We inform that Corporate Companies, whether they are constituted in the form of a Limited Company or a Joint Venture, must approve the accounts presented by the managers annually, in the first four months after the end of the fiscal year, following the provisions of articles 1065 to 1078 of the Brazilian Civil Code (Law 10,406/02) and Article 132 of the Brazilian Corporation Law (Law 6,404/76).
Therefore, the partners of Limited Companies and shareholders of Corporations, whose fiscal year coincides with the calendar year, must hold an Ordinary General Meeting (“AGO”) or Meeting of Partners until April 30, 2020, for:
I. To take the management’s accounts, examine, discuss and vote on the financial statements and the economic balance;
II. To resolve on the allocation of net income for the year 2019 and the distribution of dividends, when applicable; and
III. Elect the administrators and members of the Fiscal Council, if any.
It is important to note that the law requires the annual meeting to be held, even if there are no directors to be elected or profits to be distributed. And it is worth noting that failure to comply with the legal obligation may have unwanted implications on the following points:
– Prevention of participation in bidding processes for non-compliance with the company’s economic and financial regularity.
– Difficulties in carrying out financial transactions with banks regarding loans and financing, due to compliance rules.
– Possibility for the company to be prevented from filing acts before the Board of Trade pending the registration of the Minutes of Approval of Accounts.
– Risk of full responsibility of the Managers and Directors for the result of the fiscal year, in addition to the chances of eventual characterization of dolus, fraud and deceitfulness while the Minutes of Approval of Accounts are not registered.
– Risk of the company having its registration cancelled due to being considered inactive before the Board of Trade, depending on the date of the last filing. Also being possible, its repercussion before the Federal Revenue and the State and Municipal Farms.
We inform that the minutes of the mentioned meeting must be submitted for registration and filing before the Board of Trade where the company’s headquarters is located. And in the case of joint-stock companies, the AGO should be published in an official and widely circulated newspaper where the company’s headquarters are located.
The Lotti & Araújo corporate law team remains at your disposal for any necessary clarifications, as well as for the preparation and registration of the Minutes of Approval of Accounts for the Fiscal Year ended at the end of 2019.