Company & Commercial, Brazil updates

Apostille Convention ratified in Brazil
  • Brazil
  • 07 March 2016

The government recently ratified the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents. The convention aims to remove the requirement of diplomatic or consular legalisation of foreign documents. The government's goal in ratifying the convention is clearly to reduce bureaucracy. For companies, this reduction will decrease the expenses associated with, among other things, validating foreign documents.

Court considers retroactive effect of amendment to articles of association
  • Brazil
  • 03 March 2014

The Superior Court of Justice (STJ) recently invalidated a power of attorney that had been granted by two partners in favour of a former partner with the intent of transferring certain company assets as payment in kind for the former partner's quotas. The STJ found that such power of attorney could not be deemed valid, as it was not issued by the company's legal representative at the time of its issuance.

Court rules on piercing corporate veil of family-owned company
  • Brazil
  • 06 January 2014

The Superior Court of Justice recently pierced the corporate veil and found that it was not possible to exclude the liability of one partner of a family company if there was no evidence in the case proceedings to prove who effectively acted as the company's manager. The decision could represent a dangerous precedent for family-owned companies, if each future case is not carefully analysed on its own merits.

Extrajudicial exclusion of partners from Brazilian limited liability companies
  • Brazil
  • 05 August 2013

The Civil Code expressly provides for the extrajudicial exclusion of a limited liability partner. However, before such exclusion can take place, companies must insert such a provision into their articles of association. Ultimately, the decision will depend on the other partners' subjective determination of what is deemed an act of undeniable severity that would jeopardise the continuity of the company.

Disproportionate distribution of profits in limited liability companies
  • Brazil
  • 29 July 2013

Among the essential rights of partners in limited liability companies are the right to vote on company matters and the right to earn profits from the company's business activities. The distribution of profits other than in proportion to each partner's share of a company's capital is permitted only where all partners receive some portion of the profits and the company's articles of association expressly provide for such distribution.

Court recognises that fraud in sale of LLC property rules out guarantee
  • Brazil
  • 20 May 2013

Limited liability companies (LLCs) are one of the most common forms of corporate entity in Brazil. The Superior Court of Justice recently recognised the occurrence of fraud in the sale of an LLC property, the quotas of which were partially attached in the enforcement proceedings against its partners. The court held that the sale resulted in the defalcation of the company's assets, rendering the creditor's guarantee ineffective.

Piercing the corporate veil: new bill aims to prevent misuse of doctrine
  • Brazil
  • 13 May 2013

In addition to the legal remedies set forth under Brazilian law, piercing the corporate veil is an alternative to the general rule of limited liability. Although the courts have widely applied this doctrine, it has not always been the proper and most effective measure for resolving disputes. A new bill therefore aims to prevent misuse of the doctrine and safeguard certain principles recognised by the Constitution.

Establishing partners' liability in limited liability companies
  • Brazil
  • 07 May 2013

In a limited liability company, the liability of each partner is limited to the quota for which he or she has subscribed, but all partners are jointly and severally liable until the social capital has been fully paid up. Once the capital has been paid up, liability is limited to the amount of each partner's ownership interest (ie, the amount of their respective quotas). However, there are exceptions to this general rule.

New codes and unwelcome surprises
  • Brazil
  • 30 April 2012

The drafting of new codes is in fashion in Brazil at present, but such change is not without resistance. When the proposed changes to the Consumer Defence Code were announced, commentators were first struck by the surprising nature of the content. Most worrying are the proposals to amend procedural provisions such as permitting the burden of proof to be shifted during sentencing.

Commission adopts new policy for performance of board members
  • Brazil
  • 26 September 2011

Recent decisions and actions of the Securities and Exchange Commission may demonstrate a new tendency in the way the commission envisions and judges the performance of board members of Brazilian companies. The commission is demanding that directors act more proactively and intensively than they have to date. The impact of this new position on Brazilian public and private companies is yet to be seen.

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