M&A / Proposed law aimed at involving investors in the transfer of French agricultural operations 

The Senate has passed a proposed law creating the Agricultural Investors Land Pooling Company, which is heavily inspired by the forest investment group. 

A proposed law aiming to involve investors in the transfer of French agricultural enterprises was adopted in its first reading by the Senate on October 30, 2023. 

This proposed law aims to create a new form of company, the Agricultural Investment Land Pooling Company (GFAI), in order to establish a new way of financing and accessing agricultural land. 

The GFAI would be a land holding company, similar to existing GFAs which would be maintained, and its legal framework would be largely inspired by that of Forest Investment Groups (GFI). 

In the traditional sense, individuals could acquire or subscribe to shares of the GFAI, which, with these capital contributions, would acquire agricultural land. The GFAI would then grant a long-term lease on this land, allowing a farmer who does not have sufficient funding, to operate it. 

Unlike the traditional GFA, the GFAI could offer its shares to the public. This characteristic would allow it to attract more capital and enhance its efficiency on a larger scale. 

The SAFER’s preemption right would apply in the event of the sale of all GFAI shares. 

The GFAI would benefit from specific provisions enjoyed by GFAs, particularly in tax matters (partial exemption from gift tax and partial or total exemption from real estate wealth tax) and in terms of voting rights (double voting rights for individuals). 

The minimum share capital would be €760,000, and the nominal shares would have a minimum amount of €150. 

For the application of certain provisions of the Monetary and Financial Code, the GFAI would be assimilated to collective investment organizations, and its shares, to financial instruments. The GFAI’s management activity would be governed by the AMF’s regulations. 

The public offering of GFAI shares would impose: 

A preferential right for the acquisition of shares offered for sale to the benefit of GFAI members other than legal entities, and optionally, a priority right for associates participating in the operation. 

That at least 15% of the GFAI’s maximum capital be subscribed by the public within two years from the opening of the subscription, under penalty of dissolution of the GFAI. 

All real estate assets of the GFAI be given on a long-term lease. 

The GFAI’s assets to consist of real estate properties for agricultural use or purpose, for the exercise of an agricultural activity, and of cash or similar values within the conditions and limits of ownership and management set by decree by the Council of State (Conseil d’Etat). 

The liability of each GFAI associate resorting to the public offering not exceeding the amount of their share in the capital. 

The new system would not amount to a derogation from the provisions concerning rural leases. 

The report of the Senate Finance Committee highlights that due to limited liquidity and yield risks, the scope of the GFAI should remain limited but could constitute an additional tool for installation assistance. 

The proposal is now in its first reading in the French National Assembly.