Approval of Financial Statements and Management Accounts

Companies must examine the financial statements and management accounts within the first four (4) months following the end of the fiscal year, which must occur according to the terms of the company’s Articles of Association and Bylaws. In the case of limited liability companies, this examination usually occurs through Annual General Meetings (companies with more than 10 partners) our Annual Quotaholders’ Meetings (companies with less than 10 partners). In the case of corporations, this examination must occur through Annual Shareholders’ Meetings.

For companies with fiscal year ending on December 31, such term expires on April 30, 2024.

The amendments to Law No. 6,404/76 (“Corporation Law”) introduced by Law No. 13,818/2019, which came into effect on January 01, 2022, stated that corporations are exempt from the obligation of publishing their documents, including Balance Sheets, in the Official Gazette. The publication is necessary in a wide circulation newspaper (summary format) and in such newspapers’ website (in its entirety).

In addition, the Corporation Law was changed by Supplementary Law No. 182/2021 (New Legal Framework for Startups), which allows closely held corporations with annual gross revenue up to BRL 78 million to publish their acts solely in electronic format.

With respect to limited liability companies, the publication of financial statements of large-sized limited liability companies (which, according to Law No. 11,638/07, are companies or a group of companies under common control whose total assets exceeded BRL 240 million or whose annual gross revenue exceeded BRL 300 million in the previous fiscal year) is no longer necessary.

Finally, it is worth noting that the approval of financial statements will exempt the officers from any liability for the accounts of the related fiscal year.

Demarest’s Corporate and M&A team is available to provide any further information or clarifications on this matter or any other issue.