On December 29, 2011, Law 26,737 establishing the Protection System of Argentine Title to or Possesion of Rural Land became effective. Its Regulatory Decree Nº 274/2012 was published in the National Bulletin on February 29, 2012 (hereinafter, altogether, the "RRL")

The enforcement authorities of the RRL created by Law 26,737 are the following: (i) the Argentine Registry of Rural Land in the ambit of the Ministry of Justice and Human Rights and formed by the Argentine Ministry of Agriculture, Cattle Breeding and Fishing; and (ii) the Inter-ministerial Council of Rural Land which shall be chaired by the Ministry of Justice and Human Rights and formed by the Ministry of Agriculture, Cattle Breeding and Fishing, the Secretariat of Environment and Sustainable Development subordinate to the President's Cabinet, the Ministry of Defense and the Ministry of the Interior, with representatives of the provinces.

Highlights of the RRL

As from the date of effectiveness of the RRL (i.e. December 29, 2011) the following provisions apply:

Foreign owners or holders of rural land, be they individuals or legal entities, as they are described under the RRL, shall report title to or possession of such land to the Argentine Registry of Rural Land no later than August 27, 2012. In addition, any change in the equity interests of the foreign legal entities must be reported to the Argentine Registry of Rural Land within 30 days following such act.

Any purchase, transfer, assignment of possession rights, irrespective of the manner, name assigned by the parties and term thereof, to be made in favor of foreign individuals or legal entities shall have to be previously authorized by the Argentine Registry of Rural Land.

The RRL provides for four limitations: (a) the limit on title ownership or possession of rural land in the Argentine territory by foreign persons is fixed at fifteen- percent; (b) such percentage shall be calculated also on the territory of the province or municipality (that is, 15% of rural land in a province or municipality is the maximum extension of rural land in such province or municipality that may be owned or possessed by foreign persons); (c) in no case may persons of one same foreign nationality exceed thirty percent (30%) of the percentage mentioned above, that is, 15% and (d) the area of rural land belonging to one same foreign owner may not exceed one thousand hectares (1,000 ha) in the "core zone" (i.e. specific areas of the provinces of Cordoba, Buenos Aires and Santa Fe) or equivalent areas as they will be determined by the Inter-Ministerial Council of Rural Land. Until such equivalence is determined, the limit of 1,000 hectares applies to the entire Argentine territory.

Furthermore, foreign individuals or legal entities may not own or possess pieces of property containing or adjoining large and permanent bodies of water featured as large and permanent (such as seas, rivers, streams, lakes, lagoons, wetlands, swamps, glaciers, water-bearing formations, among others). The Inter-ministerial Council of Rural Land shall determine the bodies of water that conform to the above-mentioned definitions.

Should Argentine individuals or legal entities organized in Argentina appear to pretend national ownership thus infringing the RRL, such circumstance shall be considered an unlawful and fraudulent simulation. Any legal acts carried out in violation of the provisions of the RRL shall be absolutely, totally and forever null and void, without the right to claim any compensation for the persons that committed the illegal act or participated therein.

Infringement of the rules contained in the RRL shall give rise to the following penalties: warning, fine and/or special disqualification between 6 months and 2 years from filing applications for permits. In case of fines on legal entities, same shall be imposed jointly and severally on the entity and its directors, managers, syndics, members of the supervisory committee, administrators, attorneys or representatives who have been involved in the punishable act.

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.