Law No. 13,792/19, published in the Official Federal Gazette on January 4, provides more flexibility to limited liability companies by reducing the capital stock necessary for dismissal of managing partners named in the articles of association from a two-thirds majority to a simple majority, without preventing the partners from agreeing, if they so wish, to any greater minimum. This amendment, made in article 1,063, first paragraph, of the Civil Code, will allow majority partners to remove minority partners from the position of manager more quickly, thus avoiding extended disputes that could affect a company’s operation.

In addition, the amendment of article 1,085, sole paragraph, provides that only companies with more than two partners must convene a general meeting or special meeting to exclude a minority partner (when provided for in the articles of association) in order to guarantee the right of defense to the partner excluded.

In limited liability companies with only two partners, therefore, the process becomes more flexible and less bureaucratic, as they are exempted from convening a meeting to exclude a member, thus assuming that such a meeting would be of no effect. If, on the one hand, the legislative amendment aims at preserving the proper functioning of the company, from the point of view of minority partners the measure represents a source of legal uncertainty, since they will have to resort directly to the Judiciary, and no longer to a meeting of quotaholders, to challenge any violations of their rights.

An amendment to the minimum vote for removal of a partner appointed as manager in the articles of association should not cause further discussion, but exempting a general meeting for the purpose of excluding a partner in a limited liability company that has only two partners may become controversial if it constitutes a form of reducing rights of minority partners. It remains to be seen how these matters will be understood by the boards of trade and how new case law will be formed regarding the exclusion of partners in companies with two partners.