By unanimous decision, the STF (Brazilian Federal Supreme Court) held that a Brazilian company controlled by foreign capital remains subject to Law 5,709/1971 with respect to the acquisition of rural properties by foreigners.
What the STF decided on rural properties held by foreigners
On 23 April 2026, the Full Bench of the Supremo Tribunal Federal (Federal Supreme Court) concluded the joint trial of ADPF 342 (claim of non-compliance with a fundamental precept) and ACO 2,463 (original civil action). The judgment, drafted by Justice Gilmar Mendes, confirms that paragraph 1 of article 1 of Law 5,709/1971 was received by the 1988 Constitution.
That provision treats as a foreign company any Brazilian legal entity the majority of whose share capital belongs to foreign individuals or legal entities resident or headquartered abroad. Such companies therefore remain subject to the same restrictions that the law imposes on the acquisition of rural properties by foreigners.
The decision was unanimous, in accordance with the vote of the Reporting Justice, Marco Aurélio, delivered back in 2021. Justices Gilmar Mendes, Flávio Dino, Cristiano Zanin, Nunes Marques, Alexandre de Moraes, Luiz Fux, Dias Toffoli and Edson Fachin followed the Reporting Justice. Justice André Mendonça, the Reporting Justice’s successor, did not vote.
In ACO 2,463, the Court declared Opinion 461/12-E of the Internal Affairs Office of the São Paulo State Court of Justice to be void. That opinion exempted São Paulo notary and registry offices from applying the law to Brazilian companies with foreign capital. As a result, the Federal Government and Incra (National Institute for Colonisation and Agrarian Reform) were confirmed as the authorities competent to authorise the acquisition of rural property by a foreign or equivalent legal entity.
The grounds for the decision
According to the headnote, the Federal Constitution establishes national sovereignty as a foundation of the Republic and as a principle of the economic order. In addition, article 190 assigns to the law the task of regulating and limiting the acquisition or lease of rural property by foreign individuals or legal entities.
The repeal of article 171 by Constitutional Amendment 6/1995 did not remove that competence. In the Court’s view, the repealed article dealt with strategic and technological sectors and was not directly related to the acquisition of rural properties.
The judgment also considers the nationality of the controlling capital to be a relevant criterion. This is because the acquisition of land by foreigners may give rise to political, social, economic, food-security and environmental impacts.
Finally, the law does not prohibit acquisition. It merely sets conditions and limits. For that reason, the STF found no breach of free enterprise, national development, the right of property, freedom of association or legal certainty.
Who is affected
The decision covers every Brazilian company the majority of whose share capital belongs to foreigners resident or headquartered abroad. Multinational groups, funds and investors with structures in Brazil must comply with the regime of Law 5,709.
In practical terms, article 5 of the law restricts acquisition to properties intended for agricultural, livestock, industrial or settlement projects linked to the entity’s corporate purposes, subject to prior approval. The requirements of a public deed, special entry in the Real Estate Registry and the per-municipality limits set out in articles 8, 10 and 12 also apply.
Any acquisition in breach of the law is null and void as a matter of law, pursuant to article 15. Notaries and registrars are civilly liable for any damage they cause.
What to do now
First, companies with majority foreign capital should review their corporate structure and identify the rural properties already acquired or under negotiation.
Next, it is advisable to check whether previous acquisitions obtained authorisation from Incra and whether the deeds and registrations complied with the law. Transactions in São Paulo deserve particular attention, since the opinion that dispensed with these requirements has been annulled.
It is also prudent to assess the situations that the law itself excludes from the restrictions. Paragraph 2 of article 1, as worded by Law 13,986/2020, disapplies the regime in cases of statutory succession, creation of security interests over property, and receipt of the property upon enforcement of security or in lieu of payment.
Points requiring attention
The vote of Justice Flávio Dino proposed modulating the effects of the decision in order to preserve transactions entered into while the 1994 and 1998 opinions of the AGU (Office of the Attorney General of the Federal Government) were in force. That proposal, however, does not appear in the operative part of the judgment or in the trial minutes.
Justice Alexandre de Moraes, who had dissented in 2021, followed the Reporting Justice with a caveat. In his view, drawing a distinction between Brazilian companies solely on the basis of share capital requires additional reasonable justification.
Furthermore, the judgment notes that the National Congress has for years been debating proposals to update the law. In short, the decision brings to an end a controversy lasting decades, but the matter may return to the legislative agenda, as shown by our monitoring of legal and business developments.
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