The Third Chamber of the Superior Court of Justice (“STJ”) unanimously ruled that the former partner cannot be held liable for obligations undertaken after registration of the amendment to the articles of association concerning his share transfer in the competent commercial registrar.

In this case, the former partner registered the amendment to the articles of association in June 2004 and was being held liable for a lease obligation undertaken by the company in December 2005. The Rio de Janeiro State Court of Justice (“TJRJ”) was of the opinion that the former partner was liable for all the obligations contracted until June 2006, based on the statutory provision which says that the assignor shall be liable for two years after registering the transfer of his quotas. However, the Superior Court, based on the interpretation of the articles 1.003, 1.032 and 1.057 of the Brazilian Civil Code, decided that this responsibility for the period of two years is restricted only to obligations that were undertaken when he was still a partner, not including obligations undertaken when he was not part of the company anymore. Therefore, STJ decided that the former partner could not be sued, since the obligations contracted after the amendment to the articles of association are the assignee’s sole responsibility, exempting the former partner from liability.

The Third Chamber of the Superior Court of Justice (“STJ”) unanimously ruled that indemnification for loss of profits depends on proof of future profits, and therefore it is not possible to recognize the right to loss of profits in situations in which the business’ activities have not yet started.

In this case, the company requested termination of the contract and an indemnity for loss of profits due to the non-performance of the agreement by the company that was responsible for constructing the real estate enterprise (shopping mall), which was never concluded. The Judge, since there were no elements to quantify the loss of profits, validated the expert report based on financial statements of another store of the same brand, located in a different enterprise. The São Paulo State Court (“TJSP”), however, applied the loss of a chance theory to reduce the indemnity.

The Superior Court clarified that “loss of profits” and “loss of a chance” are different legal concepts. Therefore, once the first-degree Judge determined it should have a compensation because of an advantage effectively lost (loss of profits), TJSP could not decide based on the opportunity to obtain the advantage’s lost (loss of a chance), because it would be an offence to the res judicata.

In addition, STJ decided there can be no indemnity if there is no proof of the lost profits, so there’s no indemnity for hypothetic, remote or presumed profits. Thus, it is not feasible to arbitrate loss of profits if the company has not started its operational activities yet, since business activity is risky and cannot have the success of another company as a parameter of its own success, since the achievement of each establishment depends on variables such as location, profile of the consumers, accessibility and administration.

The Third Chamber of the Superior Court of Justice (“STJ”) unanimously ruled that, based on the business judgment rule, the Judiciary shall not interfere in the essence of the decisions taken by the controlling shareholder when conducting the business, as long as the dilution of the minority shareholders is justified.

Such an interference can only occur in cases of abuse of controlling powers, which occur when the directors decide against the corporate scope, in contradiction with the company’s interests or with misuse/abuse of power.

In this case, the controlling shareholder acquired control of a bankrupt bank. The minority shareholders accused him of abusing his controlling powers to dilute their equity stakes in the company in an illicit manner, which led to reduction of their share value. STJ, however, considered that the increase of capital was needed for the financial institution’s survival and, therefore, that it was justified, only emphasizing that the minority shareholders’ preemptive rights in the new share’s acquisition needed to be respected. It was also clarified that the abuse of power of control cannot be presumed, and should always be proven, which did not occur in this case, especially taking into account the need for resources to keep the financial institution as a going concern and to achieve the business strategies set out by its management.