The committee of jurists appointed by Justice Luis Felipe Salomão has drawn up a draft law to update and adapt the Civil Code, which is currently awaiting analysis by the Federal Senate. The main aim of the draft is to reduce bureaucracy in the measures stipulated by the current law and to adapt the Code to doctrinal and jurisprudential understandings, which have already contributed over the years to updating certain issues, due to the changes in the business scenario since the Civil Code was enacted in 2002.

The draft bill proposes significant changes to company law, with a direct impact on the rules governing corporate law. Below are some of the proposals that could have an impact on the day-to-day running of companies:

• Articles of association: the draft aims to use the articles of association as the main instrument for defining the company’s rules. The aim is for the partners, when setting up their companies, to draw up detailed articles of association in order to bring greater legal certainty to their interests. This is precisely in order to avoid existing jurisprudential discussions, especially with regard to the criteria for determining the assets of a withdrawing partner, deceased partner, excluded partner or separated spouse/partner.
• Determination of assets: here the lawyers aim to bring the Civil Code into line with the procedure for determining assets already provided for in the Code of Civil Procedure (“CPC”), determining that if there is no criterion laid down in the company’s articles of association, the assets must be determined by means of a determination balance sheet, taking as a reference the date of the resolution and valuing, at the exit price, the assets and rights, tangible and intangible, including those generated internally, in addition to the liabilities, to be determined in the same way.
• Company Resolution Date: the draft bill also aims to maintain the criteria for defining resolution dates already defined by the CPC for cases of partial dissolution of the company, including, however, the provision for the resolution date in the case of divorce or dissolution of a stable union, which should be the date of de facto separation.
• Shareholders‘ Agreement: the draft bill formalizes the possibility of signing a Shareholders’ Agreement between the company’s shareholders, with the aim of defining internal rules for the purchase and sale of shares, preference for acquiring them, exercise of voting rights, or power to control the company. Currently, in order to draw up a shareholders’ agreement, the doctrine uses the supplementary application of the Corporate Law (Law 6.404/76), referring to Shareholders’ Agreements. These agreements only need to be filed at the company’s head office for them to be effective, and do not need to be registered with the Board of Trade.
• Management: one of the main novelties in the draft proposal is the possibility of companies being managed by a legal entity. Nowadays, corporate legislation attributes the ability to manage companies only to individuals.
• Shareholders‘ meetings: with the aim of reducing the bureaucracy of shareholders’ meetings, the new bill gives preference to holding meetings in virtual format, allowing them to be held in hybrid form, as well as waiving meetings when shareholders representing the majority of the share capital decide in writing on the matter that would be the subject of the meeting (currently the meeting is only waived when all the shareholders declare in writing on the matter).
• Resolutions: concentrating all resolutions of shareholders taken by votes corresponding to more than half of the share capital, regardless of whether or not the articles of association have been amended.
• Notices of meetings: the aim is for notices of meetings of shareholders to be sent twice, on sequential days, to at least two addresses, physical or electronic, provided by the shareholders and set out in the articles of association. If the calls are made in these terms, the act will be valid and effective. In addition, it will be the partner’s responsibility to keep their registration details up to date with the company.

In addition to the proposals listed above, there are a number of suggestions made by the appointed Commission, aimed at updating the legal provisions to contemporary issues that have no longer been covered over the 22 years that the Civil Code has been in force.

Given the significant changes proposed for companies, it is essential to keep a close eye on the progress of the bill to check that it has been approved and that all the changes will be maintained. The CPDMA law firm will keep a close eye on the proceedings.

By: Liège Fernandes Vargas
Corporate Law | CPDMA Team

To see the full draft bill presented by the Senate’s Internal Temporary Committee, click here.

Code of Civil Procedure: Art. 605. The date of termination of the company shall be:
I – in the event of the partner’s death, the date of death;
II – in the case of unjustified withdrawal, the sixtieth day following receipt by the company of notification from the withdrawing partner;
III – in the case of withdrawal, the date of receipt by the company of notification from the dissenting partner;
IV – in the case of withdrawal for just cause from a company for a fixed term and in the case of the judicial exclusion of a partner, the date on which the decision dissolving the company becomes final and unappealable; and
V – in the case of extrajudicial exclusion, the date of the shareholders’ meeting that decided on it.