Partners’ Meetings and Assemblies: Essential Formalities

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Partners’ assemblies and meetings are the main forum for decision-making in limited liability companies. Ignoring the formalities required by law can make decisions void and create legal uncertainty for the entire company.

Although they may seem bureaucratic, these meetings organize the company’s corporate life, record important decisions, and protect everyone involved. The Brazilian Civil Code sets out specific rules that must be followed, and ignorance of those requirements is often the source of avoidable disputes among partners.

Properly conducted resolutions matter not only for the internal validity of decisions, but also for protecting partners in dealings with tax authorities, creditors, and business partners. An assembly run with strict attention to form is the best shield against future challenges.

The difference between an assembly and a meeting

An assembly is mandatory when the company has more than ten partners, under Article 1.072 of the Civil Code. With ten partners or fewer, the articles of organization may provide for a meeting instead, a more flexible and less formal format.

In both cases, the purpose is the same: to decide matters that require a collective vote. Choosing the meeting format, when permitted, lowers operating costs and speeds up the formalization of decisions, without compromising the legal validity of the acts taken.

Properly conducted corporate resolutions protect not only the partners among themselves, but also the company in its dealings with third parties, tax authorities, and the courts.

Matters that require a vote

Matters that depend on a collective decision include: approval of accounts, appointment of managers, amendment of the articles of organization, merger, consolidation, dissolution, and expulsion of partners.

The law sets specific quorums for each type of decision, protecting partners against unilateral changes. Failing to meet the minimum required quorum makes a resolution subject to being annulled in court, which can have serious effects on contracts entered into on the basis of the challenged decision.

Beyond the matters set by law, the articles of organization may expand the list of decisions that require a collective vote, and may establish higher quorums than those in the statute. This is a recommended practice for companies whose partners have different profiles, because it balances decision-making power and prevents abuse by the majority.

Notice and quorum to convene

Notice must be given by publication in an official newspaper and in a newspaper of wide circulation, unless all partners attend or are aware of the meeting. The notice must state the date, time, place, and agenda.

The quorum to convene is three-fourths of the capital on first call and any number on second call. The period between the calls must be long enough for absent partners to be notified and decide to attend.

When the articles of organization allow it, notice may be given electronically, provided receipt is confirmed. Many companies have chosen to add clauses to their articles that validate notice through messaging apps or corporate e-mail, with a requirement of acknowledgment of receipt, which simplifies the process without compromising the required formality.

Voting quorums

Amending the articles of organization requires approval by three-fourths of the capital. Appointing a manager who is not a partner requires unanimity until the capital is fully paid in, and two-thirds afterward. Expelling a partner for just cause follows Article 1.085.

For other matters, such as appointing a manager who is a partner and approving the annual accounts, the general rule applies: a simple majority of the capital represented at the meeting. Knowing these quorums precisely is essential to avoid challenges and to ensure that resolutions have their intended effects.

Minutes and registration

Every resolution must be recorded in minutes, signed by those present and, when it amends the articles of organization, filed with the Commercial Registry (Junta Comercial). Failing to register may undermine the enforceability of decisions against third parties.

The minutes must be written clearly, identifying all participants, the topics discussed, the votes cast, and the final decision. Drafting errors or significant omissions can raise doubts about what was actually decided, making it easier for dissenting partners or interested third parties to challenge the decision later.

Representation and proxy voting

A partner who cannot attend the assembly or meeting in person may be represented by a proxy, as long as the applicable legal and contractual restrictions are observed. The Civil Code allows representation, but the articles of organization may limit who is eligible to act as the partner’s proxy.

The power of attorney must be specific to the act, stating the powers granted and, preferably, the matters on which the proxy is authorized to vote. Generic powers of attorney, or those with excessively broad powers, may be challenged by the other partners, undermining the validity of the vote cast.

In companies with corporate partners, representation is carried out by their legal representatives, according to the articles of organization or bylaws of the corporate partner. In these cases, it is advisable to require documents proving the authority to represent before the voting begins.

Frequency and the mandatory annual assembly

Article 1.078 of the Civil Code requires at least one assembly or meeting per year, within the four months following the end of the fiscal year. This meeting has a mandatory minimum agenda: reviewing the managers’ accounts, voting on the balance sheet and the income statement, and appointing managers when applicable.

Failing to call the annual assembly is a defect that can make managers personally liable, since it undermines the other partners’ oversight of management acts. If the managers fail to act, any partner has standing to ask a court to order the assembly to be called, including by setting a daily fine until the order is carried out.

Another important point is keeping the corporate books. The law requires preserving the Assembly Minutes Book, the Attendance Book, and, where one exists, the Quota Registry Book, for as long as needed to defend against administrative, tax, and judicial proceedings. Keeping these records in order significantly reduces the risk that resolutions will be challenged.

Having a corporate lawyer present is advisable at assemblies that involve complex matters, such as amending clauses, admitting a new partner, mergers, and changing the type of company. The lawyer helps prepare the minutes, advises on specific quorums, and reduces the risk of challenge for a formal error or the omission of a mandatory requirement.

Irregularities and legal consequences

Failing to follow the formalities set by law or by the articles of organization can make a resolution void or voidable, depending on the nature of the defect. Defects in the notice, such as inadequate lead time or an incomplete agenda, tend to be treated as grounds for voidability, while resolutions that violate the law are void outright.

The deadline to file an action to annul a corporate resolution is two years, counted from the date the decision was made, under the Civil Code. If no challenge is brought within that period, the resolution becomes final, even if it was made with formal defects.

Where a resolution has harmed a minority partner or third parties, the person responsible for the irregular notice may be held personally liable for the resulting damages. The liability of a manager who calls an assembly with an incomplete agenda, or without observing the correct quorum, is drawing growing attention in Brazilian courts, especially in disputes involving the transfer of assets or the approval of accounts containing irregularities.

Conflict of interest and abstention from voting

The Civil Code prohibits a partner from voting on matters in which the partner’s interest conflicts with the company’s. This situation often arises when approving the accounts of managers who are also partners, or in resolutions involving contracts between the company and the voting partner. Violating this rule may lead to the vote being annulled and, if the defect was decisive for the outcome, to the nullity of the challenged resolution itself.

A conflict of interest is not always easy to spot. In family companies, where the roles of partner, manager, and relative overlap, conflicts can go unnoticed without careful legal analysis. For that reason, it is advisable to circulate the assembly agenda far enough in advance for each partner to assess, before the meeting begins, whether anything prevents them from voting on each item.

When the majority partner has a conflict of interest and excluding that partner’s vote makes it impossible to reach a quorum, the matter must be taken to the courts for a court-supervised resolution or the appointment of an interim manager. This scenario arises in cases of deep corporate deadlock, especially in family-controlled companies where the roles of partner and business manager overlap completely.

Recording the conflict of interest in the meeting minutes is a recommended practice to preserve the validity of the other resolutions taken at that session. Without that record, questions may arise later about whether the conflicted partner actually abstained or improperly influenced the outcome, undermining the legal certainty of the decision adopted by the other participants.

Frequently Asked Questions

Can an assembly be held virtually?

Yes. Since Law No. 14.030/2020, digital assemblies have been allowed, provided the articles of organization authorize them and secure means of identifying and voting participants are ensured.

Can a partner be represented by a proxy?

Yes. Representation is allowed, subject to the requirements of corporate law regarding who may act as the partner’s proxy and what the power of attorney must contain.

Is a decision made without an assembly valid?

Yes, when all partners give their agreement in writing. Article 1.072, paragraph 3, of the Civil Code waives the formal meeting in these cases, as long as the consent is express and documented.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.