DREI renders optional the publication of the Financial Statements of Large-Sized Limited Liability Companies

On November 25, 2022, the National Department of Business Registration and Integration ("DREI"), the technical body responsible for the public registration of companies in Brazil, issued Circular Letter SEI No. 4742/2022/ME, which guides the Boards of Trade to adopt the understanding that makes it optional to publish the financial statements of large-sized limited liability companies in the Official Gazette (Diário Oficial) and in large circulation newspapers.

Currently, all Brazilian limited liability companies must hold - on an annual basis - shareholders' meetings to deliberate on the approval of its management reports and financial statements, within the first four months following the end of the fiscal year.

However, since the publication and entry into force of the Federal Law 11.638/2007, it was determined that large-sized companies - understood as the company or group of companies under common control that had in the previous fiscal year total assets greater than two hundred and forty million reais (R$ 240,000,000.00) or annual gross revenue greater than three hundred million reais (R$ 300,000,000.00) - must comply with the provisions of the Federal Law 6.404/76 (“Brazilian Corporation Law”) on bookkeeping and preparation of financial statements and the requirement for independent auditing by an auditor registered with the Brazilian Securities and Exchange Commission (CVM).

This provision raised uncertainties and doubts as to whether the publication of the financial statements of such companies in the Official Gazette and in a newspaper of wide circulation was mandatory. In an attempt to settle the issue, the National Department of Commercial Registration (“DNRC”) – currently DREI – issued Circular Letter No. 099/2008, which established, in its item 7, that the publication of the financial statements of large-sized limited liability companies was optional.

Faced with this scenario, the Brazilian Association of Official Press ("ABIO") filed suit No. 0030305-97.2008.4.03.6100 against the Brazilian Federal Government at the Federal Court seeking a declaration of illegality of item 7 of DNRC Circular Letter No. 099/2008. ABIO was successful in obtaining a preliminary injunction at the lower court (Case 5003654-25.2017.4.03.6100) to ensure the requirement of publication of financial statements by large-sized limited liability companies.

However, upon the ruling of Case No. 0030305-97.2008.4.03.6100, the 1st Panel of the Federal Regional Court of the 3rd Region recognized the legality of item 7 of DNRC Circular Letter No. 099/2008, overturning the lower court decision and making it optional for large-sized limited liability companies to publish their financial statements.

Thus, according to the DREI's new guidance, the Boards of Trade will no longer reject the filing of corporate acts - such as the filing of minutes of shareholders' meetings that deliberate on the annual approval of financial statements - under the allegation of failure to prove the publications in the Official Gazette and in a newspaper of wide circulation.

Our team is available for further information, as well as to assist you with the procedures related to the approval of accounts of large-sized limited liability companies.

Gustavo Flausino Coelho – gustavo@bastilhocoelho.com.br

Matheus Chagas Lamarca – matheus@bastilhocoelho.com.br

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