Limited liability companies are finally expressly authorized to issue preferred quotas. Normative Instruction No. 38/2017 of the Department of Corporate Registration and Integration (DREI), among other innovations, changed the wording of item 1.4, II, letter "b", of the Manual for the Registration of Limited Liability Companies to ensure this.

The change should favor the structuring of certain businesses and assure to limited liability companies other investment and financing modalities for their activities, which will increase the preference given to the use of this corporate type, which has less legal formalities than a corporation.

Preferred quotas are those that confer on their holders equity advantages and/or special privileges not attributed to other quotas, accompanied, in most cases, by limitations on voting rights.

The possibility of issuing preferred quotas in limited liability companies has been controversial since the entry into force of the new Civil Code on January 10, 2002. Although the Civil Code is silent as to the possibility of issuing these quotas, some legal scholars have come to understand that the issuance of preferred quotas should not be compatible with the intuitu personae nature of limited liability companies.

Responsible in the past for providing the guidelines to be followed by the boards of trade, the National Trade Registration Department (DNRC), upon issuing Normative Instruction No. 98/2003, expressly prohibited the issuance of preferred quotas by limited liability companies and as a result it used to be common practice to have the registration of corporate acts involving the issuance of these quotas by limited liability companies denied by the boards of trade.

Only recently, with the issuance of Normative Instruction No. 38/2017 by the DREI, which replaced the DNRC, this understanding was modified. Said instruction also admitted, in limited liability companies, the possibility of quotas held in treasury, among others institutes previously restricted to corporations.

It is worth mentioning, however, that the DREI expressly established the supplementary regulation of limited liability companies by Law No. 6,404/76 (Brazilian Corporations Law), in the event of adoption of any institute specific to corporations, whether or not the company’s articles of association so provide. For the DREI is sufficient the existence of preferred quotas to characterize the supplementary regulation by the Brazilian Corporations Law.