The Court examines whether the lack of assets and the irregular winding-up of a company allow for the presumption of abuse of legal personality.
By Luana Marachini
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Legale Overseas, no. 963.
The 2nd Section of the Brazilian Superior Court of Justice (STJ) began, in November, the trial of Theme 1,210 to discuss the extent to which shareholders’ assets may be reached when a company ceases its activities without sufficient assets to settle its debts.
The so-called piercing of the corporate veil is a legal mechanism that allows, in exceptional circumstances, the separation between the company’s assets and those of its shareholders to be disregarded. In practical terms, this means that, in certain cases, creditors may seek payment directly from the shareholders when the company fails to meet its obligations.
Under the general rule of Brazilian law, set forth in Article 50 of the Civil Code, this measure is only permitted when there is abuse of legal personality, characterized by misuse of corporate purpose or commingling of assets—an approach known as the major theory of piercing the corporate veil.
The controversy analyzed by the STJ arose from decisions rendered by the lower court in Special Appeals Nos. 1,873,187 and 1,873,811, which allowed a presumption of abuse based solely on the absence of attachable assets and the irregular closure of business activities, without examining these traditional requirements.
In this context, Theme 1,210 seeks to answer a central question: is it sufficient that a company lacks assets and has been irregularly closed for shareholders’ assets to be reached, or is effective proof of abuse of legal personality still required?
In the proceedings, the reporting justice, Minister Raul Araújo, reaffirmed the STJ’s settled case law that piercing the corporate veil requires concrete evidence of abuse, asset fraud, or misuse of corporate purpose. During the analysis, however, Minister Nancy Andrighi requested a review of the case files and highlighted the risks of an overly restrictive interpretation, which could facilitate fraudulent practices. She argued that the absence of attachable assets combined with the irregular closure of the company could, when considered together, indicate asset fraud or misuse of corporate purpose.
The final ruling on Theme 1,210 is expected to have a direct impact on how creditors and business owners address situations involving the irregular closure of companies, influencing legal certainty in commercial relationships and credit recovery.
Vaz de Almeida Advogados is closely monitoring the developments of this matter, with a focus on delivering strategic and legally effective solutions to its clients.
Translation Disclaimer
This document was originally drafted in Portuguese and subsequently translated into English using artificial intelligence (AI).
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