Agricultural Foreign Investment Disclosure Act of 1978
1) Scope and Purpose The Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA) is a disclosure law. It was enacted to collect data that can be used to determine the impact of foreign investments on family farms and rural communities. Like IITSSA, it makes no attempt to restrict or regulate foreign investments in the U.S. Unlike IITSSA, which applies to both real estate and non-real estate investments, and to both U.S. investments abroad and foreign investments in the U.S., AFIDA applies exclusively to foreign ownership of U.S. agricultural land. Also unlike IITSSA, AFIDA reports are made available for public examination.
AFIDA requires foreign persons who hold, buy or sell any interest in agricultural land to file a report with the U.S. Secretary of Agriculture within 90 days of the acquisition or transfer. The report must describe the holding or the transaction and must identify certain owners of the foreign investor. Prior to amendment of the AFIDA in 1998, information collected was used by U.S. Department of Agriculture’s Economic Research Service in the preparation of periodic reports to Congress and the President concerning the effect of such holdings upon family farms and rural communities. The Federal Reports Elimination Act of 1998, which had as its purpose the elimination of “unnecessary and wasteful reports,” did away with the requirement that such reports to Congress and the President be prepared.
U.S. Department of Agriculture regulations set forth the specific AFIDA reporting requirements. Reports must be submitted to the U.S. Department of Agriculture Farm Service Agency County Office that maintains reports for the county where the land is located.
2) Agricultural Land Reporting is required only with respect to agricultural land. Agricultural land means land in the U.S. currently used for forestry production and land in the U.S. used for, or, if currently idle, land last used within the past five years for, farming, ranching, or timber production, except land not exceeding 10 acres in the aggregate, if the annual gross receipts from the sale of the farm, ranch, forestry or timber products produced thereon do not exceed $1,000.
3) Foreign Person The reporting requirement is imposed on foreign persons. A foreign person is generally defined to include (1) an individual who is not a U.S. citizen or national or who has not been admitted into the U.S. for permanent residence; (2) a foreign government; (3) any legal entity created or organized under the laws of a foreign government; (4) any legal entity whose principal place of business is outside the U.S.; and (5) any domestic legal entity in which a significant interest or substantial control is held, directly or indirectly, by any, or a combination of, the persons described in clauses (1) through (4) above. A “significant interest or substantial control” is defined to mean an interest of 10 percent or more held by a single person described in clauses (1) through (5); an interest of 10 percent or more held by a combination of the persons described in clauses (1) through (5), if such persons are acting in concert; or an interest of 50 percent or more held by a combination of the persons described in clauses (1) through (5), regardless of whether such persons are acting in concert.
4) Reporting Requirements Any foreign person who held, holds, acquires, or transfers any interest in U.S. agricultural land is required to file a report on Form FSA-153 within 90 days of the acquisition or transfer of the interest, not later than 90 days after the date on which a person becomes a foreign person, or not later than 90 days after the date in which such land becomes agricultural land. The report asks for, among other things, the following information of the person required to submit a report: (1) the legal name and address of such foreign person; (2) citizenship, if that foreign person is an individual; (3) the nature, name, country of organization, and principal place of business of the foreign person, if such person is not an individual or government; (4) the type of interest held by the foreign person who acquired or transferred an interest in agricultural land; (5) the legal description and acreage of the agricultural land; (6) the purchase price, and other consideration, paid for the interest in agricultural land, the amount of the purchase price or value of consideration yet to be given, and the current estimated value of the land reported; (7) if the foreign person transfers an interest in agricultural land, the name, address, and citizenship of the transferee (if an individual) or country in which created, principal place of business, and nature of the transferee (if not an individual or government); (8) the agricultural purposes for which the land will be used; (9) where applicable, the name, address, and relationship of the person completing the form for the foreign person; (10) information about how the agricultural land was acquired or transferred, the relationship of the foreign person to the previous holder of the interest acquired and information about the rental agreement, if any; and (11) the date the interest in land was acquired or transferred.
The report requires the foreign person to identify any foreign individual, government, or legal entity that holds a direct interest of 10 percent or more in the foreign person. The U.S. Secretary of Agriculture may in turn require any such foreign individual, government, or legal entity that is so identified to identify any foreign individual, government, or legal entity holding an interest of 10 percent or more in it.
5) Verification An entity which has issued fewer than 100,000 shares of common and preferred stock, or instruments convertible into equivalents thereof, shall be considered to have satisfactorily determined that it has no obligation to file a report if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that persons with foreign mailing addresses hold significant interest or substantial control (i.e., 10 percent or greater interest in a U.S. legal entity which in turn holds an interest in agricultural lands) of the entity. An entity that has issued 100,000 shares or more of common or preferred stock, or instruments convertible into equivalents thereof, shall be considered to have satisfactorily determined that it has no obligation to file a report if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that the percentage of shares held in such entities by persons with foreign mailing addresses and by investment institutions which manage shares does not equal or exceed significant interest or substantial control in such entity.
6) Penalties Any foreign person who violates the reporting requirements shall be subject to a penalty of one-tenth of one percent of the fair market value of the foreign person’s interest in the agricultural land for each week that such violation continues, not exceeding a total penalty of 25 percent of the fair market value of the foreign person’s interest in the land. The failure to submit a required report or the knowing submission of a report that does not contain all required information or that contains false or misleading information constitutes a violation of AFIDA. For submission of an incomplete report or a misleading report, the penalty is 25 percent of the fair market value of the foreign person’s interest in the agricultural land.
AFIDA requires foreign persons who hold, buy or sell any interest in agricultural land to file a report with the U.S. Secretary of Agriculture within 90 days of the acquisition or transfer. The report must describe the holding or the transaction and must identify certain owners of the foreign investor. Prior to amendment of the AFIDA in 1998, information collected was used by U.S. Department of Agriculture’s Economic Research Service in the preparation of periodic reports to Congress and the President concerning the effect of such holdings upon family farms and rural communities. The Federal Reports Elimination Act of 1998, which had as its purpose the elimination of “unnecessary and wasteful reports,” did away with the requirement that such reports to Congress and the President be prepared.
U.S. Department of Agriculture regulations set forth the specific AFIDA reporting requirements. Reports must be submitted to the U.S. Department of Agriculture Farm Service Agency County Office that maintains reports for the county where the land is located.
2) Agricultural Land Reporting is required only with respect to agricultural land. Agricultural land means land in the U.S. currently used for forestry production and land in the U.S. used for, or, if currently idle, land last used within the past five years for, farming, ranching, or timber production, except land not exceeding 10 acres in the aggregate, if the annual gross receipts from the sale of the farm, ranch, forestry or timber products produced thereon do not exceed $1,000.
3) Foreign Person The reporting requirement is imposed on foreign persons. A foreign person is generally defined to include (1) an individual who is not a U.S. citizen or national or who has not been admitted into the U.S. for permanent residence; (2) a foreign government; (3) any legal entity created or organized under the laws of a foreign government; (4) any legal entity whose principal place of business is outside the U.S.; and (5) any domestic legal entity in which a significant interest or substantial control is held, directly or indirectly, by any, or a combination of, the persons described in clauses (1) through (4) above. A “significant interest or substantial control” is defined to mean an interest of 10 percent or more held by a single person described in clauses (1) through (5); an interest of 10 percent or more held by a combination of the persons described in clauses (1) through (5), if such persons are acting in concert; or an interest of 50 percent or more held by a combination of the persons described in clauses (1) through (5), regardless of whether such persons are acting in concert.
4) Reporting Requirements Any foreign person who held, holds, acquires, or transfers any interest in U.S. agricultural land is required to file a report on Form FSA-153 within 90 days of the acquisition or transfer of the interest, not later than 90 days after the date on which a person becomes a foreign person, or not later than 90 days after the date in which such land becomes agricultural land. The report asks for, among other things, the following information of the person required to submit a report: (1) the legal name and address of such foreign person; (2) citizenship, if that foreign person is an individual; (3) the nature, name, country of organization, and principal place of business of the foreign person, if such person is not an individual or government; (4) the type of interest held by the foreign person who acquired or transferred an interest in agricultural land; (5) the legal description and acreage of the agricultural land; (6) the purchase price, and other consideration, paid for the interest in agricultural land, the amount of the purchase price or value of consideration yet to be given, and the current estimated value of the land reported; (7) if the foreign person transfers an interest in agricultural land, the name, address, and citizenship of the transferee (if an individual) or country in which created, principal place of business, and nature of the transferee (if not an individual or government); (8) the agricultural purposes for which the land will be used; (9) where applicable, the name, address, and relationship of the person completing the form for the foreign person; (10) information about how the agricultural land was acquired or transferred, the relationship of the foreign person to the previous holder of the interest acquired and information about the rental agreement, if any; and (11) the date the interest in land was acquired or transferred.
The report requires the foreign person to identify any foreign individual, government, or legal entity that holds a direct interest of 10 percent or more in the foreign person. The U.S. Secretary of Agriculture may in turn require any such foreign individual, government, or legal entity that is so identified to identify any foreign individual, government, or legal entity holding an interest of 10 percent or more in it.
5) Verification An entity which has issued fewer than 100,000 shares of common and preferred stock, or instruments convertible into equivalents thereof, shall be considered to have satisfactorily determined that it has no obligation to file a report if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that persons with foreign mailing addresses hold significant interest or substantial control (i.e., 10 percent or greater interest in a U.S. legal entity which in turn holds an interest in agricultural lands) of the entity. An entity that has issued 100,000 shares or more of common or preferred stock, or instruments convertible into equivalents thereof, shall be considered to have satisfactorily determined that it has no obligation to file a report if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that the percentage of shares held in such entities by persons with foreign mailing addresses and by investment institutions which manage shares does not equal or exceed significant interest or substantial control in such entity.
6) Penalties Any foreign person who violates the reporting requirements shall be subject to a penalty of one-tenth of one percent of the fair market value of the foreign person’s interest in the agricultural land for each week that such violation continues, not exceeding a total penalty of 25 percent of the fair market value of the foreign person’s interest in the land. The failure to submit a required report or the knowing submission of a report that does not contain all required information or that contains false or misleading information constitutes a violation of AFIDA. For submission of an incomplete report or a misleading report, the penalty is 25 percent of the fair market value of the foreign person’s interest in the agricultural land.