Takeaway: The Third Panel of Brazil’s Superior Court of Justice (STJ) held that, before a company may bring a claim against former administrators based on alleged corporate corruption, it must first annul the shareholders’ meeting that approved those administrators’ accounts. Without such annulment, the claim cannot proceed. The case involved allegations that former directors participated in a scheme involving illicit advantages and harmful contracts. The Court of Justice of Rio Grande do Sul had previously dismissed the lawsuit for failure to satisfy this requirement, and the STJ upheld that decision.
The company argued that the annulment requirement should not apply in cases involving fraud, since the allegedly irregular contracts would not have been reflected in the approved financial statements. The STJ rejected that argument. According to the Court, once the shareholders’ meeting approves the accounts, the administrators receive what Brazilian corporate law refers to as quitus, a formal discharge acknowledging that they properly performed their duties during the relevant period. To remove that protection, the approval of the accounts must first be judicially annulled.
According to the reporting justice, this requirement is grounded in Brazilian corporate law and reflects the STJ’s consolidated case law.
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The MAC Advogados team closely monitors developments in Brazilian case law involving corporate governance and directors’ liability, advising clients on the annulment of shareholders’ meetings, and complex corporate disputes.