or entities, as arises from competent provincial agencies. These properties shall be sorted by departments, municipalities or equivalent political division. Lacking such information, the provinces shall submit the complete index of domain holders and possessors listings kept on their competent agencies. The provinces shall also inform the complete payroll of foreign entities or those registered companies having foreign participation in their jurisdiction.

The authority of each local government must inform to the Enforcement Authority any change in the zoning rules that could result in an amendment in the rural land surface corresponding to that jurisdiction within ten (10) days as from the relevant modification.

Section 3 of the Law sets forth the obligation of legal entities whose share capital is owned by non-argentine individuals or foreign legal entities in a proportion superior to fifty one per cent (51%) to communicate to the Enforcement Authority any modification in their shareholding .Such obligation will be in charge of the management body of the relevant company.

In connection with the administrative proceedings commenced for breaches to the Law, the Decree provides that the Enforcement Authority will provide the initiation of administrative proceedings to investigate possible breaches to Law. The decision to open the proceeding will be reported to the infringer who shall provide evidence within ten (10) business days after being served. Once the evidence is produced, the National Director of the National Register of Rural Land will apply the penalty which deems appropriate. The penalties set by the Decree are: warning, fine and special disqualification from six (6) months to two (2) years.

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