The concept of "large size companies" was introduced in the Brazilian legislation by Law No. 11.638/2007. A large size company is defined as "a company or group of companies under the same control that had in the previous fiscal year: (i) total assets over R$240 million, or (ii) annual gross revenues in excess of R$300 million.

Previously to the enactment of such law, only corporations were required to prepare and bookkeep its financial statements in accordance with the Corporations Law, as well as mandatory independent audit by an auditor duly registered with the Brazilian Securities and Exchange Commission (CVM - Comissão de Valores Mobiliários).

In addition to create the new concept of large size companies, Therefore, Law No. 11.638/2007 has determined that such companies, even if not incorporated as a Corporation (which includes limited liability companies, cooperatives and other corporate types) should follow and comply with the provisions of the Corporations Law related to bookkeeping and preparation of the financial statements as well as the obligation of independent audit by an auditor registered with the CVM.

Many discussions and debates have been occurring among Brazilian attorneys since then, considering that the wording of the law was not clear whether or not the large size companies would be obligated to publish its financial statements (complying with the same requirements imposed to corporations).

The Brazilian Association of Official Presses (ABIO) has filed a writ of mandamus and obtained an injunction, which determined that the publication of the financial statements with the Official Press was mandatory by large size companies.

As a result of that, the Board of Commerce of the State of Minas Gerais (since 2010), the Boards of Commerce of the States of Rio de Janeiro, Tocantins and Goias (since 2011) and the Board of Commerce of São Paulo (since April 7, 2015) have demanded the publication of the financial statements by large size companies that have their headquarters in those States, as a condition for the filing of the Minutes of Partners' Meeting that approves such Financial Statements.

Likewise the Corporations, the publication of the financial statements must be made by the large size companies in the State Official Gazette and in another newspaper of wide circulation, published in the place where the company's headquarters is located.

Consequently, limited liability companies that desire to file their Minutes of Annual Meetings with the Boards of Commerce of the States of Minas Gerais, Rio de Janeiro, Tocantins, Goias and Sao Paulo are required to evidence that the publications of their financial statements have been made. In case the limited liability company is not considered a large size company, it must present a statement representing it to the Board of Commerce, as a condition to have its Minutes of Partners' Meeting filed with that Board of Commerce. However, it will not prevent the registration of other corporate documents of those companies (dealing with other matters) with the Boards of Commerce.

Several Writs of Mandamus have been filed by companies in Sao Paulo, either before the State Court and the Federal Court. In many cases, injunctions have been granted establishing that the Board of Commerce of the State of São Paulo should refrain from requiring the publication of the financial statements.

The Association of the Industries of the State of São Paulo (CIESP) has obtained an important injunction determining that the Board of Commerce of the State of São Paulo refrains from requiring the publication of financial statements to its members until further decision of that Court. Therefore, nowadays companies that are associated with CIESP may file their Minutes of Partners' Meeting for the approval of their accounts, regardless of the publication of their financial statements.

There is no monetary penalty provided by law if the large size companies decide not to publish their financial statements and/or not to file (or file later) its Minutes of Partners' Meetings to approve the financial statements and their accounts with the Board of Commerce. However, the companies that decide not to do it could face some problems (such as when dealing with financial institutions or when participating in any public bid), considering they may be eventually requested to present copies of the Minutes of Partners' Meeting that approved the companies' annual financial statements and accounts.

Luciana M. Cossermelli Tornovsky is a partner in the Corporate / M&A practice at Demarest Advogados

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