On December 23, 2022, the National Department of Business Registration and Integration ("DREI"), the technical body responsible for the public business entities registry in Brazil, issued the Normative Instruction No. 88/2022 (“IN DREI 88”), which promoted significant changes in the business filing rules and guidelines in Brazil.
Among the rules altered by IN DREI 88 are Normative Instruction 81/2020 ("IN DREI 81") and its respective Annexes, which establish the Business Filing Manuals, as well as Normative Instruction 77/2020 and Normative Instruction 112/2022. The main changes promoted by IN DREI 88 were:
- Paying up capital contribution with quotas or shares of other companies: the procedures for paying up the capital contribution of limited liability companies (“sociedades limitadas") with quotas or shares of other companies have been expressly regulated;
- Pro-labore payment of limited liability company officers: IN DREI 88 recognized that there is no legal obligation of payment of pro-labore to the limited liability company officers, whether they are shareholders or not. Moreover, DREI established that it is lawful for the shareholder who is also an officer to participate in the company's profits, including in the form of dividends, without receiving pro-labore;
- Corporate resolutions and official publications for Micro and Small Companies: the rules for carrying out the shareholders resolutions of Micro Companies and Small Companies were expressly regulated (according to the provisions of articles 70 and 71 of the Federal Supplementary Law No. 123/2006), such as exemption from convening the minority shareholders prior to a shareholder’s meeting;
- Effectiveness of the filing of corporate acts: IN DREI 88 included art. 95-B determining that the corporate acts of communication of a shareholder's bankruptcy, quotas/shares purchase agreement filing, notice of withdrawal from a shareholder and notice of resignation of officers do not rely upon an amendment of the articles of association or statues in order to produce their effects in the business registry; and
- New types of certificates: IN DREI 88 introduced new types of certificates that may be issued by the Boards of Trade, such as: (i) the Specific Shareholder’s and Administrators Timeline Certificate - QSA; and (ii) the Specific Liabilities Certificate.
In addition, the changes introduced by IN DREI 88 in the regimes of withdrawal of a limited liability company shareholder are worthy of further note. First and foremost, the normative instruction acknowledged the lawfulness of provisions in articles of association that prohibit its members from exercising their individual right of voluntary withdrawal and established that the exercise of right of voluntary withdrawal (motivated or not) is irrevocable and irreversible for the withdrawing shareholder.
Furthermore, IN DREI 88 changed its understanding on the time frame for a shareholder's voluntary withdrawal from the company. The normative instruction recognized that the date of disassociation of the shareholder, in case of motivated (art. 1.029 C/02 second part) or unmotivated withdrawal, will be the date when the last of the shareholder’s received the withdrawal notification.
With regard to the winding up and the determination of the withdrawing shareholder's assets, IN DREI 88 determined that the company must wind up and pay the withdrawing shareholder's assets within 90 (ninety) days from the date of the resolution. If the contractual amendment is not filed, whereby the other shareholders opt to replace the withdrawing shareholder's shares, they will be cancelled and the capital stock of the company will be automatically reduced, and the Board of Trade will be required to do so:
- alter the business registry of the company to reflect the withdrawal of the shareholder, with the indication of the date of the disassociation, and update the corporate chart as a result of this operation;
- communicate the Brazilian Federal Revenuel Services (“Receita Federal do Brasil - RFB”) and other entities with which its systems are integrated so that they update their respective registrations; and
- launch an administrative block in the company's record, which will last until the remaining shareholder’s present an amendment to the articles of association reflecting the disassociation of the shareholder.
Finally, it should be noted that IN DREI 88 clarifies that the Board of Trade shall not interfere in the winding up and payment of the assets of the withdrawing shareholder, but only ensure that the disassociation of the shareholder is effectively implemented, and shall not require a declaration regarding the agreement of the withdrawing shareholder and the remaining shareholder’s on the determined amount, nor the submission of a statement of discharge or evidence that the assets of the withdrawing shareholder were effectively paid.
IN DREI 88 comes into force on February 10, 2023: (i) with respect to the amendments to articles 95 and 97 of DREI Normative Instruction No. 81 of 2020; (ii) with respect to item 7.4 of section II of chapter II of the Limited Liability Company Registration Manual; and (iii) with respect to items 4.4.2, 4.4.3 and 4.8 of section IV of chapter II of the Limited Liability Company Registration Manual. The other provisions took effect on the date of their publication.
Our team is available for further information, as well as to assist you with issues related to Corporate Law and public business registry in Brazil.
Gustavo Flausino Coelho – gustavo@bastilhocoelho.com.br
Matheus Chagas Lamarca – matheus@bastilhocoelho.com.br