Brazil: Period For The Holding Of Meetings/Assemblies Of Quotaholders Of Limited Liability Companies And Ordinary General Assemblies Of Corporations

Pursuant to article 1.078 of the Civil Code (Law nr. 10.406/2002) and articles 132 and 133 of the Corporations Law (Law nr. 6.404/76 and later alterations), Limited Liability Companies and Corporations should, within four months of the end of the fiscal year, hold a Shareholders' Meeting/Assembly or an Ordinary General Assembly, respectively, with the purpose of:

Limited Liability Companies

Article 1.072 of the Civil Code establishes that the decisions taken by partners of Limited Liability Companies shall be taken at a Meeting or Assembly, as stated in their Articles of Association. Furthermore, the first paragraph of the same article states that such companies are obliged to hold an Assembly if the number of quotaholders is greater than ten (10).

The call for the Quotaholders Meeting should follow the rules established in the Articles of Association. The call to the Quotaholders Assembly, when applicable, shall be the responsibility, as a rule, of the company's administrator. However, the law provides for three exceptions, meaning that the mentioned Quotaholders Assembly may be called:

(i)         by any quotaholder when the administrators have delayed the call for more than sixty days, in cases recognized by the law or the company's Articles of Association;

(ii)        by quotaholders holding more than one fifth (1/5) of the capital stock when a substantiated request for a call, with notification of the matters to be covered, is not met within eight (8) days;

(iii)        by the fiscal council, if applicable, when the administrators delay the annual call by more than thirty days, or whenever serious or urgent reasons occur.

The call for the Quotaholders' Assembly should be performed by means of an advertisement published three times in the Official Gazette of the State in which the company's headquarters is located and in a widely-circulated newspaper. This advertisement should include the location, date and time of the Assembly, whilst there should be a minimum period of eight days between the date of the first call and the holding of the Assembly, and five days for the others. However, the publication formalities are dispensed with when all the quotaholders either appear or declare, in writing, that they are aware of the location, date, time and agenda of the Assembly.

We should further stress that the administrators of the limited companies should, up to thirty (30) days prior to the date set for the holding of the Quotaholders' Meeting or Assembly, announce the information they have and which is available to the quotaholders, such which should include: (i) the administrative report on company business and the most important administrative facts from the ending fiscal year; (ii) a copy of the financial statements; (iii) the independent auditors' report, if applicable; (iv) the fiscal council's report, including dissenting votes, if applicable; and (v) any other documents relevant to the subjects included in the agenda.

Minutes of the Quotaholders' Meetings/Assemblies are to be drafted in the Book of Minutes of Quotaholders' Meetings/Assemblies, and should be signed by the members of the board and by all the shareholders present and registered with the Board of Trade.

Corporations:

The call for the holding of a Corporation's Ordinary General Assembly should be performed by means of an advertisement published in the press at least three times, containing the agenda as well as the location, date and time of the Assembly.

The first call for the Ordinary General Assembly should be performed at least eight days before the date of the Assembly, with the period starting on the date of the publication of the first advertisement. Should the Assembly not take place, a new advertisement should be published containing a second call, at least five days prior to the date of the Assembly.¹

We should further stress that the administrators should, up to one month before the date scheduled for the Assembly, by means of advertisements published as mentioned above, announce the information they have and which is available to the shareholders, such which should include: (i) the administrative report on company business and the most important administrative facts from the ending fiscal year; (ii) a copy of the financial statements; (iii) the independent auditors' report, if applicable; (iv) the fiscal council's report, including dissenting votes, if applicable; and (v) any other documents relevant to the subjects included in the agenda. The advertisements should state the location or locations where the shareholders may obtain copies of these documents.

The mentioned documents, except those mentioned in (iv) and (v) above, should be published by at least five days before the date scheduled for the Assembly.

It should be noted that if the Assembly attracts all the shareholders, any problem over the failure to publish the advertisements or non-observance of the abovementioned dates may be dismissed. However, publication of the financial statements prior to the Assembly is still required.

Furthermore, if the financial statements are published up to one month prior to the date scheduled for the Assembly, the need to publish the advertisements announcing the availability of the documents to the shareholders is waived.

As an exceptional rule, a privately-held company with less than twenty shareholders, and with net equity of less than R$ 1,000,000.00 (one million reals), may call the Assembly by means of an announcement sent out to the shareholders, such which they should sign for upon receipt (respecting the abovementioned call period). Publication of the documents mentioned in (i) and (iii) above may also be waived, as long as registered copies have been filed in the commercial records together with the Minutes of the Assembly at which they are discussed.

Minutes of the Ordinary General Assembly are to be drafted in the Book of Minutes of General Assemblies, and should be signed by all the members present and registered with the Board of Trade.

Should it be in your interests, we can provide more information on the abovementioned publication procedures, as well as provide assistance in the arrangement of Meetings or Assemblies for Quotaholders of Limited Liability Companies and Ordinary General Assemblies for shareholders in Corporations.

Footnote

1 In a publicly-held company, the advance notice for the first call shall be 15 days and for the second call, 8 days, as established in paragraph II of § 1 of art. 124 of the Corporations Law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.