1E9Ct5D

There are restrictions in statutory law with respect to the acquisition of real property located in nationalsecurity and rural areas, by foreign individuals or corporate entities, or by Brazilian corporate entitiescontrolled by foreigners residing or based abroad.Rural real property is subject to the following basic rules:a) the total sum of the rural areas owned by foreigners cannot exceed 1/4 of the surface area of theMunicipalities and persons of the same nationality cannot own more than 40% of the said limit;b) the surface areas are divided into module units, whose areas, depending on the locality, varybetween 5 ha. (in the Greater São Paulo region) and 100 ha. (according to the region of the Country);c) foreign individuals residing in Brazil may freely purchase areas of up to 3 module units for undefinedexploitation, provided that the above surface area restrictions are observed and it is the foreignindividual’s first purchase (in practice, it is recommended that the National Land Development Agency(Instituto Nacional de Colonização e Reforma Agrária – INCRA) is consulted to ensure that thepurchase complies with the surface area restrictions); for areas in excess of 3 and up to 50 moduleunits, and for the operation of a second purchase, authorization from INCRA must be obtained,whereas for areas of between 20 and 50 module units, a land use project will also have to besubmitted; for areas of 50 to 100 module units, approval needs to be obtained from the President ofthe Republic, and it will have to be evidenced that the project is of national interest and approved bythe National Defense Council; for the purchase of areas in excess of 100 module units authorizationfrom Congress will have to be obtained;d) foreign corporate entities authorized to operate in Brazil or corporate entities based in Brazil butcontrolled by individuals or corporate entities residing or based abroad, must obtain authorization fromthe Ministry of Land Development, through the competent agency, in this case INCRA;e) a foreign individual that has Brazilian children or is married under the partial or community propertysystem with a Brazilian person are free to purchase rural property.Recently, there was a significant change in the understanding that was being applied to item “d”above.Until July 2010, the understanding that prevailed was that of the former AGU (Office of the FederalAttorney General) opinion in the sense that there was no distinction between the Brazilian company ofnational capital and the Brazilian company of foreign capital. Therefore, a company based in Brazil,whose capital was controlled by a foreign corporate entity, did not suffer any type of restriction, eitherto purchase or lease rural property in Brazilian territory, provided that the property was not located inthe Country’s frontier strip.28