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29 November 2023

Development of a New Financial Scheme

Catering to the Transfer of French Farms

by Louis Vallet LLM, BIGNON LEBRAY, WI&NE Nouvelle-Aquitaine

Translated by Nathalie Parent Dumoulin, Founder, NEXT EDITION, WI&NE Nouvelle-Aquitaine

A bill aimed at facilitating the transfer of farms by involving investors was passed on its first reading by the French Senate on October 30, 2023.

The draft law aims to establish a Farmland Acquisition and Investment Fund (GFAI in French) to provide a new way of financing and accessing agricultural land.

The GFAI would be a land holding company, similar to existing Farmland Funds (GFAs in French), and its legal status would be primarily inspired by the Forestry Investment Funds (GFI in French).

In this agricultural model, individuals could purchase or subscribe to Farmland Acquisition and Investment Fund shares. The GFAI would use this capital to acquire farmland, leased out long-term to farmers lacking sufficient financing to buy the land.

Unlike classic GFAs, the GFAI could offer shares to the public, thus attracting more capital and boosting its efficiency on a larger scale.

SAFER’s (French Rural Development and Land Improvement Companies) right of first refusal would apply if all GFAI shares were to be sold.

The GFAI would benefit from the same provisions and voting rights as GFAs, notably in terms of partial tax exemption from gratuitous transfer duties and partial or total exemption from property wealth tax, as well as double voting rights for individuals.

The minimum share capital would be 760,000 euros, and the minimum registered share value would be 150 euros.

To apply specific provisions from the French Monetary and Financial Code (CMF in French), the GFAI would be treated as a collective investment scheme and its units as financial instruments. The GFAI’s management activity would be governed by the Financial Markets Authority (AMF in French) regulations.

For the GFAI to go public, the following conditions must be met:

It is important to note that the new financial scheme would not derogate from the existing provisions governing rural leases.

According to a report by the French Senate Finance Committee, the scope of the GFAI should remain a limited tool for installation aid due to the risks of limited liquidity and returns. However, it would be an additional option for those seeking aid.

The legislative proposal is currently at the first reading in the French National Assembly.

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