According to the applicable Law, Brazilian limited liability companies (sociedades limitadas) and corporations (sociedades por ações) must hold once a year an ordinary quotaholder/shareholders’ meeting within the four months following the end of the last fiscal year in order to resolve on:
(i) the approval of the management accounts and the company’s financial statements;
(ii) the allocation of net income and dividend distribution, if existent; and
(iii) if necessary, the appointment (or reelection) of administrators (directors or officers, as applicable).
Due to the COVID-19 pandemic, the deadline has been postponed to July 31, 2020.
Administrators must provide quotaholder/shareholder’s with their accounts and all accounting documentation. The approval of the accounts without reservations, by the partners, exonerates the members of the administration from responsibility for their management acts, except in cases of error, malice, fraud or simulation.
The lack of such approval may result in obstacles for the company, such as bad credit score with banks and disqualification in public bidding processes.
The minutes of the meeting must be registered with the competent Board of Trade.
Corporations and large-sized limited liability companies* must also present proof of publication of their financial statements in an official newspaper and in a widely-distributed newspaper. However, regarding large-sized limited liability companies, such requirement is being discussed in courts and a favorable judicial decision may exempt the company from publishing the documents.
* the company or group of companies under common control with assets in the previous fiscal year exceeding R$ 240,000,000.00 or annual gross revenue higher than R$ 300,000,000.00 is deemed a large-sized company.
Closely held corporations with less than 20 shareholders and up to R$ 10,000,000.00 in net assets are exempt from publishing their financial statements, as long as those are filed with the minutes of the meeting with the Board of Trade.
Barcellos Tucunduva is at your disposal for further clarifications and assistance.