Two STJ Rulings Strengthen Legal Certainty for Investors in Brazil
Two recent decisions by the Superior Court of Justice (STJ), Brazil’s highest court for ensuring uniform interpretation of federal law, address issues of particular importance to those investing in Brazil from abroad. The first concerns how a foreign company may be validly served process in a Brazilian lawsuit. The second establishes when the personal assets of shareholders or members may be used to satisfy the company’s debts. Taken together, they reinforce something European investors value above almost everything else: predictability.
Being Sued in Brazil: Service of Process on a Foreign Company
Service of process is the formal act by which a party is notified that it is being sued and is given the opportunity to defend themselves. If service is invalid, the entire proceeding may be jeopardized. Conversely, if service of process is deemed valid despite not having been properly carried out, the company may be held in default, i.e., lose the case simply because it was not properly notified.
In a decision released in June 2026, the STJ’s 4th Panel ruled on a case involving Hyundai Corporation, a South Korean company (Special Appeal (Resp) 2.000.242). A Brazilian company had sued it after failing to receive mobile phone accessories for which it had already paid. To bring the foreign company into the proceedings, the plaintiff requested that process be served on Hyundai Caoa do Brasil, which is identified as Hyundai Corporation’s “representative”. The argument was that the two companies used the Hyundai brand, that Caoa had a distribution agreement with an affiliate of the defendant, and that all of the companies belonged to the same economic conglomerate.
By majority vote, the STJ invalidated the service of process and all procedural acts taken thereafter. According to the Court, a common brand, distribution agreements, and the fact that they are part of the same corporate group are not sufficient to make one company the legal representative of another, particularly when the Brazilian company operates in a different business sector. Caoa manufactures and sells automobiles, not mobile phone accessories.
Without concrete evidence that the Brazilian company had authority to accept service of process on behalf of the foreign company, the proper method of service is through a letter rogatory, an international judicial cooperation mechanism by which Brazilian courts request a foreign country to serve process on a company headquartered there.
This raises a frequent and legitimate question: Brazilian law does in fact require a foreign company to have a representative in Brazil. However, this requirement, set forth in Article 1.138 of the Brazilian Civil Code, applies to foreign companies authorized to operate in Brazil, that is, companies that establish a branch, agency, or subsidiary office in the country with authorization from the federal government. A company that merely conducts business from abroad, for example by exporting goods to a Brazilian customer, is not required to maintain a representative in Brazil. In such cases, as a general rule, it must be served process through a letter rogatory, unless there is evidence that someone in Brazil actually acts on its behalf or has authority to represent it.
The practical message is clear, although this is a Panel decision and does not have binding effect. Indirect structures, such as distributors, licensees, or affiliates, do not automatically create a legal representative of the parent company. For investors, this provides protection against procedural surprises, but it also underscores the importance of clearly defining, in contracts and corporate records, who is, and who is not, authorized to represent the company in Brasil.
Cases where Shareholders’ Personal Assets May Be Used to Satisfy Company Debts
One of the reasons investors operate through a corporate entity, such as a limited liability company or a joint-stock company, is limited liability. As a general rule, the company’s assets are legally separate from those of its members. There is, however, an exception: piercing the corporate veil. This mechanism allows a court to reach the personal assets of members to satisfy the company’s debts.
For years, Brazilian courts had disagreed over a practical question: was it enough for a company to have no assets with which to pay its debts, or to have been shut down improperly, for its members to become personally liable? In May 2026, the STJ’s Second Section resolved the controversy by establishing a binding legal thesis applicable nationwide under Theme No. 1.210.
The answer was clear: no. To reach the personal assets of members, there must be proof of abuse, characterized either by misuse of the corporate purpose, when the company is used for unlawful purposes, or by commingling of assets, when the company’s funds and those of its members are mixed. The mere absence of assets or the irregular closure of the company, standing alone, does not justify piercing the corporate veil. In other words, business failure is not the same as fraud.
The decision was closely divided, by a 4–3 opinion, showing that the issue still gives rise to debate. It applies to civil and corporate matters. It does not extend to consumer or environmental matters, which are governed by a more flexible standard, nor to tax enforcement proceedings, which have their own rules for holding members liable. The following day, the Superior Labor Court adopted a similar approach for companies undergoing judicial reorganization, likewise requiring proof of abuse. Outside that context, however, Brazilian Labor Courts tend to apply a more flexible standard.
For foreign investors, this represents a direct reinforcement of limited liability. Investing capital in a business that ultimately fails does not expose, per se, the investor’s personal assets or those of the controlling company. It is important to remember, however, that piercing the corporate veil remains possible when abuse is effectively proven. Good corporate governance and a clear separation between company funds and those of members remain the best safeguards.
What This Means for Investors
The two decisions point in the same direction: greater predictability and respect for proper legal procedures. The first ensures that a foreign company will only be brought into Brazilian proceedings through the appropriate method of service. The second safeguards the separation between the company and its members, allowing that separation to be disregarded only when concrete evidence of abuse exists. For foreign investors, these are signs of a legal environment that, although complex, provides solid protective mechanisms, provided that the corporate structure and the roles of each party are properly documented.
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For more information on the above or other matters, please contact Maristela SA Rossetti (mar@rraa.com.br) or Gilberto Rossetti (gmr@rraa.com.br).
This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.
