We inform that Companies, whether incorporated as Private Limited or as Joint Stock, must approve the accounts presented by their directors annually, within the first four months following the end of the fiscal year, as provided in articles 1065 to 1078 of the Brazilian Civil Code (Law no. 10,406/02) and in article 132 of the Joint Stock Company Law (Law no. 6,404/76).
Thus, the partners of Private Limited Companies and the shareholders of Joint-Stock Companies, whose fiscal year coincides with the calendar year, shall hold an Ordinary General Meeting (“AGO”) or Partners’ Meeting until April 30, 2021 with the purpose of:
I. Audit the directors’ accounts, examine, discuss and vote on the financial statements and the financial turnover;
II. Deliberate on the allocation of net income for the fiscal year 2020 and the distribution of dividends, when applicable; and
III. Appoint the directors and members of the Fiscal Council, if any.
It is important to point out that the law requires the annual holding of the aforementioned meeting, even if there are no directors to be elected or profits to be distributed. And it is worth pointing out that failure to comply with the legal obligation may bring unwanted implications on the following points:
I. Prevention of the companies’ participation in biddings due to non-compliance with the company’s equity flow regime.
II. Hindrances in performing financial operations with banks involving loans and financing, due to compliance rules.
III. The possibility of the company being prevented from filing acts before the Board of Trade while it does not settle the registration of the Minutes of Approval of Accounts.
IV. Full responsibility risk of the Directors and Executive Officers for the results of the fiscal year, as well as the eventual characterization of malice, fraud, and simulation while the Minutes of Approval of Accounts are not filed.
V. Risk of the company having its registration cancelled due to being considered inactive before the Board of Trade, depending on the date of the last filing made. It is also possible to have repercussions before the Internal Revenue Service and the State and Municipal Treasuries.
We inform you that the Minutes of the mentioned meeting must be submitted for registration and filing before the Board of Trade where the company’s headquarters are located. Furthermore, in the case of joint-stock companies, the AGO must be published in the official and mass-circulation newspaper where the company’s head office is located.
The Corporate Law Team at Lotti & Araújo Law Firm remains at your disposal for any necessary clarifications, as well as for the preparation and registration of the Minutes of Approval of Accounts for the fiscal year ending at the end of 2020.