Brazilian law provides that the partners/shareholders of Brazilian companies shall meet annually to review the management accounts, discuss and vote the financial statements and decide on the destination of the year-end results, as well as, as the case may be, appoint managers and members of the audit board.
The annual meetings must be held within the first 4 months after the end of the fiscal year. In Brazil, the fiscal year-end usually coincides with the end of the calendar year and, therefore, the annual partners/shareholders meeting shall normally be held until April 30 of each year.
LIMITED LIABILITY COMPANIES
In relation to limited liability companies, the financial statements must be disclosed to the non-manager partners before the annual meeting. The decisions taken in such meeting shall be formalized in minutes, which must be registered in the competent Board of Commerce.
The Board of Commerce of the State of São Paulo ("JUCESP"), on the terms of Deliberation JUCESP No. 02/2015, understands that the companies characterized as "large-sized" companies must publish their financial statements in the newspapers before filing the minutes of partners meeting which approved such financial statements with JUCESP.
Large-sized companies are the ones which, according to Law No. 11,638/07, have, in the last fiscal year, total assets greater than R$ 240 million or a gross income greater than R$ 300 million. Companies that are not considered large-sized may be released from publishing its financial statements if present a declaration attesting that the company does not fall into the definition of large-sized company.
Corporations must, as a rule, publish their financial statements at least 1 month before the date of the Annual Shareholders' Meeting ("AGO"), in which the relevant decisions will be taken and, later, file such financial statements in the Board of Commerce.
Corporations may, alternatively, publish a notice to the shareholders within the same term previously mentioned (at least 1 month), informing that the financial statements are available at its headquarters and publish them at least 5 days prior to the AGO. If all shareholders attend the meeting, such terms can be dismissed, but the publication of the financial statements must be done prior to the AGO. Closely held corporations with less than 20 shareholders and net equity up to R$ 10 million are released from the obligation of publishing their financial statements.
The minutes of the AGO must be registered in the competent Board of Commerce.
Public companies must also observe the provisions established by the Normative Instruction of the Brazilian Security Exchange Commission ("CVM") No. 481, dated as of December 17, 2009, as amended ("ICVM 481") and the guidelines issued by the Circular Letter CVM/SEP No. 01/2021, published by CVM's Superintendence of Corporate Relations on February 26th, 2021. It is important to highlight that, through the most recent changes in ICVM 481, CVM has regulated Shareholders Meetings held 100% virtually. The delay in disclosing its financial statements is considered a serious noncompliance by CVM and the company may be liable to pay a daily fine.
Different from last year, so far, the authorities have not extended the term for the annual approval of financial statements. In case of any updates regarding this matter, we will inform in a new newsletter.
Our team will be pleased to assist you with the draft of the corporate documents required to formalize the approval of the 2020 accounts and to discuss alternatives on the publication of financial statements for the large-sized limited liability companies.
For additional information, please contact KLA's Corporate and Mergers & Acquisitions practice area.
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.