Sempatous law: strengthening the control of agricultural investments

Sempastous Law:

The Sempastous law aims to preserve agricultural lands and make them accessible to farmers by limiting land purchases by non-agricultural investors. It introduces a new procedure for controlling the transfer of shares and actions of companies on the agricultural land market.

Conditions for Controlling the Transfer of Social Shares

The law allows for the triggering of a control mechanism by the SAFER (Land Development and Rural Establishment Companies) under two conditions:

-When a sale exceeds 40% of the company’s shares. (Exempt from this control are sales between spouses, registered partners, transactions between long-term associated operators)

-The surface area owned exceeds a significant enlargement threshold. This threshold is set in hectares by the regional prefect. It is between 1.5 times and 3 times the regional average useful agricultural area.
The January 1st, 2023 decree specifies the conditions under which the regional prefect sets the significant enlargement threshold from which movements of social shares of companies owning or operating real estate for agricultural use or purpose lead to a takeover subject to prior authorization.

As soon as an operation combines both criteria mentioned above, it must be authorized by the departmental prefect after the competent SAFER has processed the application file.
First, a request for authorization file must be sent to the SAFER, which will give an opinion on the proposed corporate transaction to the departmental prefect.
Then, the prefect will have to decide on the validity of the operation.

Share transfers must be notified to SAFER

The law also imposes notification obligations for the sale of agricultural lands. Landowners must now inform the SAFER of the sale of their land. The SAFER then has a pre-emptive right to buy the plot at a fair price and offer it to farmers. The SAFER is now responsible for issuing an opinion on these transfers. They process authorization requests and transmit their opinion to the prefect who can approve or refuse transfers and set conditions.

Why is the Sempastous law important?

The Sempastous law is a response to land speculation in France. Agricultural lands have become a source of investment for non-agricultural investors, which has led to a rise in prices and a decrease in access to lands for farmers. This law is important to preserve French agriculture and allow farmers to access lands to carry out their profession.

The Sempastous law is an important legislation for agricultural investment that changes the rules of the game. Investment in agricultural real estate remains profitable, but with evolving legislation, it would be useful as an investor to engage a lawyer to secure your acquisition.