One of the innovations brought about by Normative Instruction No. 81 of the Department of Business Registration and Integration (DREI), issued on June 10 of this year, is the express provision for the filling of limited liability companies' articles of association containing preferred quotas with voting restrictions or without voting rights.
A specific item included in the filling manual for limited liability companies (5.3.1) expressly establishes that quotas of different classes are admitted in these companies, and the articles of association are used to establish the proportions and conditions attached to such quotas. These preferred quotas may grant their holders various economic and voting rights. They may even eliminate or limit the voting right of the holder of such preferred quota, subject to the limits of Law No. 6,404/76 (the Brazilian Corporations Law), applied in a supplementary manner.
The DREI also expressly stated that if there is any preferred quota without voting rights, it will not be computed for the purposes of calculating the quorums for call to order and resolutions provided for in the Civil Code.
Preferred shares are those that confer on their holders equity advantages and/or special privileges not attributed to other quotas, accompanied, in most cases, by restrictions on voting rights.
Since the entry into force of the new Civil Code on January 10, 2002, the possibility that the capital stock of a limited liability company may include preferred quotas has been discussed, considering that the Civil Code is silent on this matter. Despite this silence, part of the legal scholarship came to the understanding that preferred quotas should no longer be admitted on the basis of the prevalence of the nature of a company of persons (intuitu personae) intrinsic to limited liability companies.
It is important to emphasize that, when dealing with the freedom of a limited liability company to perform an act not prohibited by law, such as contemplating preferred quotas in its capital stock, we must consider certain principles that are the basis of private law, including private autonomy, contractual freedom, and legality.
Private autonomy and contractual freedom materialize the right of the contracting parties to choose whether or not to enter into a contract, as well as the content and conditions thereof, provided that they are agreed upon in good faith, respecting the social function of the contract, and not contradicting any provisions of law. The principle of legality, in turn, is provided for in article 5, subsection II, of the Federal Constitution, according to which all are equal before the law, without distinction of any kind, and no one shall be obliged to do or refrain from doing anything except by virtue of the law. From the point of view of private law, this principle stipulates that private individuals may do anything that is not forbidden by law, which includes performing any act not provided for by law. Thus, there would be no legal impediment for limited liability companies to include preferred quotas in their articles of association.
It so happens that, before Normative Instruction No. 81, there was no uniform understanding on the part of the various boards of trade regarding this controversy. Some accepted the recording of articles of association including quotas without voting rights or with restricted voting rights, while others rejected this possibility.
Since 2017, with the enactment of DREI Normative Instruction No. 38, the possibility of establishing preferred quotas in limited liability companies was already included in the registration manual for limited liability companies. At the time, the provision had been placed in item 1.4, subsection II, letter "b" of the manual for registration of limited liability companies so that the supplementary regulation of the Brazilian Corporations Law would be presumed for limited liability companies that had preferred quotas. Even so, there were differences in the legal scholarship as to its validity and legality, and as regards the details linked to the division of the capital stock into such quotas, for example the possibility of eliminating or limiting the right to vote. This difference in understanding has always generated great legal uncertainty regarding the subject and has served to make it impossible in practice for limited liability companies to create preferred quotas.
Although the change brought about by Normative Instruction No. 81 is very welcome as a way to standardize the understanding regarding of the filling agencies, some controversial issues still need to be clarified. The first revolves around the competence of the DREI to establish the possibility of creating preferred quotas in limited liability companies, given that the DREI is a body whose legal purpose is to hand down standards to resolve doubts regarding the interpretation of laws and regulations on the registration of companies, under the terms of article 4 of Law No. 8,934/94. Therefore, any quotaholder of a limited liability company that may feel harmed by the division of the capital stock into preferred quotas may bring the matter to be discussed in the judicial sphere, on the grounds of incompetence of the DREI to "legislate" regarding preferred quotas in limited liability companies.
Furthermore, Normative Instruction 81 does not indicate exactly which advantages may be assigned to preferred quotas. In other words, it is not clear whether limited liability companies will be restricted to the use of the advantages allowed by the Brazilian Corporations Law, which must be applied in a supplementary manner, or whether they will be able to innovate with other advantages not provided for by law.
Thus, from the standpoint of company registration, some issues relating to the use of preferred quotas by limited liability companies have been clarified and standardized by Normative Instruction No. 81. However, given the controversy that the subject generates in Brazilian legal scholarship, the underlying issue still generates controversy and conflicting understandings.
The Brazilian Corporations Law, in turn, expressly allows companies to issue preferred shares, which give shareholders certain preferences, such as (i) priority in the distribution of fixed or minimum dividends, (ii) priority in the reimbursement of capital, with or without a premium, or (iii) accumulation of the preferences and advantages mentioned in items (i) and (ii), as provided for in article 17 of the same law. In addition, the bylaws may limit certain rights relating to the preferred shares, such as the right to vote.