CHAPTER 47-9A
CORPORATE FARMING RESTRICTIONS
47-9A-1 Agriculture prohibited as corporate or limited liability company purpose.
47-9A-1.1 Certain breeding stock, products, and facilities exempt.
47-9A-2 Definition of terms.
47-9A-3 Corporate farming and acquisition of interest in farm real estate prohibited.
47-9A-3.1 Certain greenhouse operations exempt.
47-9A-3.2 Facilities for feeding poultry or producing meat or eggs exempt.
47-9A-3.3 Dairy on agricultural lands exempt.
47-9A-4 Banks and trust companies exempt--Purchase of agricultural land through pooled investment fund excepted.
47-9A-5 Certain limited liability entities exempt from restrictions.
47-9A-6 Encumbrance taken for security exempt.
47-9A-7 Lands acquired in collection of debt or enforcement of claim exempt--Period allowed for disposition--Covenant runs with land.
47-9A-8 Agricultural land--Gift--Restrictions--Applicability.
47-9A-9 Farms, for scientific, medical, research, or experimental purposes exempt if sale of products incidental.
47-9A-10 Raising breeding stock for resale exempt--Nurseries and seed farms.
47-9A-11 Livestock feeding exempt.
47-9A-12 Land acquired for nonfarming uses exempt--Acreage allowed--Restrictions on farming pending development.
47-9A-12.1 Cement Plant Commission property used for nonfarming purposes.
47-9A-13 Family farm and authorized farm corporations exempt.
47-9A-13.1 47-9A-13.1. Repealed by SL 2016, ch 220, § 2.
47-9A-13.2 Pork production subject to same provisions as other operations.
47-9A-14 Family farm corporation defined.
47-9A-15 Qualifications of authorized small farm corporation.
47-9A-16 Report required of corporation engaged in farming--Contents.
47-9A-17 Additional information for qualification as family or authorized farm corporation.
47-9A-18 Farming prohibited without certification by secretary of state.
47-9A-19 47-9A-19. Repealed by SL 2017, ch 192, § 1.
47-9A-20 Corporation failing to file or filing false report--Civil fine.
47-9A-21 Attorney general to prosecute violations--Order of court declaring violation.
47-9A-22 Recording of order--Divestiture within prescribed period--Covenant running with land--Public sale of lands not divested.
47-9A-23 Citation of chapter.
47-9A-1. Agriculture prohibited as corporate or limited liability company purpose.
The Legislature of the State of South Dakota recognizes the importance of the family farm to the economic and moral stability of the state, and the Legislature recognizes that the existence of the family farm is threatened by conglomerates in farming. Therefore, it is hereby declared to be the public policy of this state, and shall be the provision of this chapter, that, notwithstanding the provisions of § 47-1A-301, no foreign or domestic corporation, except as provided herein, shall be formed or licensed under the South Dakota Business Corporation Act for the purpose of owning, leasing, holding or otherwise controlling agricultural land to be used in the business of agriculture.
It is further declared that no foreign or domestic limited liability company, except as provided herein, shall be formed or licensed under the South Dakota Limited Liability Company Act for the purpose of owning, leasing, holding or otherwise controlling agricultural land to be used in the business of agriculture.
Source: SL 1974, ch 294, § 2; SL 1991, ch 377, § 1; SL 1993, ch 344, § 39FF; SL 2005, ch 202, § 8.
47-9A-1.1. Certain breeding stock, products, and facilities exempt.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to agricultural land, animals, or facilities owned or operated primarily for the purpose of producing animal breeding stock or reproductive products from animals.
Source: SL 2006, ch 229, § 1.
47-9A-2. Definition of terms.
Terms used in this chapter, unless the context otherwise plainly requires, mean:
(1) "Agricultural land," land used for farming;
(2) "Corporation" or any derivation of "corporation," both corporations under the South Dakota Business Corporation Act and limited liability companies under the South Dakota Limited Liability Company Act;
(2A) "Family," all descendants born of common parents after the year 1900 as well as their spouses, step-children, and adopted children. Once a person is a family member subsequent events such as death or divorce, do not disqualify that person from being a family member under this chapter.
(3) "Family farm," an unincorporated farming unit owned by one or more persons residing on the farm or actively engaging in farming;
(4) "Farming," the cultivation of land for the production of agricultural crops; livestock or livestock products; poultry or poultry products; milk or dairy products; or fruit or other horticultural products. It shall not include the production of timber or forest products; nor shall it include a contract whereby a processor or distributor of farm products or supplies provides spraying, harvesting or other farm services;
(5) "Shareholders" or "stockholders," include the members of a limited liability company; and
(6) "Shares" or "stock," include membership interests in a limited liability company.
Source: SL 1974, ch 294, § 3 (1), (3), (4); SL 1993, ch 344, § 39GG; SL 2004, ch 276, § 1.
47-9A-3. Corporate farming and acquisition of interest in farm real estate prohibited.
Except as provided herein, no foreign or domestic corporation may engage in farming; nor may any foreign or domestic corporation, directly or indirectly, own, acquire, or otherwise obtain an interest, whether legal, beneficial or otherwise, in any title to real estate used for farming or capable of being used for farming in this state.
Source: SL 1974, ch 294, § 4; SL 1991, ch 377, § 2.
47-9A-3.1. Certain greenhouse operations exempt.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to the cultivation of edible fruits, vegetables or mushrooms if such cultivation occurs within a greenhouse or other enclosed or semi-enclosed structure.
Source: SL 1986, ch 386; SL 2004, ch 277, § 1.
47-9A-3.2. Facilities for feeding poultry or producing meat or eggs exempt.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to facilities acquired by a corporation for the purpose of feeding poultry for the production of meat or eggs.
Source: SL 1986, ch 385; SL 2004, ch 277, § 2.
47-9A-3.3. Dairy on agricultural lands exempt.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to agricultural lands acquired by a corporation solely for the purpose of operating a dairy.
Source: SL 2008, ch 237, § 1.
47-9A-4. Banks and trust companies exempt--Purchase of agricultural land through pooled investment fund excepted.
Any national or state chartered bank, or trust company, authorized to do business in this state shall be exempt from the provisions of this chapter; provided, however, that no national or state bank or trust company shall purchase agricultural lands in South Dakota through a pooled investment fund formed from assets from retirement, pension, profit sharing, stock bonds or other trusts.
Source: SL 1974, ch 294, § 9; SL 1977, ch 383.
47-9A-5. Certain limited liability entities exempt from restrictions.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to agricultural land and land capable of being used for farming which:
(1) Was owned by a corporation as of July 1, 1974, including the normal expansion of such ownership at a rate not to exceed twenty percent, measured in acres, in any five-year period; or
(2) Is leased by a corporation in an amount, measured in acres, not to exceed the acreage under lease to such corporation as of July 1, 1974, and the additional acreage required for normal expansion at a rate not to exceed twenty percent in any five-year period;
and the additional acreage necessary to meet the requirements of pollution control regulations.
Source: SL 1974, ch 294, § 4 (3), (6); SL 2004, ch 277, § 3.
47-9A-6. Encumbrance taken for security exempt.
The restrictions provided in §§ 47-9A-1 and 47-9A-3 do not apply to a bona fide encumbrance taken for purposes of security.
Source: SL 1974, ch 294, § 4 (1); SL 2004, ch 277, § 4.
47-9A-7. Lands acquired in collection of debt or enforcement of claim exempt--Period allowed for disposition--Covenant runs with land.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to agricultural lands acquired by a corporation by process of law in the collection of debts; or by any procedure for the enforcement of a lien or claim thereon, whether created by mortgage or otherwise. However, any land so acquired shall be disposed of within ten years after acquiring the title thereto. In addition, no land so acquired may be used for farming during the ten-year period except under a lease to a family farm unit, a family farm corporation or an authorized farm corporation. The aforementioned ten-year limitation period shall be deemed a covenant running with the title to the land against any corporate grantee or assignee or the successor of such corporation.
Source: SL 1974, ch 294, § 4 (9); SL 2004, ch 277, § 5.
47-9A-8. Agricultural land--Gift--Restrictions--Applicability.
The restrictions in §§ 47-9A-1 and 47-9A-3 do not apply to a gift of agricultural land, whether by grant or devise, to any nonprofit entity organized under the laws of this state and registered with the secretary of state.
Source: SL 1974, ch 294, § 4 (7); SL 2004, ch 277, § 6; SL 2021, ch 193, § 1.
47-9A-9. Farms, for scientific, medical, research, or experimental purposes exempt if sale of products incidental.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to any entity that engages in farming primarily for scientific, medical, research, or experimental purposes. However, any commercial sales from such farming shall be incidental to the scientific, medical, research, or experimental objectives of the entity.
Source: SL 1974, ch 294, § 4 (4); SL 2004, ch 277, § 7.
47-9A-10. Raising breeding stock for resale exempt--Nurseries and seed farms.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to agricultural land operated by a corporation for the purpose of raising breeding stock for resale to farmers or operated for the purpose of growing seed, nursery plants, or sod.
Source: SL 1974, ch 294, § 4 (5); SL 2004, ch 277, § 8.
47-9A-11. Livestock feeding exempt.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to agricultural lands acquired by a corporation solely for the purpose of feeding livestock.
Source: SL 1974, ch 294, § 4 (10); SL 2004, ch 277, § 9.
47-9A-12. Land acquired for nonfarming uses exempt--Acreage allowed--Restrictions on farming pending development.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to agricultural land acquired by a corporation other than a family farm corporation or authorized farm corporation for immediate or potential use in nonfarming purposes. A corporation may hold such agricultural land in such acreage or such form of ownership as may be necessary to its nonfarm business operation. However, pending the development of agricultural land for nonfarm purposes, such land may not be used for farming except under lease to a family farm unit, a family farm corporation or an authorized farm corporation, or except when controlled through ownership, options, leaseholds or other agreements by a corporation which has entered into an agreement with the United States of America pursuant to the New Community Act of 1968, (Title IV of the Housing and Urban Development Act of 1968, 42 U.S.C. 3901-3914), as amended, or a subsidiary or assign of such a corporation.
Source: SL 1974, ch 294, § 4 (8); SL 2004, ch 277, § 10.
47-9A-12.1. Cement Plant Commission property used for nonfarming purposes.
All real property owned or held by the State of South Dakota by and through the South Dakota State Cement Plant Commission as of December 28, 2000, is owned or held by it and its successors in title for immediate or potential use for nonfarming purposes and the real property is necessary for nonfarming business operations.
Source: SL 2000 (SS), ch 4, § 2.
47-9A-13. Family farm and authorized farm corporations exempt.
The restrictions of §§ 47-9A-1 and 47-9A-3 do not apply to a family farm corporation or an authorized farm corporation.
Source: SL 1974, ch 294, § 4 (2); SL 2004, ch 277, § 11.
47-9A-13.2. Pork production subject to same provisions as other operations.
The production of pork is subject to the same provisions which apply to livestock feeding, breeding stock, dairies, and poultry and egg operations under this chapter.
Source: SL 2016, ch 220, § 1.
47-9A-14. Family farm corporation defined.
As used in this chapter, the term, family farm corporation, means any corporation founded for the purpose of farming and the ownership of agricultural land in which the majority of the voting stock is held by members of a family, an estate of a family member, or a trust that benefits members of the family, and at least one of whose stockholders is a person who is residing on or actively operating the farm or who has resided on or has actively operated the farm, and none of whose stockholders are corporations. Transfers of shares to persons who are or have been family members are qualified as a family member under this chapter.
Source: SL 1974, ch 294, § 3 (5); SL 1984, ch 298; SL 1985, ch 369; SL 1988, ch 371, § 2; SL 2004, ch 276, § 2.
47-9A-15. Qualifications of authorized small farm corporation.
As used in this chapter, unless the context otherwise plainly requires, "authorized farm corporation" means a corporation whose shareholders do not exceed ten in number, whose shareholders are all natural persons or estates, whose shares are all of one class, and whose revenues from rent, royalties, dividends, interest, and annuities do not exceed twenty percent of its gross receipts.
Source: SL 1974, ch 294, § 3 (2).
47-9A-16. Report required of corporation engaged in farming--Contents.
Every corporation engaged in farming or proposing to commence farming in this state shall file with the secretary of state a report containing:
(1) The information required by § 59-11-6; and
(2) The acreage and location listed by section, township, and county of each lot or parcel of land in this state that is owned or leased by the corporation and used for the growing of crops or the keeping or feeding of poultry or livestock.
Source: SL 1974, ch 294, § 5; SL 2008, ch 275, § 54.
47-9A-17. Additional information for qualification as family or authorized farm corporation.
The report of a corporation seeking to qualify hereunder as a family farm corporation or an authorized farm corporation shall contain, in addition:
(1) The number of shares owned by persons residing on the farm or actively engaged in farming, or their relatives within the third degree of kindred;
(2) The name, address, and number of shares owned by each shareholder; and
(3) A statement as to percentage of gross receipts of the corporation derived from rent, royalties, dividends, interest, and annuities.
Source: SL 1974, ch 294, § 5.
47-9A-18. Farming prohibited without certification by secretary of state.
No corporation shall commence farming in this state until the secretary of state has inspected the report required by § 47-9A-16 and certified that its proposed operations comply with the provisions of §§ 47-9A-16 and 47-9A-17.
Source: SL 1974, ch 294, § 5.
47-9A-20. Corporation failing to file or filing false report--Civil fine.
Any corporation which fails to file any report required by this chapter or intentionally files false information on any report required by this chapter is subject to a civil fine of not more than one thousand dollars.
Source: SL 1974, ch 294, § 7; SL 1983, ch 15, § 31; SL 1983, ch 331, § 3.
47-9A-21. Attorney general to prosecute violations--Order of court declaring violation.
If the attorney general has reason to believe that a corporation is in violation of this chapter, he shall commence an action in the circuit court for the county in which any agricultural lands relative to such violation are situated, or if situated in two or more counties, in any county in which a substantial part of the lands are situated. If the court finds that the lands in question are being held in violation of this chapter, it shall enter an order so declaring.
Source: SL 1974, ch 294, § 8.
47-9A-22. Recording of order--Divestiture within prescribed period--Covenant running with land--Public sale of lands not divested.
The attorney general shall file any order under § 47-9A-21 for record with the register of deeds of each county in which any portion of said lands are located. Thereafter, the corporation owning such land shall have a period of five years from the date of such order to divest itself of such lands. The aforementioned five-year limitation period shall be deemed a covenant running with the title to the land against any corporate grantee or assignee or the successor of such corporation. Any lands not so divested within the time prescribed shall be sold at public sale in the manner prescribed by order of the court.
Source: SL 1974, ch 294, § 8.
47-9A-23. Citation of chapter.
This chapter shall be known and may be cited as the Family Farm Act of 1974.
Source: SL 1974, ch 294, § 1.
