Provisional MeasureNo. 897/2019, known as MP do Agro, was converted into LawNo. 13,986/2020 on 07.04.2020 ("Law") and aims to unbureaucratize the rural producer's access to credit, inject money into the agribusiness sector and attract foreign investments.
The highlights of the Act are:
- FGS - Solidarity Guarantee Fund: The credit operations carried out by rural producers, including those resulting from debt consolidation, may be guaranteed by FGS. The form of constitution of the FGS, administration, remuneration of the administrator, use of resources, among other provisions necessary for its operation, will be provided in the statute. It is noteworthy that the FGS was instituted to replace the Fraternal Support Fund and will gather capital from producers, banks and creditors, with the purpose of ensuring the eventual renegotiation of debt or new credit taking;
- Rural Assets under appropriation: The Law provides for the possibility of the rural property owner submitting his rural property or fraction thereof to the regime of appropriation. Thus, the land, the accessions and improvements may constitute rural assets in affectation to serve as a guarantee in the issuance of CPR - Rural Product Notes (Cédula de Produto Rural) or financial transactions contracted by the owner through the CIR - Rural Real Estate Notes (Cédula Imobiliária Rural);
- CIR - Rural Real Estate Credit Note: This is a new credit note. The CIR will be nominative, transferable and of free negotiation, as well as representing (i) a promise to pay in cash, resulting from a credit operation of any type, and (ii) the obligation to deliver, in favor of the creditor, a rural property or fraction of the property linked to the rural estate in affectation, which is the guarantee of the credit operation in case the payment of the operation does not occur until the maturity date. It should be noted that this security may be guaranteed by third parties, including financial institutions or insurance companies;
- CRAs - Agribusiness Receivables Certificates and CPRs - Rural Product Notes: The Law allows these securities to be issued with a foreign exchange adjustment clause and distributed abroad;
- Economic subsidy for cereal companies: The Law authorizes the Federal Government to grant economic subsidy for the benefit of cereal companies, in the form of equalization of interest rates in financing transactions contracted with the National Bank for Economic and Social Development (BNDES) until June 30, 2021. It should be noted that the National Monetary Council will also establish the conditions necessary for contracting this financing; and
- Relaxation of the ownership of rural real estate property by foreigners: The Law provides for the non-applicability of Law 5.709, of October 7, 1971, which provides on the acquisition of rural real estate property by a foreigner that resides in Brazil or by a foreign legal entity authorized to operate in Brazil ("Law 5.709"), with regard to (i) the cases of lawful succession, except for the exception provided for in Law 5.709; (ii) the events of constitution of a guarantee in rem, including with respect to the transfer of the fiduciary ownership in favor of a national or foreign legal entity; and (iii) the cases of receipt of real estate property in settlement of a transaction with a national or foreign legal entity, or a national legal entity in which foreign individuals or legal entities that hold the majority of the corporate capital, and which reside or are headquartered abroad, participate for any reason, by means of real guarantee, payment in kind or any other form. Thus, under such circumstances, foreigners may be owners of rural properties.
The Law came into force on the date of its publication, 07.04.2020. Click here to read the Law in full.
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