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FDI: Entry and ownership rule
On June 29, 2016, the Government of Argentina enacted Decree 820/2016 reducing certain restrictions imposed under existing laws on the acquisition and leasing of rural lands by foreign individuals and legal entities. The main changes introduced relate to determining when the Rural Land Law applies, the clear definition of “Foreign Legal Entity”, and the modification of certain reporting requirements and the consequences for failing to comply with such requirements.
In the first case, according to the new Decree, the application of the Rural Land Law shall be determined as it follows depending on the type of investments:
As to the definition of "Foreign Legal Entity", Decree 820/2016 defines it as any legal entity registered as an owner of rural lands in which foreign individuals or legal entities, directly or indirectly, control the majority vote. In addition, it does not differentiate between legal entities incorporated in Argentina or abroad, making only the 51% foreign ownership as the distinctive feature.
With regard to reporting requirements and consequences, the new Decree still maintains the obligation to disclose any modification in their capital stock, however in case of failure, it eliminates the audit inspections triggered by a failure to comply with the reporting requirement.
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