Text: HF00705 Text: HF00707 Text: HF00700 - HF00799 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 9H.1, subsection 3, unnumbered 1 2 paragraph 1, Code 1997, is amended to read as follows: 1 3 "Authorized farm corporation" means a corporation other 1 4 than a family farm corporation or network agricultural 1 5 production corporation founded for the purpose of farming and 1 6 the ownership of agricultural land in which: 1 7 Sec. 2. Section 9H.1, subsection 3, paragraph b, Code 1 8 1997, is amended to read as follows: 1 9 b. The stockholders arealllimited to natural persons, 1 10 family farm entities, network entities, or persons acting in a 1 11 fiduciary capacity for the benefit of natural persons or 1 12 nonprofit corporations. 1 13 Sec. 3. Section 9H.1, subsection 3A, unnumbered paragraph 1 14 1, Code 1997, is amended to read as follows: 1 15 "Authorized limited liability company" means a limited 1 16 liability company other than a family farm limited liability 1 17 company or network agricultural production limited liability 1 18 company founded for the purpose of farming and the ownership 1 19 of agricultural land in which all of the following apply: 1 20 Sec. 4. Section 9H.1, subsection 3A, paragraph b, Code 1 21 1997, is amended to read as follows: 1 22 b. The members arealllimited to natural persons, family 1 23 farm entities, network entities, or persons acting in a 1 24 fiduciary capacity for the benefit of natural persons or 1 25 nonprofit corporations. 1 26 Sec. 5. Section 9H.1, subsection 4, unnumbered paragraph 1 27 1, Code 1997, is amended to read as follows: 1 28 "Authorized trust" means a trust other than a family trust 1 29 or network agricultural production trust in which: 1 30 Sec. 6. Section 9H.1, subsection 4, paragraph b, Code 1 31 1997, is amended to read as follows: 1 32 b. The beneficiaries arealllimited to natural persons,1 33 who are not acting as a trustee or in a similar capacity for a 1 34 trustas defined in subsection 22 of this section,orfamily 1 35 farm entities, network entities, persons acting in a fiduciary 2 1 capacity, or nonprofit corporations; and 2 2 Sec. 7. Section 9H.1, Code 1997, is amended by adding the 2 3 following new subsections: 2 4 NEW SUBSECTION. 2A. "Authorized entity" means an 2 5 authorized farm corporation; authorized trust; authorized 2 6 limited liability company; or limited partnership, other than 2 7 a family farm limited partnership, which owns or leases 2 8 agricultural land. 2 9 NEW SUBSECTION. 8B. "Family farm entity" means a family 2 10 farm corporation, family farm limited liability company, 2 11 family farm limited partnership, or family trust. 2 12 NEW SUBSECTION. 16A. "Network agricultural production 2 13 corporation" means a corporation which meets all of the 2 14 following conditions: 2 15 a. The corporation is founded for the purpose of farming 2 16 and the ownership of agricultural land. 2 17 b. The stockholders are all natural persons or persons 2 18 acting in a fiduciary capacity for the benefit of natural 2 19 persons. 2 20 c. Sixty percent of the voting stock is held by and sixty 2 21 percent of the stockholders are persons who each received 2 22 sixty percent of their income over the last consecutive three- 2 23 year period from farming. 2 24 NEW SUBSECTION. 16B. "Network agricultural production 2 25 limited liability company" means a limited liability company 2 26 which meets all of the following conditions: 2 27 a. The limited liability company is founded for the 2 28 purpose of farming and the ownership of agricultural land. 2 29 b. The members are all natural persons or persons acting 2 30 in a fiduciary capacity for the benefit of natural persons. 2 31 c. Sixty percent of the membership interest is held by and 2 32 sixty percent of the members are persons who each received 2 33 sixty percent of their income over the last consecutive three- 2 34 year period from farming. 2 35 NEW SUBSECTION. 16C. "Network agricultural production 3 1 limited partnership" means a limited partnership which meets 3 2 all of the following conditions: 3 3 a. The limited partnership is formed for the purpose of 3 4 farming and the ownership of agricultural land. 3 5 b. The general partner and all the limited partners are 3 6 all natural persons or persons acting in a fiduciary capacity 3 7 for the benefit of natural persons. 3 8 c. Sixty percent of the partnership interest is held by 3 9 and sixty percent of the limited partners are persons who each 3 10 received sixty percent of their income over the last 3 11 consecutive three-year period from farming. 3 12 NEW SUBSECTION. 16D. "Network agricultural production 3 13 trust" means a trust which meets all of the following 3 14 conditions: 3 15 a. The trust is formed for the purpose of farming and the 3 16 ownership of agricultural land. 3 17 b. The beneficiaries are all natural persons, who are not 3 18 acting as a trustee or in a similar capacity for a trust or 3 19 persons acting in a fiduciary capacity for the benefit of 3 20 natural persons. 3 21 c. Sixty percent of the interest in the trust is held by 3 22 and sixty percent of the beneficiaries are persons who each 3 23 received sixty percent of their income over the last 3 24 consecutive three-year period from farming. 3 25 NEW SUBSECTION. 16E. "Network entity" means a network 3 26 agricultural production corporation, network agricultural 3 27 production limited liability company, network agricultural 3 28 production limited partnership, or network agricultural 3 29 production trust. 3 30 Sec. 8. Section 9H.4, unnumbered paragraphs 1 and 2, Code 3 31 1997, are amended to read as follows: 3 32 A corporation, limited liability company, or trust, other 3 33 than a corporation, limited liability company, or trust which 3 34 is classified as a family farmcorporationentity, authorized 3 35farm corporationentity,family farm limited liability4 1company, authorized limited liability company, family trust,4 2authorized trustnetwork entity, revocable trust, or 4 3 testamentary trust, shall not, either directly or indirectly, 4 4 acquire or otherwise obtain or lease any agricultural land in 4 5 this state. However, the restrictions provided in this 4 6 section shall not apply to the following: 4 7 A corporation, limited liability company, or trust,other4 8than a family farm corporation, authorized farm corporation,4 9family farm limited liability company, authorized limited4 10liability company, family trust, authorized trust, revocable4 11trust, or testamentary trust, violatingas provided in this 4 12 section, which violates this section shall be assessed a civil 4 13 penalty of not more than twenty-five thousand dollars and 4 14 shall divest itself of any land held in violation of this 4 15 section within one year after judgment. The courts of this 4 16 state may prevent and restrain violations of this section 4 17 through the issuance of an injunction. The attorney general 4 18 or a county attorney shall institute suits on behalf of the 4 19 state to prevent and restrain violations of this section. 4 20 Sec. 9. Section 9H.5, subsection 1, unnumbered paragraph 4 21 1, Code 1997, is amended to read as follows: 4 22 An authorizedfarm corporation, authorized limited4 23liability company, or authorized trustentity shall not, on or 4 24 after July 1, 1987,anda limited partnership other than a 4 25 family farm limited partnership shall not, on or after July 1, 4 26 1988, and a network entity shall not, either directly or 4 27 indirectly, acquire or otherwise obtain or lease agricultural 4 28 land, if the total agricultural land either directly or 4 29 indirectly owned or leased by the authorizedfarm corporation,4 30authorized limited liability company,entity, network entity, 4 31 or limited partnership, or authorized trustwould then exceed 4 32 one thousand five hundred acres. 4 33 Sec. 10. Section 9H.5, subsection 2, Code 1997, is amended 4 34 by striking the subsection and inserting in lieu thereof the 4 35 following: 5 1 2. a. A person who holds an interest in an authorized 5 2 entity or a network entity shall not hold an interest in 5 3 another authorized entity or network entity, if all authorized 5 4 or network entities in which the person would hold an interest 5 5 own or lease a combined total of more than one thousand five 5 6 hundred acres of agricultural land. A person who is a family 5 7 farm entity or network entity shall not hold an interest in 5 8 more than three authorized entities. 5 9 b. As used in this section, an interest in an authorized 5 10 or network entity means holding an interest as any of the 5 11 following: 5 12 (1) A stockholder of an authorized farm corporation or 5 13 network agricultural production corporation. 5 14 (2) A beneficiary of an authorized trust or network 5 15 agricultural production trust. 5 16 (3) A limited partner in a limited partnership, including 5 17 a network agricultural production limited partnership, which 5 18 owns or leases agricultural land, other than a family farm 5 19 limited partnership. 5 20 (4) A member of an authorized limited liability company or 5 21 a network agricultural production limited liability company. 5 22 c. This subsection shall not apply to a person holding an 5 23 interest in an authorized entity to the extent that one of the 5 24 following also applies: 5 25 (1) The combined number of acres of agricultural land 5 26 owned or leased by multiple authorized entities exceeds the 5 27 limit provided in this section only because a person holds 5 28 less than a fifteen percent interest in each of the multiple 5 29 authorized entities. 5 30 (2) An interest in an authorized entity was held on or 5 31 before July 1, 1988. 5 32 Sec. 11. Section 9H.5, subsection 3, paragraph a, Code 5 33 1997, is amended by striking the paragraph and inserting in 5 34 lieu thereof the following: 5 35 a. The following shall apply to persons violating this 6 1 section: 6 2 (1) If an authorized entity acquires land in violation of 6 3 subsection 1, the authorized entity shall divest itself of any 6 4 land held in violation of subsection 1 within one year after a 6 5 judgment is entered ordering the authorized entity to comply 6 6 with subsection 1. The court shall order the dissolution of 6 7 an authorized entity which violates the order requiring 6 8 compliance. The clerk of court shall immediately send a 6 9 certified copy of the dissolution order to the secretary of 6 10 state. 6 11 (2) If a person acquires an interest in an authorized 6 12 entity in violation of subsection 2, the person shall transfer 6 13 the person's interest in any authorized entity as is required 6 14 to comply with subsection 2 within one year after a judgment 6 15 is entered ordering the person to comply. A person who 6 16 violates an order requiring compliance is subject to a civil 6 17 penalty of not more than one thousand dollars. 6 18 Sec. 12. Section 9H.5A, subsection 4, Code 1997, is 6 19 amended to read as follows: 6 20 4. A reporting entity shall be excused from filing a 6 21 report with the secretary of state during any year in which 6 22 the reporting entity's corporation, limited partnership, 6 23 trust, or limited liability company owns, leases, and holds 6 24 less than twenty acres of agricultural land in this state and 6 25 the gross revenue produced from all farming on the land equals 6 26 less than ten thousand dollars. If a reporting entity is 6 27 excused from filing a report with the secretary of state as 6 28 provided in this subsection in the immediately prior reporting 6 29 year, the secretary of state shall not deliver a form to the 6 30 reporting entity for the current reporting year. 6 31 Sec. 13. Section 487.802, Code 1997, is amended by adding 6 32 the following new unnumbered paragraph: 6 33 NEW UNNUMBERED PARAGRAPH. Upon application by the attorney 6 34 general, the district court of Polk county shall decree 6 35 dissolution of a limited partnership if the limited 7 1 partnership is in violation of a court order providing for 7 2 compliance with section 9H.5. 7 3 Sec. 14. Section 490.1430, subsection 1, unnumbered 7 4 paragraph 1, Code 1997, is amended to read as follows: 7 5 A proceeding by the attorney general, if it is established 7 6 thateitherany of the following apply: 7 7 Sec. 15. Section 490.1430, subsection 1, Code 1997, is 7 8 amended by adding the following new paragraph: 7 9 NEW PARAGRAPH. c. The corporation is in violation of a 7 10 court order providing for compliance with section 9H.5. 7 11 Sec. 16. Section 490A.1302, Code 1997, is amended by 7 12 adding the following new unnumbered paragraph: 7 13 NEW UNNUMBERED PARAGRAPH. Upon application by the attorney 7 14 general, the district court of Polk county shall decree 7 15 dissolution of a limited liability company if the limited 7 16 liability company is in violation of a court order providing 7 17 for compliance with section 9H.5. 7 18 EXPLANATION 7 19 This bill amends Code chapter 9H, which prohibits corporate 7 20 entities from owning or leasing agricultural land in the 7 21 state. The chapter provides for a number of exceptions. The 7 22 bill classifies entities that can currently hold land as 7 23 family farm entities or authorized entities, which may include 7 24 corporations, limited partnerships, limited liability 7 25 companies, and trusts which meet certain qualifications. 7 26 Generally, for an authorized entity, all persons holding an 7 27 interest in the authorized entity must be natural persons. 7 28 Current law provides that an authorized entity cannot hold 7 29 more than 1,500 acres of agricultural land. Current law also 7 30 provides that a person cannot hold an interest in more than 7 31 one authorized entity. It provides that an authorized entity 7 32 which violates the chapter is subject to a civil penalty of 7 33 not more than $25,000. A person who holds multiple interests 7 34 is subject to a civil penalty of not more than $1,000. 7 35 Current law also requires divestiture. 8 1 The bill establishes a new type of corporate entity that 8 2 can own or lease agricultural land called a network production 8 3 entity, including a network agricultural production 8 4 corporation, a network agricultural production limited 8 5 liability company, a network production limited partnership, 8 6 or a network agricultural production trust. In order to 8 7 qualify as a network entity, a corporation, limited liability 8 8 company, limited partnership, or trust must be founded for the 8 9 purpose of farming and the ownership of agricultural land; all 8 10 the persons who own an interest in the entity must be 8 11 individuals; and 60 percent of the interest in the entity must 8 12 be held by persons and 60 percent of the shareholders must be 8 13 persons who derive 60 percent of their income from farming. 8 14 The bill provides that a network entity cannot hold not 8 15 more than 1,500 acres of agricultural land. The bill amends 8 16 Code chapter 9H to provide that any number of network entities 8 17 or family farm entities may hold an interest in one authorized 8 18 entity. The bill provides that a person who holds an interest 8 19 in an authorized entity or network entity is prohibited from 8 20 holding an interest in another authorized or network entity if 8 21 all authorized or network entities in which the person holds 8 22 an interest own or lease a combined total of more than 1,500 8 23 acres. The bill provides that a network entity or a family 8 24 farm entity may hold an interest in not more than three 8 25 authorized entities. The bill creates an exception to this 8 26 prohibition on multiple ownership if the combined number of 8 27 acres of agricultural land owned or leased by multiple 8 28 authorized entities exceeds the 1,500 acre limit only because 8 29 a person holds less than a 15 percent interest in each of the 8 30 multiple authorized entities. 8 31 The bill provides that if an authorized entity acquires 8 32 land in violation of the bill, the authorized entity must 8 33 divest itself of land held in violation of the bill within one 8 34 year after a judgment is entered ordering compliance. The 8 35 court must order the dissolution of an authorized entity which 9 1 violates the order. The bill provides that if a person 9 2 acquires an interest in an authorized entity in violation of 9 3 the bill, the person must transfer the person's interest in 9 4 the authorized entity one year after a judgment is entered 9 5 ordering compliance. A person failing to comply is subject to 9 6 a civil penalty of not more than $1,000. 9 7 LSB 1740HV 77 9 8 da/jw/5.1
Text: HF00705 Text: HF00707 Text: HF00700 - HF00799 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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