The below post is authored by our friends at Azevedo Sette Advogados.
UNITED STATES BUSINESS ENTITIES OWNING BRAZILIAN CORPORATIONS AND LIMITED LIABILITY COMPANIES MUST CAUSE THEIR BRAZILIAN SUBSIDIARIES TO PERFORM SHAREHOLDERS/ QUOTAHOLDERS ANNUAL MEETING BY THE END OF APRIL
All Brazilian Corporations and Limited Liability Companies must hold a Shareholders Annual Meeting (AGO) or a Quotaholders Meeting (RQ), respectively, for discussion and approval of the four items noted below as required by Article 132 of Brazil Federal Law 6.404/76 and Article 1.078 of the Brazilian Civil Code; those meetings must be held within the four months following the end of the previous fiscal year (April 30 for most companies):
• management’s report, exam, discuss and vote the company financial statements;
• approval of the destination of the net profit and distribution of dividends;
• appointment of directors and the members of the board of auditors, if the case may be; and
• approval of the inflation adjustment of the capital of the company (art. 167).
The AGO and the RQ are mandatory (art. 132 of federal law 6.404/76 and art. 1.078 of the Brazilian Civil Code) and must be performed annually, within the terms and conditions determined for the approval of the matters indicated by the legislation. Regardless of the necessity of Directors or Officers elections or the existence of profits distribution, the execution of the AGO and RQ are mandatory for each fiscal year.
The minutes of the AGO and the RQ must be registered before the Commercial Registry at the State in which the company’s head office is located. Exclusively for Brazilian corporations, following the registration of the minutes of the AGO, it must be published in the Official Gazette of the State and also in another widely circulated newspaper in the location of the company’s head office.
It is important to highlight that for Brazilian corporations, prior to the performance of the AGO, the company´s management must make available to the shareholders, as well as publish the company´s financial statements, management’s report and auditor’s report, if the case may be, in the Official Gazette of the State, and also in another widely circulated newspaper in the same location as the company’s head office.
The approval by the shareholders of financial statements without restrictions, discharges the officer from all and any management responsibility, except for those actions executed by mistake, fraud or simulation.
The publishing obligation of financial statements of Limited Liability Companies with large incomes is subjected to some legal administrative and judicial discussion. In this way, this type of Limited Liability Company shall evaluate in each case the necessity of publishing its financial statements.
Azevedo Sette’s Corporate Team is available for further clarifications and additional assistance regarding this matter. Please contact them at email@example.com .