The Brazilian Supreme Court unanimously ruled that the restrictions established in Law No. 5,709/71 regarding the acquisition and use of rural properties by Brazilian companies under foreign control are constitutional. The Court also reaffirmed that the Union has the authority to authorize this type of transaction.

The decision reinforces the understanding that Brazilian companies with majority foreign capital remain subject to the same legal regime applicable to foreign companies, especially from the perspective of national sovereignty and territorial security.

Immediate impacts for agribusiness

The decision is likely to have a direct impact on:

• Structured transactions for the acquisition of rural properties involving foreign capital;
• Foreign investment in territorial expansion in agriculture;
• Real estate and corporate due diligence processes;
• Corporate structures used for the acquisition or leasing of rural land;
• Registration analysis and approval of transactions before notaries and competent authorities.

Brazilian companies controlled by foreign investors must continue to observe the legal limits established in Law No. 5,709/71, including the need for specific authorizations in certain cases.

Where the decision does NOT apply

The Supreme Court's decision does not It eliminates the exceptions introduced by the so-called "New Agricultural Law".“ (Law No. 13.986/2020), which remain valid.

Thus, they remain permitted, including for foreign companies or those considered equivalent:

– Establishment of real guarantees on rural properties;
– fiduciary alienation;
– consolidation of ownership in cases of default;
– payment in kind;
– Receiving property as payment for debt.

These assumptions were expressly preserved by the Agricultural Law precisely to guarantee greater legal certainty for credit and financing operations in the agricultural sector.

The Supreme Court's ruling, therefore, reinforces the restrictions on the direct acquisition of rural land by companies under foreign control., But it does not eliminate the mechanisms created in recent years to promote private credit and investment in Brazilian agribusiness.

The decision was taken at the plenary session this Thursday (23), at the conclusion of the trial of the Argument of Non-Compliance with Fundamental Precept. (ADPF) 342 and the Original Civil Action(ACO) 2463