In the first four months of the year, companies must approve the management accounts, analyze the financial statements, and decide on the allocation of profits. In general, the fiscal year coincides with the calendar year, ending on December 31, which means that the Annual General Meeting (AGM) or the Meeting of Members must take place by April 30 of the following year.

Joint-stock and limited-liability companies are subject to such obligation, as set forth in article 132 of the Corporation Law (Law 6.404/76) and in article 1.078 of the Civil Code (Law 10.406/02). The requirement of publication of the financial statements depends on the company’s size and structure, pursuant to the applicable statutory provisions.

Although there is no penalty for non-compliance, the lack of formalization can lead to operational difficulties, such as obstacles to participating in bidding processes and restrictions on obtaining credit, as many financial institutions require the minutes of the meeting that approved the accounts registered with the Commercial Registry.

The approval of the accounts also provides greater legal certainty to managers, officers, and members of the Fiscal Council, exempting them from liability for actions during the period, except in cases of error, intent, or sham.

In limited-liability companies, the Meeting of Members may be waived if all members resolve on the required matters in writing. For joint-stock companies, article 133 of the Corporation Law, in turn, requires that shareholders be informed of the availability of the accounting documents at the company’s principal place of business. This requirement may be waived if the company publishes its financial statements in newspapers with wide circulation at least one month in advance, or if all shareholders attend the AGM.

Furthermore, joint-stock companies with fewer than 20 shareholders and shareholders’ equity lower than BRL 10 million are exempt from publishing financial statements, provided that certified copies of these documents are attached to the minutes of the AGM.

Therefore, it is essential that companies plan in advance the preparation of financial statements, comply with the formalities of calling and holding meetings, and observe the need for the publication of financial information. Meeting these requirements contributes to the company’s compliance and helps to avoid operational and legal setbacks.

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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 foreign subsidiary as a comprehensive analysis of the matters referred to herein.