The changes in the Ownership and Use of Agricultural Land Act (OUALA) entered into force with their promulgation in the Official State Journal Volume 38, dated 7.5.2014. The concrete amendment consists in the newly introduced legal impossibility of acquiring and holding an ownership right over agricultural lands in Bulgaria by:
- Companies whose shareholders are directly or indirectly companies, registered in jurisdictions with favorable tax regime (the so called offshore companies);
- Companies whose shareholders are foreigners (apart from natural persons -foreign citizens of Member States of the European Union or of the European Economic Area), or foreign legal persons (apart from those stipulated by Art.3, para. 4 OUALA - foreign legal persons can acquire an ownership right of agricultural lands in accordance with the conditions of an international agreement, ratified pursuant to the procedure in art.22, para.2 of the Constitution of the Republic of Bulgaria, ratified and in force- and para.6 - legal persons citizens of Member States of the European Union or of the European Economic Area), as well as sole traders/ single- members companies established by such natural or legal persons;
- Public limited companies that have issued bearer shares (Art.3, new para.7). According to the new Art.3c, para. 1 OUALA an ownership right over agricultural lands can be acquired by natural or legal persons who have resided or have been established in the Republic of Bulgaria for more than 5 years.
According to art.3c, para.2 legal persons holding a registration pursuant to the Bulgarian legislation which is less than 5 years old can acquire ownership of agricultural lands provided that the shareholders or members of the company satisfy the conditions listed in para.1, i.e. have resided or have been established in the Republic of Bulgaria for more than 5 years.
This means that not only foreign citizens but Bulgarian ones as well cannot acquire agricultural lands in the Republic of Bulgaria provided that they have not lived at least 5 years before that in the country.
According to Art. 3c, para.3 OUALA when concluding a deal for the acquisition of ownership of agricultural lands, it is required that the acquirers when natural persons have to present a declaration for the origin of funds in front of a notary public, and when legal persons - a document certifying the origin of funds. In case of inheritance by law, the requirement for the 5- years- residence or establishment on the territory of the Republic of Bulgaria does not apply. According to art.24a, para.2 OUALA the agricultural lands from the State Land Fund can be rented or leased without auction or contest to owners or users of livestock objects with grazing animals, registered in the System for identification of animals and registration of livestock objects of the Bulgarian Food Safety Agency (BFSA) when the land is a pasture or a meadow (new para.6). Further, renting or leasing of lands from the Municipal Agricultural Fund, apart from pastures and meadows pursuant to para.6, subpara.4, is subject to an auction or contest under the conditions and procedure determined by the City Council. Art. 35 extends the range of persons eligible for participation in auctions for agricultural land from the State Land Fund to owners of registered compensation bonds, compensation records and residential compensation records (para.4). According to the newly introduced para.5 twenty per cent of the proposed price in the auctions for agricultural land from the State Land Fund pursuant to para.3 shall be paid by the winning participant by financial means. The following changes and amendments are introduced in art.37: 1. Para. 1 and 2 are altered as follows: „(1) Pastures and meadows from the State and Municipal land fund are rented or leased pursuant to the procedure set in art.24a, para.2 to owners or users of livestock objects with grazing animals, registered in the System for identification of animals and registration of livestock objects of the Bulgarian Food Safety Agency, in the corresponding or neighboring area, proportionally to the number and kind of the registered animals, at market value estimated by an independent assessor. Pastures and meadows from the State and Municipal land fund are rented or leased to persons who do not have tax obligations or obligations to the State Fund “Agriculture”, State Land fund, Municipal land fund and for lands pursuant to art. 37c, para.3, subpara 2. (2) The Agriculture and Food Minister prescribes with an order the available pastures and meadows from the State Land fund that are to be rented or leased pursuant to para.1 within a period determined by the Regulations for the enforcement of the OUALA.” 2. (3) The City Council sets by a decision the pastures and meadows for common and individual usage, whereas a list of the lands for individual usage is presented to the Minister of Agriculture and Food or alternatively to authorized by him persons within a period determined by the Regulations for the enforcement of the Act. (4) The pastures and meadows from the State and Municipal Land fund and their prices, determined according to the procedure in paras. 2 and 3, are announced at a notable location at Municipalities, Town halls, municipal agriculture services and the regional directorates “Agriculture”. (5) Persons shall submit an application form to the regional directorates “Agriculture”, together with documents certifying the circumstances pursuant to para.1. (6) The Director of the Regional Directorate “Agriculture” appoints regional committees which consider the application for the corresponding municipality within a period of 30 days. The Regional Director appoints regional committee which coordinates and exercises control over the activities of the separate municipality directorates. The committees consist of equal number representatives of the Municipality, the Regional Directorate “Agriculture” and of the stock breeders and their organizations. (7) Pastures and meadows are allocated among the applicants who have registered livestock objects in the corresponding municipality. Those persons who use legally less than 1 acre pastures and meadows for sustaining 0, 15 animal units, proportionally to the number and kind of the registered grazing animals, equated to animal units, are given no more than 20 acres for sustaining of 1 animal unit. (8) The remaining available pastures and meadows are allocated among the applicants with registered livestock objects on the territory of a neighboring municipality according to the number and kind of the grazing animals in the municipality which they own. This procedure applies for the satisfaction of the submitted applications pursuant to para.5 but to the extent of the corresponding neighboring area in the territory where the livestock objects are registered. (9) For the purposes of their activities in accordance with para.6 the committees draft protocols which reflect the allocation of the pastures and meadows among the applicants. On the basis of the protocols of the committees and after the payment of the rent and lease price, the Director of the Regional Directorate “Agriculture”, accordingly the mayor of the Municipality, concludes rent and lease agreements for the usage of the pastures and meadows for a period of 4 to 6 agricultural years. (10) Following the allocation pursuant to paras. 7 and 8, the remaining available pastures and meadows are auctioned to persons who accept an obligation to maintain these in good agricultural and ecological condition according to a procedure, specified in the Regulation for the enforcement of the Act.” The requirement of art.37k that the price for private usage of the pastures pursuant to art.37i, para.1,shall not go below the market price, has been abolished. Further, paragraph 2 states as follows: „(2) Incomes from the rent and lease for the usage of pastures and meadows from the State Land Fund shall enter the budget of the Ministry of Agriculture and Food, and incomes out of the Municipality Land Fund- the budget of the corresponding Municipality.”