WI&NE and Sempastous bill

Co-authored by

Benoit Ab-der-Halden, Wine Expertise Consultant, Cabinet viticole St-Vincent, WI&NE Provence-Rhône and Louis Vallet, Merger & Acquisition Lawyer, BIGNON LEBRAY, WI&NE Nouvelle-Aquitaine

Translated FR>EN by Nathalie Parent Dumoulin, NEXT EDITION, WI&NE Nouvelle-Aquitaine

Companies are developing significantly in agriculture, particularly viticulture. Whether their purpose is to operate or hold land, large agricultural holdings number and the area under their control constantly increase. When farms are sold, buyers often prefer to acquire shares of the operating or land structure or, eventually, both. The legislator did not foresee this situation within the scope of the SAFER’s preemption rights, and control over some transfers of company shares is also not subject to structural control.

In light of this situation, the legislator sought to amend the regulations. The French law on the future of agriculture, food and forestry of 13 October 2014 (known as “AAAF” in French) extended the scope of the SAFER’s preemption rights to include company shares but only in the event of total disposal of shares. As this text proved ineffective, two bills were passed (Law No. 2016-1691 of 9 December 2016, known as “Sapin 2”, and Law No. 2017-348 of 20 March 2017) to include transfers of securities in the scope of this right of preemption, regardless of the number of securities transferred. The Constitutional Council censured these two bills as infringement provisions against the right of ownership and the freedom of enterprise. Thus, the filing of a bill “on emergency measures to ensure the access regulation to agricultural land through corporate structures” to the French National Assembly by Mr Jean-Bernard SEMPASTOUS, MP. Published on 24 December 2021, this text will apply to the transactions concerned whose completion date is over one month after the effective date of the decree, setting the significant expansion threshold applicable in the region concerned by application decree no. 2022-1515 of 2 December 2022, published on 4 December 2022, which is beyond the timeframe set by the law.

The Control Mechanism of the Sempastous Bill

The SEMPASTOUS control mechanism comes in addition to the pre-existing tools SAFER has at its disposal for transferring shares in agricultural companies.

This text provides for the obligation to obtain prior prefectural authorization for the operations concerned, delivered in the light of an assessment made by the SAFER. In practice, an authorization request describing the operation must be sent to the SAFER, which will examine the file on behalf of the prefect and issue its recommendations. The aforementioned decree fixes the instruction period at two months, with the principle of a tacit favorable opinion in the event of non-transmission of the said opinion to the prefect within the period. Following the conclusions reached by the SAFER and within four months of the date of acknowledgement of receipt of the authorization request sent to the SAFER, the prefect may prohibit the operation, authorize it or make it conditional, in particular on the resale by the beneficiary of part of his land or the leasing of the same land through a long-term lease. These deadlines may also be extended by the time required for file processing and in the event of reasons opposing the authorization.

Operations Subject to the Sempastous Bill

All transactions involving company shares (sale, merger, capital increase or reduction, etc.), which will have the effect of transferring control, within the meaning of the new article L.333-2, IV of the French rural and maritime fishing code, will be affected by this text. However, only those concentrating in the hands of a single person the exploitation or ownership of land for agricultural use or vocation beyond a certain threshold, qualified as “significant land concentration”, will be subject to authorization. This threshold will be set by prefectural decree, by natural region and will be between 1.5 and 3 times the average functional agricultural area (SAUR in French) specified in the regional agrarian master plan. To assess whether this threshold has been exceeded, the total surface area exploited or held by the beneficiary of the operation after its execution must be considered per the legal provisions.

Operations Exempt from SAFER Control

Some operations will be exempt from this control regardless of the surfaces involved.

These include:

Operations carried out by the SAFERs;
Transactions carried out free of charge (donation or inheritance);
Transactions carried out between spouses, partners in a civil solidarity pact, parents and relatives up to and including the 4th degree, as well as between associates, subject to the condition that the shares are held/conserved and that they are operated

WI&NE’s Insight

The SAFER, as a member of the WI&NE association, and all WI&NE’s key experts can accompany you throughout the acquisition process and, consequently, avoid the pitfalls of a failed acquisition through in-depth analyses and audits, given the new control mechanisms of the Sempastous bill. The provided expertise is a significant advantage since a poorly prepared file can increase delays or lead to an authorization refusal by the prefect to acquire a property.

The decree can be consulted online (French version only): Décret n° 2022-1515 du 2 décembre 2022 relatif à la procédure de délivrance de l’autorisationpréalable à la prisede contrôle des sociétés possédant ou exploitant du foncier agricole – Légifrance(legifrance.gouv.fr)