April 2021 – Brazil – Rossetti Advogados
In Brazil, pursuant to article 132 of Law 6.404/76 (“Corporation Law“) and to article 1.078 of the Brazilian Civil Code, corporations and limited-liability companies must, at least once a year, during the four months following the end of their fiscal year, call and hold the Annual Shareholders’ Meeting (“AGO”) or the annual meeting of their members (“Annual Meeting”), as the case may be, and resolve upon the accounts of their management relating to the previous fiscal year.
Therefore, the Brazilian companies the fiscal year of which ended on December 31, 2020 must comply with the obligation relating to the fiscal year ended on December 31, 2020 by next April 31, in order to: (i) review the accounts of the managers, examine, discuss and vote on the financial statements; (ii) resolve on the allocation of the net income of the fiscal year and on the distribution of dividends; and (iii) elect the managers and members of the fiscal council, should this be the case.
With respect to Corporations, article 133 of the Corporation Law provides on their obligation to publish a notice informing their shareholders that the management documents (including the management report, the financial statements and the other related documents) relating to the fiscal year ended are available for consultation at the company’s principal place of business.
However, such disclosure is waived if the companies publish their financial statements in the newspapers of broad circulation used by them at least thirty (30) days before the date scheduled for the Annual Shareholders’ Meeting (AGO) or whenever the AGO is attended by all shareholders.
Please note that due to the costs involved in the publication of the financial statements in newspapers of broad circulation, the Corporation Law waives the obligation to publish them if the closely-held company has, cumulatively, less than twenty (20) shareholders and shareholders’ equity lower than R$10 million, provided that certified copies of these documents are registered with the competent Commercial Registry in the form of exhibit to the minutes of the AGO that resolves upon them.
With respect to limited-liability companies, the Annual Meeting may be waived in case all members resolve in writing on the matters that would be included in its agenda.
At least thirty (30) days before the date scheduled for the Annual Meeting to be held, the document containing the accounts of the managers and the balance sheet must be made available to the members that do not engage in the company’s management, in writing and with proof of the respective receipt.
Please note that limited-liability companies or groups of limited-liability companies under common control that had, in the fiscal year 2020, total assets in excess of R$ 240 million or an annual gross revenue in excess of R$ 300 million shall (i) prepare their financial statements in accordance with the rules applicable to corporations; (ii) submit the financial statements to review by an independent auditor registered with the Brazilian securities commission; and (iii) publish these statements before the date of the Annual Meeting.
Digital AGO and Annual Meeting
Finally, Law No. 14.030, of July 28, 2020 (conversion of Provisional Measure No. 931/2020) was enacted during the COVID-19 Pandemic. This Law provides that the AGOs and Annual Meetings may be digitally held, wholly or in part, permitting the remote participation and voting by the members, by means of an electronic system that permits registration of the pronouncements and votes, the simultaneous sharing of documents and recording of the meeting, thus complying with the applicable rules, including CVM Instruction No. 622 and DREI Normative Instruction No. 79, of April 2020 (subsequently incorporated into and revoked by DREI Normative Instruction No. 81, of June 2020).
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.