Directors’ Duties in Brazil

>> Powers and Duties in Brazil

You must act within the powers imposed by the applicable legislation and constitutional documents.  As a director you are required to act with diligence and loyalty in the discharge of your duties. You must act on behalf of and in the interests of the legal entity.

According to the Brazilian Civil Code, the acts performed by administrators will validly bind the company, even when they exceeded their corporate powers, unless:

  • the limitations of said powers are duly indicated in the company’s Articles of Association
  • such limitation is known by the contracting third party
  • when the nature of the act performed is evidently alien to the purposes of the company

Duties – Skill and Care

In exercising directors’ powers, you are required to exhibit the care and diligence that all active and honest persons normally exercise in the management of their own affairs and to act in the interest of the company.

Duties – General

As a director, you must act in a way which you think is most likely to promote the success

of the company.  You need to consider a number of statutory factors relating to corporate requirements, including the long term consequences of your decisions, the company’s reputation and the interests of other stakeholders such as employees, customers and the community.

  • you must maintain loyalty to the company, for example you must maintain the secrecy of confidential information and not use privileged information for personal gain or to the benefit of others
  • you must provide certain information to the shareholders about material facts, such as:
    • the number of securities issued by the corporation, a controlled corporation   or a corporation belonging to the same  group which you have acquired or disposed of in the previous fiscal year.
    • the options to purchase shares which you have acquired or exercised during the previous fiscal year
    • the conditions of the contracts of   employment which the corporation entered into with its directors and senior employees

Duties – Other

There are many other areas of law that impose duties on directors and senior managers. Matters likely to be of particular relevance, depending upon the nature of the entity and its activities, are set out below.

Law 12.529/11, also known as Brazilian Antitrust Law, presents a list of violations against the economic order. The fine for an offence under this law can be between 0.1% and 20% of the gross sales in the last annual accounting period, excluding taxes, but will never be less than any quantifiable advantage gained. Where violations have been directly caused by a director, they will be liable for a fine of between 1% to 20% of the fine levied on the entity. Acting in conformity with the by-laws or articles of association can still give rise to this liability.


  • you will not be held personally liable for the obligations contracted in the name of the company for regular acts of management performed upon the company’s bankruptcy. However, you will be liable within the civil sphere for any damages caused by acts performed within your powers through negligence or wilful misconduct, in violation of law or the company’s Articles of Association
  • the joint liability of partners and directors of the company shall be assessed by the competent court during the bankruptcy proceeding, independent of the realisation of the company’s assets or evidence of insufficient assets to cover the company’s liabilities. In certain cases or under the requirement of creditors, the court may decide to freeze the personal assets of the directors and partners, until a final judgment on joint liability has been made.

Criminal Law

  • The Brazilian Criminal Code includes provisions which apply to directors i.e. a director who makes a false statement about the economic situation of the company or wilfully neglects, fully or partially, facts related to the company or distributes fictitious profits or dividends. It should be noted that, in connection with the liability of directors in criminal law, imprisonment and alternative sanctions may be applied to the company’s legal representatives, if they contributed to the performance of the crime through negligence, imprudence or malpractice
  • other crimes which impose criminal sanctions on directors include crimes against welfare (Law 1.521/51) and crimes against intellectual property and unfair competition (Law 9.279/96)


Law 12.846/2013, also known as the Clean Companies Act, introduced strict administrative and civil liability on all legal entities with operations in Brazil for illicit acts practiced against local and foreign public administration, such as (i) direct and indirect acts of bribery or attempted bribery of Brazilian public officials or foreign public officials; and (ii) bid rigging and fraud in the public procurement process. It is important to highlight that the liability of the legal entity shall not exclude the personal liability of its directors, officers, or any individual who has directly contributed to the illegal act. The act stipulates that penalties for such crimes may include fines.

Health and Safety

In Brazil, there are several rules related to employees’ Health and Safety. According to Labour law, an entity is required to:

  • observe and enforce the provisions governing occupational safety and health
  • inform its employees, by means of internal instructions, of the precautions to be taken against employment accidents and occupational diseases
  • take such measures as are ordered by the competent regional authority
  • facilitate supervision by the competent authority

The employer shall ensure that their employees have the representation necessary for the discussion and referral of safety and health issues solutions at work.

Competition Law

Law 12.529/11 provides that the violation of the competition legislation subjects the directors, whether directly or indirectly responsible for the violation committed, to a fine of between 1% to 20% of the fine applied to the company.  Therefore directors should ensure that they are fully aware of the application competition rules and legislation.

Tax Legislation

In accordance with the National Tax Code, the Código Tributário Nacional (CTN), the directors of a company may be considered personally liable for the of tax obligations resulting from acts performed with excess of power, violation of the law or breach of the articles of association/bylaws (“ultra vires”). Although the obligation to pay the taxes lies on the company, the Tax Authority may go after directors for payment of tax obligations. Although controversial, this has on a  few occasions been accepted by the Brazilian Courts, notably in the case of the irregular dissolution/ liquidation of the company and in the absence of assets that might guarantee the execution of the company’s tax debts. The same CTN rules mentioned above apply to social security debts, which, according to the Superior Court of Appeals (Superior Tribunal de Justiça), are of a tax nature.

Maintenance of statutory records

Generally the corporate secretarial provider will maintain statutory records but there is a duty on directors to ensure certain records are maintained while not necessarily within the premises/offices.

According to the Brazilian Civil Code, directors are obligated to provide justified accounts of their administration to the quotaholders, and must present to them the inventory each year, as well as the balance sheet and the income statements. The code also provides that the quotaholders may, at any time, examine the books and documents, the status of the documents and the portfolio of the company, if  these records are stored within the statute of limitation period provided in law to each kind of document.

Thereby, the directors of the company shall employ, in the exercise of their functions, the care and diligence which any active person of integrity normally employs in the administration of their own business.

Data Protection Law

Any collection, use, storage or processing of personal data through the internet is subject to the users’ express consent and must be limited to the purposes that justified it. Also, without prejudice to other civil, criminal or administrative provisions, any breach of data protection or privacy regarding the collection, storage, custody and treatment of records, personal data or communications by internet connection will be subject to the following sanctions: warnings relating to corrective action

  • a fine of up to ten percent of the revenues of the economic group in Brazil in its most recent financial year
  • temporary suspension of its activities
  • prohibition of certain activities

These sanctions may be applied on an individual or cumulative basis. There is no specific  authority in charge of data protection in Brazil, although some bills of law provide for the creation of such entity.

Environmental Law

You must ensure that the entity:

  • does not build, renovate, expand, install or operate in any part of the country, establishments, facilities or services that potentially will cause any form of pollution without a license or authorisation from the competent environmental bodies, or contrary to the relevant laws and regulations
  • does not produce, process, package, import, export, sell, supply, transport, store, keep, have in storage or use products or substances which are toxic, hazardous or harmful to human health or the environment, in violation of the requirements established by law or in  its regulations
  • does not cause pollution of any nature in levels that result or may result in harm to human health or causing the death of animals or significant destruction of flora

In Brazil, any activity that causes harm to the environment is subject to civil, criminal and administrative penalties.  These penalties may be applied cumulatively, depending on the severity of the damage called and the economic capacity of the company.  In the case of civil liability, it must be noted that the responsibility for repairing the damage cause is independent of guilt and includes all those who have directly or indirectly contributed to its cause.

Latest version updated 22nd March 2018

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Brazilian Real


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