1. In accordance with the Brazilian laws, quotaholders of limited liability companies and shareholders of corporations shall hold meeting at least once a year, within four months after the end of the corporate year of the company, in order to (i) receive the accounts of the administrators; (ii) resolve on the financial statements; (iii) resolve on the allocation of the net profits of the corporate year and distribution of dividends; and (iv) appoint new administrators, if applicable.
  2. The purpose of these annual meetings is to present to the quotaholders and shareholders the economical results and the information of the company's activities of the previous corporate year. Therefore, quotaholders and shareholders who do not participate on a daily basis in the administration of the company have the opportunity to request information about the business and, as the case may be, to appoint new administrators for the company.
  3. The corporate year of a company incorporated in Brazil usually coincides with the calendar year, i.e., starting on January 1st and ending on December 31st of each year. In these cases, the annual meeting shall be held until the end of April following the ended corporate year.
  4. Nonetheless, certain measures shall be taken before the annual meeting is held, such as, for instance (i) the accounts of the administration, the balance sheet and the profit and loss statement of a limited liability company shall be made available to the quotaholders at least thirty (30) days prior to the annual meeting; (ii) a notice to the shareholders of the corporation shall be published at least a month prior to the annual meeting informing that the management report, the financial statements, the opinion of the independent auditor, if applicable, and other documents are available for consultation; (iii) the referred documents shall be published by the corporation at least five (5) days prior to the shareholders' ordinary meeting2; and (iv) all shareholders/quotaholders shall be called to the meeting pursuant to the terms of law, unless all shareholders/quotaholders are present at the annual meeting.
  5. After the annual meeting, its minutes shall be registered with the relevant Commercial Registry and, as for corporations, the minutes shall be published in the Official Gazette of the State in which the company is headquartered and in a local newspaper.
  6. Finally, the approval (without reservation) of the accounts prepared by the administrators and of the financial statements aligns administrators with quotaholders and shareholders with respect to the company's economical results and the information about its activities, as well as releases the members of the administration and fiscal council, if any, from liability, except in cases of errors, misconduct, fraud or simulation.

Footnotes

* Mauro Takahashi Mori e Katherina Kuramoti Ballesta are members of the Corporate and Contracts area of Machado Associados.

2 A privately held corporation with less than twenty (20) shareholders and with net equity below R$ 1,000,000.00 (one million Brazilian reais) may dismiss the publication of the referred documents, provided that certified copies of such documents are registered with the relevant Commercial Registry alongside with the minute of the shareholders' ordinary meeting resolving about them.

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.