THE BRAZILIAN CIVIL CODE WAS AMENDED TO REDUCE THE DEFAULT VOTING REQUIREMENT TO REMOVE A QUOTAHOLDER FROM MANAGEMENT POSITION IN LIMITED LIABILITY COMPANIES AND TO SIMPLIFY THE OUT-OF-COURT PROCEDING EXCLUSION OF QUOTAHOLDER IN LIMITED LIABILITY COMPANIES WITH ONLY TWO QUOTAHOLDERS
Federal Law n. 13.792/2019 which amends certain provisions of the Brazilian Civil Code dealing with limited liability companies was sanctioned on January 3rd, 2019. The significant modifications, which are already in force as of January 4th, 2019 are the following:
- Default voting requirement for removal of an officer-quotaholder nominated in the bylaws of a limited liability company. Pursuant to Federal Law 13.792/2019, the removal of an officer, in the event such officer is also a quotaholder of the company and has been nominated officer in the bylaws of the company, requires the approval of quotaholders with the majority of the company capital, except as otherwise provided in the bylaws. Before this amendment, the Brazilian Civil Code required the approval of quotaholders representing at least two-thirds of company’s equity to approve the removal of an officer in the same condition. Limited liability companies which are interested in preserving the original voting requirement may reimplement it through an amendment to the bylaws.
- Simplified out-of-court exclusion of a quotaholder in limited liability companies with only two quotaholders. Furthermore, Federal Law 13.792/2019 simplifies the proceedings for the out-of-court exclusion of a quotaholder that is risking the future of the company through acts of evident seriousness. The new Law 13.792/2019 amends Brazilian Civil Code to exempt limited liability companies with only two quotaholders from implementing a quotaholders meeting or a special general meeting for the discussion and defense of the claim upon which the out-of-court exclusion is based.
