Exercise your responsibilities carefully as the penalties for failure to do so can be severe. Be aware that you are jointly and severally liable for the damages caused to the legal entity or to third parties, when you:
- act beyond the scope of the administrators’ powers (ultra vires)
- practice acts which are contrary to the Articles of Association or the Law
- fail to act, or act with negligence or willful misconduct
- in accordance with the Corporation Law, you are not personally liable for the obligations incurred on behalf of the company and in the regular course of your management duties. You are liable, however, for the losses caused to the company when you act:
- within your attributions or powers, but with negligence or willful misconduct
- in excess of your powers, or in violation of the law or of the By-laws of the company
- you are not liable for the wrongdoings of other directors, including your predecessors, unless you are aware of such acts or omissions and fail to act to prevent or stop their occurrence or are negligent in detecting and communicating them to the other directors or to the shareholders. You may also set aside your liability by dissenting from the acts or omissions and ensuring your dissent is registered in the appropriate corporate records of the company
A civil claim can be filed against the directors by shareholders or third parties.
The directors may be indemnified against their liabilities towards the company. It is possible to have an indemnity agreement and directors’ and officers’ liability (D&O) insurance.
Delegation of Authorities
In accordance with the Brazilian Civil Code, the directors are forbidden from delegating the exercise of their duties, but they may, within the limits of their powers according to the Company´s Articles of Association, constitute attorneys-infact, specifying in the instrument the acts and operations that the attorneys may be allowed to practice.
Directors and Officers Insurance
The company should have a global insurance programme including directors’ and officers’ liability insurance. Where local regulations do not permit or recognise “non-admitted” or foreign insurance a local D&O Insurance policy is issued.
Note that foreign D&O insurance policies are not binding in Brazil.
Latest version updated
22nd March 2018