Pursuant to Brazilian legislation currently in force, limited liability companies and corporations must hold ordinary shareholders’ meetings within the first four months of their fiscal year in order to:
- Demand managers’ accounts, examine, discuss and vote the financial statements relating to the prior fiscal year (as well as resolve on the destination of the net income and the distribution of the dividends); and,
- Appoint managers (and members of the Board of Directors in the case of corporations), whenever applicable.
The deadline for holding that meeting is April 30 for companies whose fiscal year ends on December 31st.
It is worth emphasizing that the financial statements must be published in a wide circulation newspaper edited in the locality that the company is headquartered within five (5) days prior to the date of the Meetings in case of Corporations and Large Limited Liability Companies, the company or group of companies under common control that has, in the previous fiscal year, total assets greater than R$240.000.000,00 (two hundred and forty million Brazilian reais) or annual gross income greater than R$300.000.000,00 (three hundred million Brazilian reais).
The obligation to publish financial statements, by Corporations, does not apply to privately held companies, with less than 20 (twenty) shareholders and shareholders’ equity of up to R$10,000,000.00 (ten million Brazilian reais).
For privately held companies with annual gross revenue of up to R$78,000,000.00 (seventy-eight million Brazilian reais), the respective financial statements may be published electronically at the Central de Balanços (CB) of the Public Digital Bookkeeping System (SPED) and made available on the company’s website.
Non-compliance with this legal obligation may result in the following:
- Until the accounts are approved with no restrictions, managers and members of the audit committee remain liable for the acts performed during the corresponding fiscal year, i.e., the approval of the accounts with no restrictions is a matter of safety for those individuals leading a company’s management, who are thereby released from such liability, except in the case of mistake, malice, fraud or simulation;
- Depending on the date of the last filing, the Board of Trade may cancel the registration of the company due to inactivity, with possible repercussions in connection with Federal, State, and Municipal tax authorities; and,
- The company is exposed to risks of, for instance, being deemed inept to participate in public bids and obtain financing from financial institutions.
We remain at your entire disposal to provide you with any clarification you may deem necessary and to assist you in this matter.