After being approved by the House of Representatives, the substitutive text presented to Bill no. 3,401/08 is on its way to presidential sanction. The Bill regulates the disregard of the legal entity, an institute that allows extending the liability of a legal entity to a member, founder, shareholder, or administrator.

Although Article 50 of the Brazilian Civil Code allows the judge to disregard the legal entity in cases of misuse of purpose or confusion of assets to extend certain obligations to the private assets of partners and managers of the legal entity, there was no specific procedure for this procedure.

According to the approved text, disregarding the legal entity will depend on the proof of an abusive act, by the shareholders or administrators, to the detriment of the legal entity’s creditors and for their benefit. The disregard does not apply in the event of mere inexistence or insufficiency of equity to pay the obligations contracted by the legal entity, and its effects will not reach the private assets of the party that has not practiced an abusive act.

Among the main points of the procedural rite foreseen in the Bill, the following stand out:

  • mandatory objective indication, by the party or by the Public Prosecution Service, in a specific request, of the acts practiced that would give rise to an individual’s liability;
  • impossibility of ex officio disregard by the judge;
  • establishment of an incident of disregard in separate records, ensuring the right to adversary proceedings and broad defense, with a period of fifteen days for the defense and production of evidence;
  • mandatory hearing of the Public Prosecution Service, being forbidden the application of the disregard by analogy or extensive interpretation;
  • opportunity for the legal entity to satisfy the obligation in cash or indicate how it may ensure enforcement.

The Bill also defined that, for disregard, the disposal or encumbrance of personal assets of members, founders, shareholders or administrators of the legal entity, capable of reducing them to insolvency, is considered fraudulent when, at the time of the disposal or encumbrance, they have been summoned or notified of the pending decision on the request for disregard of the legal entity or personal liability for the debts of the legal entity.

Finally, the Bill determines that the act of the Public Administration that implies the disregard of the legal entity and the imputation of direct, joint, or subsidiary liability to shareholders, or administrators of the legal entity will depend on a court decision for it to be effective against the party or third parties.

Since the Bill provides for procedural law, the new provisions apply immediately to all legal proceedings in progress at any level of jurisdiction.

For more information about the PL, click here.

The business consulting team of Fraga, Bekierman e Cristiano Advogados is available to clarify any doubts about the matter.