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Quorum required for corporate resolutions in Limited-Liability Companies are changed by Brazilian Law

February / 2019

Law 13792/2019 was enacted earlier this year, which brings about two significant changes in corporate resolutions quorums in limited liability Companies. These changes aimed at solving some corporate obstacles experienced daily.

The first one, changed the first paragraph of article 1.063 of the Brazilian Civil Code, reducing the quorum necessary for a managing partner withdrawal designated in articles of association. Therefore, this matter no longer requires at least 2/3 of the Company's capital stock support and is now approved by the favorable vote of the absolute majority of the capital stock.

Old VersionNew Wording

Art. 1.063 (...)

§ 1º In case of a managing partner designated in articles of association, his withdrawal requires the approval of at least two-thirds of the capital stock, except if the articles of association do not provide otherwise.

Art. 1.063 (...)

§ 1º In the case of a managing partner designated in articles of association, his withdrawal requires the approval of at least more than half of the Company's voting stock, except if the articles of association do not provide otherwise.

It is worth reminding that this is also applicable in a withdrawal of non-member officer, either by analogy or by the cap of the law (Art. 1.076, II of the Brazilian Civil Code).
 
The second one adjusted the single paragraph of Art. 1.085 of the Brazilian Civil Code, dismissing shareholders meetings in case of a member exclusion in companies composed by only two  shareholders.

Old VersionNew Wording

Art. 1.085 (...)

Single paragraph. The exclusion can only be designated in a meeting specially convened for this purpose, advising the accused in a timely manner to enable them to appear and exercise the right of defense.

Art. 1.085 (...)

Single paragraph. Except in the case where the Company is composed by only two shareholders, the exclusion can only be determined in a meeting specially convened for this purpose, advising the accused in a timely manner to enable them to appear and exercise the right of defense.

Regarding to the amendment, the opinion of the Chamber of Constitution and Justice provided further clarifications: “[…] it is relevant the amendment that makes holding a meeting unnecessary for the exclusion of a partner through out-of-court proceedings, in cases when this possibility is provided in the articles of association, if there are only two shareholders in a Company. By the rules of the Project, the majority shareholder excludes the minority shareholder, clamming gross negligence, and minority shareholder remains to seek his rights through the judicial process. In fact, it will be inefficient to present defense to the only partner who already intends to dismiss him".

In addition: (i) the excluded shareholder has to be notified an presented with the facts and grounds duly explained; and (ii) the exclusion in companies composed by only two shareholders will only be operated by the absolute majority of the Company's voting stock.

Limited liability companies prior to Law nº 13.792/2019, it will be necessary to adjust the articles of association to maintain the qualified quorum rule for the dismissal of designated directors (2/3 of the capital stock) if there articles of association make generic reference to the quorums of resolutions of the Brazilian Civil Code.

Vernalha, Di Lascio, Mesquita & Associados is at the disposal of its clients for more information on the subject.