The São Paulo State Court of Appeal (“TJSP”) decided to annul – due to violation of Section 134, §1º of the Brazilian Corporations Law (“LSA”) – an Ordinary Meeting of Shareholders that (i.) prevented a minority shareholder from obtaining clarifications about the Company’s financial statement and (ii.) occurred without the presence of the Company’s managers and independent auditor.

Although the Company had published the call notice for the Meeting, the TJSP ruled that the Company did not disclose the management report and the Company’s financial statements to the minority shareholder.

According to TJSP, any shareholder has the essential right to participate in the Company’s profits and to be informed about the Company’s business, based on Section 109 of the LSA. The Company’s by-laws and the shareholders in General Meetings cannot deny said rights. The TJSP decided that the Meeting was void for denying the minority shareholder’s right to access information and documents about the Company.

Civil Appeal nº 1003589-80.2017.8.26.0650 – TJSP
link to court ruling – in Portuguese

The São Paulo State Court of Appeal (“TJSP”) ruled that it is possible to delay the payment of dividends of a company going through financial distress.

The controversy concerned the interpretation of Section 202, 4^th paragraph of the Brazilian Corporations Law (“LSA”), which establishes the possibility of not distributing the dividends, if it is not compatible with the company’s financial situation, in the hypothesis that the shareholders had already approved a resolution to pay the dividends in the financial year in which they were declared.

It was TJSP’s understanding that, even if there is a previous shareholders’ resolution deciding for payment of dividends, the shareholders can postpone the payment, by observing the formal rules of Law 6.404/76, should the company’s financial situation become inconsistent with the payment of the dividends. Therefore, the sovereignty of the shareholders’ general meeting was preserved and the company’s interest defended by the decision, so as to avoid the aggravation of the company’s financial distress.

Civil Appeal n° 1002982-64.2017.8.26.0554 – TJSP
link to court ruling – in Portuguese

In August 2019, the 3rd Chamber of the Brazilian Superior Court of Justice (“STJ”), analyzing REsp nº 1.733.403/SP, ruled that the effects of the decision recognizing a corporate group and reversely piercing the corporate veil endures throughout all the execution process and the related motions, if any.

In the case at hand, after the official termination of the corporate relationship between two companies, the former minority shareholder offered a motion in an execution process. The main company, which was not part of this motion, was held legally responsible for the payment of the attorney’s fees referring to this motion. According to the STJ, it is a case of joint liability, even though the generating factor occurred after the termination of the corporate relationship between the companies, due to the effects of the reverse piercing of the corporate veil.

REsp nº 1.733.403
link to court ruling – in Portuguese