Brazil Lowers Voting Thresholds for LLCs

Brazilian law sets minimum voting requirements for decisions made by members of limited liability companies or limitadas. These minimums, however, changed in 2022, giving company owners more control over decision-making processes.

In the past, 75% of a company’s voting capital was required to modify the articles of incorporation. But with the passage of Law 14.451/2022, a company’s articles can be changed by a majority vote. The same majority requirement applies to decisions to enter into a merger or dissolve the company. Previously, 75% of the membership interests were needed.

A similar change was made regarding the designation of the manager or administrador of the company. Before the new law, appointing a manager who wasn’t a member of the company required either 100% or two-thirds of the voting capital, depending on whether or not the capital was already paid up. Today, those minimums are two-thirds and a majority.

There are two other essential points to remember. First, these numbers are minimums. Companies may establish voting thresholds that are higher than what the law prescribes by including them in their articles of incorporation. Second, these are default thresholds. For companies that don’t specify their voting requirements, the legal minimums will apply.

When forming a limited liability company or limitada in Brazil, carefully consider the corporate structure that’s most suitable for your situation. As a foreign owner of a Brazilian company, you’ll want to make sure you have the control necessary to protect your business, even if you’re not running the day-to-day operations