Here are the possible damages and what officers should do to avoid them.
Failure by the managing officers to submit the company’s accounts annually, or the simple irregularity in the legal formalization of the rendering of accounts may bring several damages to a company and its officers, among which, we point out the following:
(a) Officer’s personal liability, in view of the lack of exemption of liability to third parties.
(b) Corporate conflicts between stockholders with respect to the allocation of the profit ascertained in the fiscal year, especially on the part of minority stockholders.
(c) Difficulty/restriction to (i) taking out loans at various financial organizations; (ii) obtaining investments from third parties, remarkably investment funds; (iii) participating in private/public bids or auctions.
To avoid doubts and annulment of the meeting by other stockholder or third parties concerned, we list below the main items that officers should check before holding a stockholders’ meeting without risks of nonconformities. Such legal requirements should be analyzed on a case-by-case basis, since they may vary according to the corporate type, company size, net equity value, number of stockholders, provisions in the bylaws or articles of association of the relevant company, among others aspects.
(a) Formalities to call Stockholders’ Meetings: publishing call notices in newspapers or sending calls by email? What is the advance time required to call a meeting?
(b) Financial Statements (FS): Do FS need to be published in advance in newspapers, or only making them available at the company’s headquarter is valid? How long before? Should FS be submitted to independent auditing? What should the content of the explanatory notes be?
(c) Drawing up Minutes: May minutes be drawn up in a summarized manner in order to reduce the costs with their publication?
(d) Records and Publications: Must all minutes of the meetings be recorded and published in a widely circulated newspaper, or are there any cases that waives with such formalities?
(e) Quorum: What is the minimum quorum required for a stockholders’ meeting? And for the resolutions of the matters in the agenda?
Azevedo Sette’s Corporate team of lawyers is ready to advise and give other clarifications about this matter.