Mandatory annual corporate meetings

I have been sending this message to my clients. If you have investments in Brazil, this might be useful to you. 

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Dear client,

According to Brazilian legislation (art. 1.078 of the law 10.406/02, and art. 132 of the law 6.404/74), every company must hold at least one annual meeting, in the first four months of the year, in order to:

          i.            evaluate the company’s financial reports, previously presented by the directors (or, in most cases, drafted by the accounting firm and approved by the Director/administrator);

        ii.            determine the destination of the company’s economical results (profit or loss);

      iii.            elect the company’s directors, if needed.

There is no immediate legal punishment for not holding this meeting in the first four months  of the year.

However, it is the registration and publication of this meeting that validates the company’s financial reports before third parties, including tax authorities and banks. Moreover, several operations than require registration before the Brazilian Central bank may require a copy of the financial reports.

 Therefore, we strongly recommend the registration of  the meeting’s minute, as early as possible. Also, this is a requirement in our indemnity/provisional administration agreement.

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