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DREI’s decision grants filing of transfer of quotas based on automatic transfer clause in the event of death of a limited liability company partner

DREI’s decision grants filing of transfer of quotas based on automatic transfer clause in the event of death of a limited liability company partner

5/30/2022

On March 21st, 2022, the National Department of Business Registration and Integration (Departamento Nacional de Registro Empresarial e Integração – “DREI”) published a decision[1] that ratified the acceptance of the filing of a company’s amendment to the articles of association before the Board Trade of the State of Rio de Janeiro (In Brazil, the Boards of Trade are under state jurisdiction), whose purpose was to approve the automatic transfer of quotas belonging to a deceased partner to the remaining partner of the Company, in accordance with the rules provided for in the articles of association, without the presentation of a court order or public deed of estate settlement. As a rule, to register the transfer of quotas of a deceased partner of a limited liability company, the DREI Limited Liability Company Registration Manual requires the presentation of a court order authorizing the quota transfer or a public deed of estate settlement, or in case of a judicial probate that has already been closed, a copy of the approved estate settlement and final decision certificate.

In the analyzed case, the amendment to the articles of association filing request was initially rejected by the Board of Trade, so the company’s remaining partner contested such decision by filing an appeal to the Board of Trade plenary claiming that the specific rules for the automatic quota transfer were determined by the partners in the company’s articles of association to regulate the event of death of one of the partners and should be observed. The remaining partner argued that, as provided for in Article 1.028, I, of the Brazilian Civil Code[2], it is lawful for the limited liability company partners to provide the effects of their death in the company’s articles of association. Thus, the contractual rule should prevail and be effective without the need for judicial interference, or the approval of the estate administrator and heirs. The object of discussion in this case is not the heirs right to receive the amount equivalent to the quotas, but compliance with the rules previously established and agreed between the partners. The Board of Trade plenary granted the remaining partner’s appeal, approving the filing of the amendment to the articles of association.

After the filing was granted, an appeal was filed by the Board of Trade Attorney General’s Office, which argued that the quota transfer cannot happen automatically after a partner’s death, and the rules of the DREI Limited Liability Company Registration Manual should be followed. On the appeal’s decision, the DREI concluded that it is lawful for the partners of a limited liability company to establish the rules for automatic transfer of quotas in the event of the death of a partner.

One of the arguments of the DREI’s decision is precisely related to the observance of the objectives brought by the Economic Freedom Law (Law No. 13.874/19), which seeks to preserve private autonomy and contractual freedom, so that the will of the parties and the principle of minimum intervention must prevail, unless there is an express legal prohibition to the contrary.

Considering that this is a decision on a specific case and there was no change in the DREI Limited Liability Company Registration Manual, it is not possible to guarantee that such understanding will be followed by other Boards of Trade for the filing of corporate acts in similar cases. And, although the competence of the Boards of Trade is restricted to the examination of formal aspects of the acts and documents presented, from a corporate and contractual perspective, it is a precedent that reinforces the importance of the objectives brought by the Economic Freedom Law for contractual relations and the relevance of establishing well-structured governance rules and procedures in the articles of association that clearly reflect the objectives intended by the partners, whether for a succession event or for other relevant corporate issues.

Coauthors: Felipe Castro and Giovanna Cavassa Hayashi


[1] Appeal DREI No. 14022.116144/2022-57

[2] Law No. 10.406/2002

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