Companies operating in Brazil must provide their annual account approval

Corporations and limited liability companies with a 31 December year-end have until 30 April to hold their annual general meeting, and approve their accounts from the previous year (base year of 2015).

Article 1.078 of the Civil Code and Article 132 of the Corporate Law (Law No. 6.404/76) determine that shareholders, or partners, of corporations and limited liability companies, must conduct the annual account approval with board of trade, within four months after the end of the year, by means of the Partners’ Meeting or General Ordinary Meeting to approve them.

During these meeting, the balance sheet and other financial statements are discussed; managers are elected and other issues related to the company’s interest are raised.

Why conduct annual account approval?

With the annual account approval, the company’s results and managerial practices, especially non-partners (contractors), can be understood. Failure to approve the company’s account may be detrimental when obtaining credit, commercial contracts and/or financing. By approving the accounts, partners validate the numbers presented by the managers. 

Compliance perspective

Developing compliance programs is important in order to follow local laws and regulations, demonstrate transparency towards the market and ensure ethical business relations.

In Brazil, especially after the publication of Law No. 12.846/13, known as the Anticorruption Law, it has become essential for companies to protect themselves against illegal acts. 

In this context, the annual account approval, containing accounting records that fully and precisely reflect the legal entity’s transactions, has the function of demonstrating the company’s integrity, and of those responsible for it, to its stakeholders – clients, suppliers, creditors, among others.

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