BRAZIL : Issuance of Debentures by Limited-Liability Companies (Ltda.)

August 2020 – Brazil – Rossetti Advogados

Bill No. 3.324/20, submitted by senator Flávio Bolsonaro (Republicanos-RJ), was presented last June 15, with the participation of various corporate law scholars, in order to expressly authorize the issue of debentures by limited-liability companies and cooperatives. Currently, these bonds may only be issued by joint-stock companies (S.A.), even though there is no express prohibition to limited-liability companies.

The issue of debentures by limited-liability companies was, to this day, the subject of considerable debate by jurists. Some jurists understand that due to the inexistence of express prohibition by law, limited-liability companies are authorized to issue this type of debt security, by means of private offering. 

However, showing a different understanding, the Commercial Registries, especially the Commercial Registries of São Paulo and Rio de Janeiro, understand that limited-liability companies are not compatible with the issue of debentures and, for that reason, their general instruction was to deny the filing of debenture indentures. 

The bill proposes an amendment to Article 1.055-A of Law No. 10.406, of January 10, 2002 (Brazilian Civil Code) to contemplate the issue of debentures by limited-liability companies and cooperatives. Cooperatives may not issue debentures convertible into company’s shares, only limited-liability companies are allowed to do it.

In addition, the bill also sets forth that the Brazilian Securities Commission (CVM) shall regulate the public offering of these bonds.

The reasons for the bill are the financial crisis originated by the covid-19 pandemics, as well as the limited-liability companies’ need to expand their instruments to raise funds in the market, which are, to the date hereof, extremely limited for this company type. 

The recently enacted Economic Freedom Act (Law No. 13.874 of September 20, 2019) admitted the existence of one-member limited-liability companies, and this company type tends to be more and more used by businesspersons, in substitution for the EIRELI (limited-liability sole proprietorship). Today, limited-liability companies are the most used company type in Brazil, including by startups, which play a relevant role in the development of innovations in this country.

The bill will offer legal certainty, since it will not permit adoption of a different understanding by the bodies in charge of registering corporate acts, and it will greatly expand the number of companies that may use this well-known corporate financing instrument, which will certainly be very helpful to boost the Brazilian economy, which will rank pari passu with the practice of many other countries. 

For more information on the above or in other matters, please contact Maristela Abla Rossetti ( or Gilberto Rossetti (

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.