Law on the Strengthening of Shrimp Farming

PURPOSE. This Law aims to establish a set of regulations oriented toward strengthening the cultivated shrimp industry in its different stages, in order to increase its competitiveness, such that it continues to be a sector with broad contributions to the national economy and employment.

ADMINISTRATION OF NATIONAL LANDS SUITABLE FOR SHRIMP FARMING GRANT OF CONCESSION. The Secretary of State in the Offices of Agriculture and Livestock (SAG) is responsible for the administration of national lands suitable for shrimp cultivation, which are granted in concession or lease in favor of natural or legal persons, prior to a favorable resolution from the Secretary of State in the Offices of Agriculture and Livestock (SAG) under the conditions established in the administrative act of grant. The Secretary of State in the Offices of Agriculture and Livestock (SAG) must send the Administrative Resolution that authorizes for the first time or renews the Concession or its file to the Attorney General of the Republic (PGR), for the registration of the respective Concession or Lease Contract, which must be submitted for approval by the National Congress, in accordance with Article 205, attribution 19) of the Constitution of the Republic. The Secretary of State in the Offices of Agriculture and Livestock (SAG) must issue the Administrative Resolution for the grant or renewal of the concession or lease within a maximum period of six (6) months, counted from the date of submission of the prior application by the interested party. The Attorney General of the Republic (PGR) shall execute the corresponding Concession or Lease Contract within thirty (30) business days from the date of receipt of the administrative file by the Secretary of State in the Offices of Agriculture and Livestock (SAG) and must send it to the National Congress within six (6) calendar days.

TERM (OR CANON) OF THE CONCESSION OR LEASE. The term of the concession or lease is established as a period of twenty (20) years, renewable for equal periods, and an annual canon per hectare in production (water mirror in production) of Forty United States Dollars (USD$40.00). The area conceded as productive must pay an annual canon of Five United States Dollars (USD$5.00) per hectare.

TRANSFERABILITY OF CONCESSIONS. The authorizations granted by the State, in the form of Concession or Lease Contract for the installation and execution of shrimp farming projects, in any of its stages, on national platform plots, are transferable without need for governmental authorization. The transmission, in any manner, must be recorded in a public deed, which must be registered in the Special Registry in charge of the Secretary of State in the Offices of Agriculture and Livestock (SAG). The transfer for consideration, including dation in payment, of the concession or lease contract causes, for the first time, a tax of two point five percent (2.5%), calculated on the purchase price or the amount owed for which the dation in payment is granted. For subsequent transmission, the tax referred to in this paragraph is calculated by subtracting from the sale price the acquisition price plus the investment made in improvements in the current transaction.

USE OF THE CONCESSION AS GUARANTEE FOR CREDIT OBLIGATIONS. Concessions may be granted as guarantee by a holder to institutions of the National and International Financial System, to guarantee the payment of credits intended to improve the productive unit located on the conceded property or for the development of new investments in any of the stages of the production and marketing chain of the cultivated shrimp industry, provided that the term of the guarantee does not exceed the period.

SPECIAL ASSOCIATED REGISTRY. The Special Associated Registry of Concessions or Lease Contracts of National Plots for the Shrimp Industry is created, which is under the charge of the Secretary of State in the Offices of Agriculture and Livestock (SAG), in which the grant, modification, cancellation, transmission, and encumbrance of each concession must be registered, and likewise the present and future mortgages that the concessionaires may make on the properties granted in lease by the State must be registered.

OBLIGATIONS AND PROHIBITIONS OF THE CONCESSIONAIRE OR LESSEE. The obligations of the concessionaire or lessee are:

• 1)

  Register in the Special Associated Registry the grant, renewal, cancellation, transmission, and encumbrance of the concession or lease;

• 2)

  Use the conceded or leased area for the purposes for which it was granted;

• 3)

  Permit the entry of authorized inspectors from the Secretary of State in the Offices of Agriculture and Livestock (SAG) to conduct contractual and/or legal inspections; and 4) Pay the canon in the manner established in this Law. The prohibitions of the concessionaire or lessee are: 1) Suspend work or abandon the conceded or leased plot property for twenty-four (24) consecutive months;

CAUSES FOR REVOCATION OR RESOLUTION. The causes for resolution of the concession or lease contract, without liability on the part of the State, are the following:

• 1)

  The non-registration in the Special Associated Registry of the grant, renewal, modification, cancellation, transmission, and encumbrance of the concession or lease contract within a period of up to one hundred eighty (180) days after the fact occurred;

• 2)

  Prevent, two (2) times within a year, the entry of authorized inspectors from the Secretary of State in the Offices of Agriculture and Livestock (SAG) to conduct contractual and legal inspections, with minutes being drawn up with the participation of the Public Ministry;

• 3)

  Loss of the leased property due to act of God or force majeure;

• 4)

  By mutual consent of the parties;

• 5)

  Dissolution of the commercial corporation holding the concession or lease;

• 6)

  Failure to pay the corresponding canon for two (2) consecutive years; and,

• 7)

  Upon expiration of the term of the concession or lease contract and failure to request its renewal within twelve (12) months from the date of its expiration. The resolution of the concession or lease contract must be declared by the Secretary of State in the Offices of Agriculture and Livestock (SAG), prior observance of the rights that the Constitution of the Republic and national laws grant to private parties. Once the administrative act declaring the resolution of the concession or lease contract is final, the Secretary of State in the Offices of Agriculture and Livestock (SAG) must inform the Attorney General of the Republic (PGR), so that it may proceed in accordance with the law, in relation to the public instrument containing the concession or lease contract declared resolved.

OBLIGATION OF REGISTRATION. The concessionaire or lessee is obligated to request registration in the Special Associated Registry of the grant, renewal, modification, cancellation, transmission, and encumbrance of each concession within thirty (30) calendar days after registration of the respective contract, otherwise incurs a fine for each day of delay equivalent to twenty percent (20%) of the annual minimum wage in effect in the municipality to which the conceded property belongs, being able to accumulate a delay of up to one hundred eighty (180) calendar days. If that final period expires without the lessee having made the corresponding registration, the Secretary of State in the Offices of Agriculture and Livestock (SAG) must proceed, based on law, with the procedure for resolution of the respective concession contract.

CREATION OF THE SPECIAL REGISTRY OF SEAFOOD DISTRIBUTORS AND MARKETERS. The Special Registry of Seafood Distributors and Marketers is created, which shall be under the charge of the Executive Directorate of Income (DEI). Natural or legal persons engaged in the distribution and marketing of seafood must register accompanied by their application with the following documents:

• 1)

  Articles of incorporation or declaration as an individual merchant,

• 2)

  Operating Permit from the Municipal Mayoralty of the merchant's domicile, and,

• 3)

  National Tax Registry. Persons properly registered must be issued a registration certificate, which must be displayed in their establishments or carried in the vehicle during product transportation, so that it can be reviewed by authorities during their inspections. The certificate's validity is one (1) year and must be renewed annually with an affidavit of registrations that the registry conditions have not changed, or with satisfaction of the requirements in case they have changed. The municipalities must cooperate with the Executive Directorate of Income (DEI), providing the information they possess related to the operations of persons engaged in the distribution and marketing of seafood. The Executive Directorate of Income (DEI) is authorized to establish the contents of the Registry and to expand the registration requirements.

CREATION OF THE SHIPPING GUIDE. The Shipping Guide is created, which must be issued by the National Agricultural Health Service (SENASA), through processing plants and/or cultivated shrimp farms; this Guide is mandatory for the transport of product within national territory, whose destination is the internal market. The departure of cultivated shrimp from any customs office in the country is prohibited, without the respective Certificate of Export accredited by the competent authority. The National Agricultural Health Service (SENASA), dependent on the Secretary of State in the Offices of Agriculture and Livestock (SAG), must place properly trained personnel at the fixed and temporary checkpoints established by the National Police, to verify the carrying of the Shipping Guide and that the product meets the safety requirements; in any case, the National Police is obligated to verify the carrying of the Shipping Guide.

INTERPRETATION. Interpret Article 1 of the LAW ON RATIONALIZATION OF THE EXEMPTION OF FUEL AVAILABLE FOR ELECTRICITY GENERATION, contained in Decree No. 181-2012, dated November 28, 2012, in the sense that the Special Import Regime (REI) is understood to be shared within the exceptions established in the second paragraph of numeral 1) of said Article.

CREATION, PURPOSE, COMPOSITION, AND DOMICILE OF THE FOUNDATION. The Foundation for the Development of the South Zone (FUNDESUR) is created, with autonomy and its own legal personality. The Foundation shall constitute itself with society and the State of Honduras and jointly the public and private sectors of the South Zone, to increase the quality of life of present and future generations; composed of the members of the National Association of Aquaculturists of Honduras (ANDAH) and those agreed upon in the Regulation referred to in Article 16 of this Law. Its domicile is the city of Choluteca, Department of Choluteca.

GOVERNING BODIES. The governing bodies of the Foundation are:

• 1)

  The General Assembly;

• 2)

  The Board of Directors;

• 3)

  The Executive Directorate; and,

• 4)

  The Audit Body.

ASSETS. The assets of the Foundation, with which a trust can be established in any banking institution based in Honduras, are formed by:

• 1)

  Annual contribution of product of Two Cents per Dollar (US$0.

• 02)

  per pound of shrimp exported; 2) The ordinary or extraordinary fees set by the Board of Directors;

• 3)

  Inheritances, bequests, donations, and subsidies from individuals, public or private institutions, national or international; and,

• 4)

  The proceeds from activities carried out to raise funds for the foundation.

ORGANIZATION AND OPERATION.- The Foundation shall be organized and shall function in accordance with a Regulation approved by the General Assembly, which must be published in the Official Gazette (Diario Oficial La Gaceta).

TRANSITIONAL.- REGULARIZATION OF CONCESSIONS OR LEASES AND ENVIRONMENTAL LICENSES.- The responsibility is assigned to the State Secretariat of Natural Resources and Environment (SERNA), the State Secretariat of Agriculture and Livestock (SAG), and the Institute for Conservation and Forest Development, Protected Areas and Wildlife (ICF), to formulate and execute a joint project, so that shrimp farming productive units that operate on national lands and that do not have the respective concession or lease and/or environmental license may obtain them through a simplified procedure. Within the framework of the Project referred to in the preceding paragraph, shrimp producers with less than one hundred (100) hectares may associate in order to request and process their environmental license or authorization; a trade organization must be accredited with a constitutive agreement authenticated by a notary.

TRANSITIONAL.- PREFERENTIAL RIGHT.- The producer who has been occupying, during shrimp farming, occupied practically and uninterruptedly national beaches, during the five (5) years prior to the effective date of this Law, without the respective concession or lease contract, has the preferential right for the State through the State Secretariat of Agriculture and Livestock (SAG) to grant him the respective concession or lease. This possession must be duly accredited before the State Secretariat of the corresponding legal authority. To avail himself of the aforementioned benefit, the interested party has one (1) year from the effective date of this Law to submit the request for concession or lease. This provision does not apply to lessees of shrimp farming properties owned by the State of Honduras.

TRANSITIONAL.- ADAPTATION DEADLINES.- A period of ninety (90) calendar days is established from the date of entry into force of the Special Associated Regulation for all current concessionaires or lessees to comply with the obligation referred to in Article 6 of this Law. The Executive Revenue Office (DEI) must implement the Registry referred to in Article 10 within a period of six (6) months. Natural or legal persons engaged in the commercialization or distribution of shellfish must register within sixty (60) calendar days in the Registry referred to in Article 10, from the implementation of said Registry. The Executive Branch must issue the Special Regulation referred to in Article 17 within a period of three (3) months from the date of entry into force of this Law.

DISCOUNTS AND SPECIAL PROCEDURE FOR GRANTING OR RENEWING CONCESSION OR LEASE CONTRACT.- The lessee or concessionaire may pay in advance, totally or partially, the canon of the granted productive and non-productive year, to whose cost a discount must be applied according to the following table:

• 1)

  From two (2) to five (5) years, equivalent to twenty percent (20%) discount;

• 2)

  From six (6) to ten (10) years, equivalent to thirty percent (30%) discount;

• 3)

  From eleven (11) to fifteen (15) years, equivalent to forty percent (40%) discount; and 4) From sixteen (16) to twenty (20) years, equivalent to fifty percent (50%) discount. The discount percentages previously listed are applicable to the sum of canon established in Article 3. For this sole occasion, the Office of the Attorney General of the Republic is authorized to execute the respective lease contract with concessionaires that avail themselves of the benefit established in this Article, thereby fulfilling the requirement established in Article 205, attribution 19) of the Constitution of the Republic. The payment of total or partial anticipated canon shall be paid once the corresponding deed of concession or lease is signed by the Office of the Attorney General of the Republic. The holders of existing concessions or lease contracts as of the date of entry into force of this Law may avail themselves of the benefit established in this Article. The period to avail oneself of the benefits of this Article is one (1) year from the entry into force of this Law.

SOLIDARITY CONTRIBUTION.- A solidarity contribution of two cents of a dollar (US$0.02) per pound of exported shrimp is created, which must be paid by the exporter in accordance with Article 15 of this Law.

EFFECTIVE DATE.- This Decree shall enter into force from the day of its publication in the Official Gazette (Diario Oficial La Gaceta). Given in the city of Tegucigalpa, municipality of the Central District, in the Session Room of the National Congress, on the sixteenth day of the month of December of two thousand thirteen. MAURICIO OLIVA HERRERA PRESIDENT BY LAW GLADIS AURORA LÓPEZ CALDERÓN SECRETARY ÁNGEL DARIO BANEGAS LEIVA SECRETARY Release to the Executive Branch dated February 20, 2014. Therefore: Execute. Tegucigalpa, M.D.C., April 8, 2014 JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE STATE SECRETARY IN THE OFFICES OF AGRICULTURE AND LIVESTOCK JACOBO PAZ BODDEN