Continuing the trend of giving greater flexibility to the corporate decision making process, Law No. 14,451/2022, which shall enter into force on 22nd October 2022, reduces certain quori for deliberations in limited liability companies (sociedades limitadas) contemplated in the Brazilian Civil Code.
It is worth noting that such form of company is the most commonly adopted in Brazil with a substantial increase in such type of company having been noticed in recent years due to significant reduction in bureaucracy.
In this regard, with a view to reducing the respective quori set contemplated by Law – it being noted that quotaholders may, at their sole discretion, determine more restrictive quori, but without state intervention, – a recent Law introduced the following changes:
(i) the caption of article 1,061, which previously determined that appointment of a non quotaholder as officer should be approved by all the quotaholders, while the capital was not fully paid up, and by 2/3 after full payment was effected, now contemplates that the appointment is subject to approval by 2/3 before the full payment and simple majority (50% plus one voting quota) upon the full payment; and
(ii) clause II of article 1,076 has been amended to establish the following matters requiring approval by simple majority:
II – appointment of officers, if deliberated in a separate document (i.e., in the minutes of quotaholders meeting, instead of an amendment to articles of association);
III – removal of officers;
IV – form of remuneration, if this is not regulated in the articles of association;
V – amendment to the articles of association;
VI – merger, amalgamation, dissolution or cessation of liquidation;
VIII – filing for “concordata”.
It is relevant to note that although the original wording of the Brazilian Civil Code refers to concordata, there is no longer such procedure under Brazilian law, which was replaced by Judicial and Extrajudicial Restructuring under Law No. 11,101/2005).
One of the most important changes introduced by the new law was the reduction of quorum for deliberations in amendments to the articles of association, from 75% to a simple majority, thereby putting Limitadas on a par with Corporations (S.A.s). This results in such type of company again becoming an attractive vehicle for joint ventures and other corporate transactions.
Limited liability companies must adjust their articles of association to the new legal provisions by 22nd October 2022 or, if this is not done by them, by the first filing of any corporate document with the competent Commercial Registry (Junta Comercial).