1E9Ct5D

After August 2010, through a new AGU opinion, signed by the then President of the Republic LuizInácio Lula da Silva, Brazilian companies whose capital is controlled by a foreign corporate entityreceived the same treatment as a foreign company, and began to suffer the restrictions set forth inLaw 5.709, of 7 October 1971, namely: (i) cannot acquire a rural area that has more than 50 modulesof undefined exploitation; (ii) only rural real property to be used for the implementation of cattlebreeding, agricultural and industrial projects and that are linked to the corporate purposes set forth intheir corporate bylaws or articles of association and approved by the Ministry of Land Developmentand INCRA may be acquired or leased.On 3 December 2012, the Office of Judicial Administration of the State of São Paulo Supreme Court(Corregedoria Geral de Justiça do Tribunal de Justiça do Estado de São Paulo) issued Opinion461/2012-E holding that Law 5,709/71 is unconstitutional and advising the State of São Paulo notariesto ignore the restrictions and guidelines set forth in that Law. This is a hot topic that must be analyzedon a case by case basis, taking into account the negotiated terms and the State in which the propertyis located.Furthermore, it is important to remember that a determination exists whereby the sum of the ruralareas belonging to foreign persons or Brazilian companies controlled by foreign companies shall notexceed 25% of a municipality.Special restrictions are also imposed on rural properties located in areas known as frontier strips,which are considered indispensable to national security. This area is defined as the 150 kilometerwideinternal strip (equivalent to 93 miles), running parallel to the borderline of the national territory.The purchase of rural land within the frontier strip, by a foreign individual or corporate entity, or by acompany that has any foreign ownership interest (whether majority or minority, as a shareholder ormember of the Board), will depend on prior approval from the National Defense Council (Conselho deDefesa Nacional).Prior approval from the National Defense Council will also be required for the establishment oroperation, within the frontier strip, of industries that are of interest to national security, listed as such inan Official Decree, and for the establishment, in this same strip, of companies engaged in thefollowing activities:a) prospecting, extraction, exploitation and utilization of mineral resources, except for those ofimmediate application in civil construction, as classified in the Mining Code, andb) land settlement and rural developments.29