1. The shareholders of Brazilian corporations (“sociedades por ações” or “S.A.”) and the “quotaholders” of Brazilian limited liability companies (“sociedades empresárias limitadas”) must, at least once a year and within the four months following the end of the fiscal year, resolve on the so-called “account approval”, that is, on the officers’ accounts, the financial statements of the company, the designation of the economic results of such fiscal year, the distribution of dividends, if any, and the election of new officers and member of the auditing board, when their term of office coincides with this meeting1.
2. As general rule, the fiscal years of Brazilian companies start on January 1st and end on December 31st of each year, in a way that, in these cases, the ordinary meeting shall take place until the end of April of the year following the ended fiscal year.
3. In order to carry out the ordinary shareholders meetings, the quotaholders/shareholders must, in accordance with the applicable and/or the terms and conditions of the articles of association/by-laws of such companies, be convened to attend such ordinary meetings, being such notice unnecessary if all quotaholders/shareholders attend to such meeting.
4. It is important to note that, in addition to such notice, some measures must be adopted prior to such ordinary meeting.
5. In case of the sociedades empresárias limitadas, for example, in no more than 30 days before the quotaholders’ meeting, the officer’s accounts, the balance sheet and the economic result have to be made available to its quotaholders. Brazilian Commercial Registries/Board of Trades of some states understand that the publishing of the financial statements and the administration’s report of sociedades empresárias limitadas considered as big companies (grande porte) are mandatory. It is very likely that the filing of the minutes of the meeting where the financial statements and the administration’s report of sociedades de grande porte will be denied by such authorities.
6. In case of the corporations (S.A.), it shall be published the (i) notices to the shareholders, with 1 month in advance, providing that the management’s report, the financial statements, the independent auditors’ report, if any, and other documents are available for consultation of the shareholders at the corporations’ headquarters, and (ii) the documents mentioned in item (i) with 5 days prior to such ordinary general meeting.
7. There is a special rule for privately-held corporations with less than 20 shareholders and a net equity lower than R$ 1 million: they are not obliged to publish the management’s report, the financial statements, the independent auditors’ report, if any, provided that certified copies of such documents are filed for registration with the competent Commercial Registry alongside the minutes of the general shareholders meeting in which the approval of such documents were included in the ballot.
8. The minutes of both metings must be filed with the competent Commercial Registry. The shareholders meeting of a corporation must be published in the Official Gazette of the State where the company has its headquarters and in a big newspaper.
9. Finally, the approval of accounts and of the financial statements releases from liability, when made without reservations, the administrators (officers and directors) and the member of the auditing board, if any, except in cases of error, wilful misconduct, fraud or simulation. In addition, it works as a way of aligning the quotaholders/shareholders of the company and its administrators, in relation to the results and the business of the company.