Annual Obligations from the Brazilians Limited Liability Comercial Companies – Approval of Accounts
(VOLTAR)Ana Lucia de Campos MaiaLawyer from Records team of the Law Firm Fraga, Bekierman et Pacheco Neto Advogados, in São Paulo/SP.
The New Civil Code, since its inception in January 10, 2002, brought to the Limited Liability Comercial Companies some accounting and corporate obligations previously exclusive to the Joint-Stock Corporations. Since then, the Limited Liability Comercial Companies are, regardless of the number of their partners, obligated to perform meeting or assembly between them for the approval of their accounts.
In Limited Liability Commercial Companies composed by more than 10 shareholders, the execution of Annual General Meeting will be mandatory. In Limited Liability Commercial Companies composed by 10 shareholders or less, the execution of the Shareholder´s Meeting will be obligatory.
For cases in which the articles of incorporation are silent on the procedures of these meetings, the rules/standards of the Annual General Meetings will be set among them, including the procedures for call notices, procedures and time frame for completion.
The article 1701 of the New Civil Code stipulates that limited liability companies must, once a year and four months following to the end of fiscal year, approve the accounts of the administrator(s), the balance sheet and the financial result for the preceding year. Usually the companies decide to coincide with the fiscal to the calendar year. If this is the case, the end of April 2011, will be the final term to the execution of the Annual General Meeting or the Shareholder´s Meeting in order to approve the accounts for the fiscal year of 2010.
Because it is the determination of the New Civil Code, the realization of the approval of accounts is a legal duty of the company and although there is no explicit penalty for non compliance, the absence of it will result in liability to their administrators due to the violation of the legal system and damages arising from them.
The realization of the annual Approval of Accounts has to be regarded as more than a mere formality, it should be pursued as a tool for controlling and monitoring the direction of the company by all the shareholders