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Annual general meetings and shareholders’ meetings must be held by April 30
Companies must approve their annual accounts in accordance with the regulations applicable to their specific corporate type
Corporations and limited liability companies are approaching the deadline to conduct their Annual General Meeting (AGM) or Shareholders' Meeting. This requirement needs to be fulfilled within the first four months of the fiscal year. Given that the fiscal year for most companies concludes on December 31, these entities are required to hold these meetings by April 30, 2024.
Check out the following topics for key insights into these corporate events:
Why these meetings should be held
The AGMs and Shareholders' Meetings must be held to review and approve the directors' management and the financial statements for the 2023 fiscal year, ensuring a comprehensive evaluation of the company's governance.
Additionally, these meetings are crucial for passing resolutions on the reporting and distribution of dividends, if applicable, thereby finalizing the allocation of profits generated within the period.
Furthermore, these events serve to release directors from liability for their management duties, except in cases of fraudulent behavior.
Differences between an Annual General Meeting and a Shareholders' Meeting
The AGM must comply with legal provisions and requires a minimum number of shareholders to be present to convene and make decisions on specific issues. Conversely, the Shareholders' Meeting entails more streamlined procedures, as outlined in the company's articles of incorporation.
The choice between an AGM and a Shareholders' Meeting is contingent upon the company's shareholder count. Only limited liability companies with no more than 10 members may conduct a Shareholders' Meeting. Companies exceeding this number of shareholders are required to hold an AGM.
It is important to note that micro-enterprises (MEs) and small businesses (EPPs) are exempt from conducting these meetings.
Practical issues
Registration of minutes: The minutes of the AGM or Shareholders' Meeting must be filed with the Board of Trade to be considered valid.
Holding an AGM: Regarding the organization of an AGM, distinct regulations apply to corporations and limited liability companies. Check them out:
Annual General Meeting |
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Limited-liability companies (Articles 1,071 to 1,080-A of the Brazilian Civil Code) |
Corporations (Articles 121 to 134 of the Brazilian Corporate Act) |
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Attendance on first call |
Requires the attendance of members representing at least ¾ of the company’s capital. |
Requires the attendance of shareholders holding at least ¼ of the company’s total voting shares. |
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Who is responsible for calling the meeting |
1. Administrative body; 2. Statutory audit committee, should the administrators delay the call for more than one month; 3. Any member, whenever the administrators delay the call for more than 60 days; 4. Members representing more than 1/5 of the company’s capital, when not served, within 8 days, their request for a reasoned call. |
1. Administrative council or directors; 2. Statutory audit committee, should the administrative bodies delay the call for more than one month 3. Any shareholder, whenever the officers delay the call for more than 60 days; 4. Shareholders representing at least 5% of the capital, whenever the corporation officers do not, within 8 days, comply with their justifiable request that a meeting be called; 5. Shareholders representing at least 5% of the voting capital, or 5% of nonvoting shareholders, whenever the corporation officers do not, within 8 days, comply with the request that a meeting be called in order to appoint a statutory audit committee. |
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Purpose of the meeting |
1. To receive the accounts rendered by the administrative body and to discuss the company’s balance sheet and income statement; 2. To appoint administrators; 3. To discuss any other subject of the agenda for that day. |
1. To receive the accounts rendered by the corporation officers and to examine, discuss and vote on the financial statements; 2. To decide on the uses to which the net profits of the fiscal year should be put and on the distribution of dividends; 3. To elect the officers and the members of the statutory audit committee; 4. To approve the monetary adjustment to the shareholders’ capital. |
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Quorum for resolutions |
Votes corresponding to more than 50% of the capital in the following matters: appointment, dismissal and compensation of administrators, amendment of the company’s bylaws, incorporation, merger and dissolution or end of liquidation, and application for bankruptcy. Remaining cases are passed by a majority of votes of those present, provided that the law or the bylaws do not require a higher quorum. Note: until the capital is fully paid up, the appointment of non-members as managers shall require the approval of at least 2/3 of the members. |
As a general rule, resolutions shall be passed by a simple majority of votes, abstentions not being taken into account. The bylaws of a closed corporation may increase the quorum required for certain resolutions, provided they specify which matters are subject to this provision. |
Company's disclosures:
The disclosure rules for corporations have recently changed, eliminating the need to issue reports, including financial statements, in the Official Gazette. Now, they must disclose them in summary form in widely circulated newspapers, with the full text available exclusively on the company's website.
Closely held companies with annual gross revenue up to BRL 78 million are allowed to issue their disclosures solely in electronic format, either on their own website or on the Public Digital Bookkeeping System (Sped).
It should be noted that large-sized limited-liability companies are no longer required by the Trade Boards to issue their financial statements in order to file their meeting minutes, making such disclosure optional.
Sanctions for non-compliance
While the law does not specify penalties for companies that fail to approve their accounts, non-compliance can lead to various complications, including disqualification from participating in public tenders, limitations when filing for reorganization, challenges in securing contracts with financial institutions, and restrictions on transferring capital abroad.
Thus, holding these annual meetings is crucial not just for meeting legal requirements but also for ensuring transparency and sound governance within companies, helping to mitigate risks that could impact their operations.
Compliance with corporate requirements
DPC has a Paralegal department prepared to assist companies in maintaining compliance at the local, state and federal levels. You can count on our support: dpc@dpc.com.br.
How can DPC help your company?
Domingues e Pinho Contadores has a specialized team ready to assist your company.
Contact us at dpc@dpc.com.br
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