Brazil: Ownership Of Rural Land By Local Companies With Foreign Control Is Authorized!

The ownership of rural land by foreign companies or individuals has been debated in and outside the Courts for decades in Brazil.

Recently the Special Committee of the São Paulo State Tribunal authorized the property registration of rural land on behalf of a Brazilian company held by foreign shareholders.

The Magistrates ruled that the plaintiff (Brazilian Company) was not subject to Federal Law 5.709/1971, which imposes limitations to the acquisition of rural land by foreign individuals or companies.

The original petition of registration was denied by the Internal Affairs of the São Paulo State Justice, which was following Ruling LA-01/2010 issued by the Federal General Attorney´s Office (AGU). Such ruling establishes that Brazilian companies that are controlled by foreign based individual or companies are also subject to the limitations imposed by Federal Law 5.709/1971.

Contrary to the ruling above, the magistrates understood that it is not admissible to discriminate Brazilian companies held by foreign capital. Moreover, the Magistrates understood that Federal Law 5.709/1971, on this specific topic, was overruled by the Federal Constitution of 1988.

It is important to note that this decision was taken by the Special Committee of the São Paulo State Court, composed by 25 Magistrates. This attributes considerable weight to the decision, making it a remarkableprecedent.

This decision will orient all Courts and Notaries in São Paulo State.

In fact, based on the ruling of the São Paulo State Court, the Internal Affairs Director, José Renato Nalini, reviewed the orientation of the Internal Affairs Office and issued a Normative Orientation allowing Brazilian Companies held by foreign capital to acquire rural land in São Paulo.

We could not agree more with the decision of the São Paulo State Tribunal and its correct application of the constitutional principles.

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