Shareholders’ Rights & Shareholder Activism 2025 Comparisons

The main types of companies that can be formed in Brazil are the limited liability company (sociedade limitada, or Ltda) and the corporation (joint-stock company; sociedade anônima, or S/A).

Foreign investors generally prefer to use a limited liability company, as it is commonly perceived as a simpler and more flexible structure. There is no obligation to pay in the capital upon incorporation, and the company may be formed by a single shareholder. In addition, publication requirements are minimal compared to corporations, which are often viewed as more complex and suited to larger enterprises, even though this is not necessarily the case under Brazilian law.

Companies in Brazil may issue common or preferred shares, and each type may comprise one or more classes. Preferred shares may carry limited or no voting rights, but they may grant certain economic preferences, such as:

• priority in the distribution of dividends (which may be fixed or minimum);
• priority in the reimbursement of capital in the event of liquidation; or
• both.

The rights attached to each class of shares must be set out in the company’s articles of incorporation (estatuto/contrato social) and are also subject to the provisions of corporate law.

Shareholders’ rights may be varied through an amendment to the company’s articles of incorporation, approved at a shareholders’ meeting. As a general rule, such amendments require the approval of shareholders representing the majority of the voting capital, unless the by-laws or the law establish a higher quorum. However, any amendment that changes the rights of a specific class of shares must be approved not only by the general meeting but also by a separate meeting of the shareholders of the affected class.

It should also be noted that certain types of preferred shares, particularly those without voting rights, are not admitted to trading on the stock exchange under Brazilian regulations.

There are no minimum share capital requirements for either limited liability companies or corporations. In limited liability companies, there is no legal requirement for the capital to be paid in upon incorporation, although the shareholders remain jointly liable for the full payment of the subscribed capital. In corporations, at least 10% of the subscribed capital must be paid in at the time of incorporation, and such amount must be deposited in a bank account opened under the company’s name before registration of the articles of incorporation with the commercial registry.

There is no minimum number of shareholders for a limited liability company (sociedade limitada), which may be incorporated by a single shareholder. A corporation (sociedade anônima) must generally have at least two shareholders, except in the case of a wholly owned subsidiary (subsidiária integral), whose sole shareholder is another Brazilian company. As a rule, shareholders may be either residents or non-residents in Brazil. However, foreign ownership is restricted in certain regulated sectors, such as aviation, media, and the acquisition of rural land or land located in border areas.

Shareholders’ agreements are not public documents, but based on the firm’s experience, they are very common in Brazil, especially among private companies. Joint venture agreements are also frequently used, but they often lead to the incorporation of a company by the parties. In such cases, the joint venture agreement is typically replaced or supplemented by a shareholders’ agreement governing the relationship between the partners in the new entity.

Typical provisions included in shareholders’ or joint venture agreements relate to voting rights, dividend distribution, restrictions on the transfer of shares or quotas, and purchase and sale mechanisms such as tag-along, drag-along and call/put options. These agreements are enforceable under Brazilian law. However, to be enforceable against the company and third parties, a shareholders’ agreement must be filed at the company’s registered office. Such agreements are generally private instruments, and it is very common for the parties to include confidentiality clauses to maintain their terms undisclosed.

Companies must hold an annual general meeting (assembléia geral ordinária; AGM) within four months following the end of the fiscal year to:

• review, discuss and approve the financial statements;
• resolve on the allocation of profits and the distribution of dividends; and
• elect the managers and members of the fiscal council (conselho fiscal), if applicable.

For closely held corporations, notice of the AGM must be given at least eight days in advance for the first call and at least five days in advance for the second call. For publicly held companies, notice must be published at least 21 days before the first call and eight days before the second call. The notice period may not be shortened, except in very limited circumstances and subject to the consent of all shareholders.

In addition to the AGM, companies may hold extraordinary general meetings (assembleias gerais extraordinárias) at any time to deliberate on other matters of interest to the company that are not reserved for the AGM. There is no limitation on the number of extraordinary meetings that may be held.

The legal notice requirements for extraordinary general meetings (assembleias gerais extraordinárias) are the same as those applicable to AGMs. The minimum notice period cannot be shortened, except with the unanimous consent of all shareholders.

General meetings may be called by the board of directors or, if there is no board, by the executive officers. The fiscal council, if installed, may also call a meeting if the board or the officers fail to do so for more than one month after the end of the legal term for holding the AGM (that is, more than five months after the end of the fiscal year), or whenever there are relevant and urgent reasons to call an extraordinary general meeting.

Shareholders may also call a general meeting if the board, the officers or the fiscal council fail to call the annual meeting within 60 days after the end of the legal term for holding the AGM. In addition, shareholders representing at least 5% of the company’s capital stock may request the calling of a meeting by indicating its agenda. If the board or the officers fail to call the meeting within eight days after such request, the shareholders themselves may call it. The same rule applies to requests for the installation of a fiscal council.

All shareholders are entitled to receive notice of a general meeting. The notice must be published at least three times in a newspaper of wide circulation (for corporations) and the official gazette (for limited liability companies), and must include the date, time and place of the meeting, the agenda and, in the case of proposed amendments to the by-laws, an indication of the subject matter to be discussed. As a result, the information relating to the meeting is made available to all shareholders.

For AGMs, shareholders must receive:

• the management report on the company’s business and the main administrative events of the fiscal year;
• a copy of the financial statements;
• the opinion of the independent auditors, if any;
• the opinion of the fiscal council (conselho fiscal), including any dissenting votes, if any; and
• any other documents relevant to the matters included in the agenda.

Shareholders are also entitled to inspect the company’s corporate books and records, as provided by law.

Shareholders’ meetings may be held in physical, virtual or hybrid format. Brazilian law expressly authorises the use of virtual or hybrid meetings for both limited liability companies and corporations, provided that the company ensures the authenticity and security of communications and allows shareholders to exercise their voting rights remotely.

For corporations, a general meeting may be held on first call if shareholders representing at least 25% of the voting capital are present, unless a higher quorum is required by law or by the company’s by-laws. On second call, the meeting may be held with any number of shareholders in attendance. For limited liability companies, the law does not establish a specific quorum for installation, but in practice the meeting is considered valid if partners representing the necessary percentage of the capital to pass resolutions are present. In both cases, the by-laws or articles of association may establish higher attendance requirements for the valid opening of meetings.

In Brazil, corporate law distinguishes between annual (ordinary) and extraordinary shareholders’ meetings, but all decisions taken at such meetings are, in essence, shareholders’ resolutions. The distinction lies in the matters discussed rather than in the type of resolution itself.

For corporations, resolutions at general meetings are generally passed by the majority of votes validly cast. For limited liability companies, resolutions are approved by partners representing more than half of the total capital, unless a higher or qualified quorum is required by law or by the company’s articles of association.

The applicable voting thresholds are set forth primarily by statute, and the company’s by-laws or articles of association may supplement these rules but cannot reduce the statutory requirements.

In Brazil, shareholder approval is required for key corporate matters, including the approval of financial statements, the election and removal of directors and officers, the allocation of profits and distribution of dividends, amendments to the by-laws or articles of association, capital increases or reductions, mergers, spin-offs, dissolutions and other corporate reorganisations.

As a general rule, resolutions are passed by the majority of votes validly cast in corporations, and by partners representing more than half of the total capital in limited liability companies, unless a higher or qualified quorum is required by law or by the company’s by-laws or articles of association.

Under Brazilian law, each ordinary share generally carries one vote. Shareholders may vote in person or by proxy, provided the proxy complies with the formal requirements set out by law. Voting may occur by show of hands, written ballots or electronic means.

Multiple (plural) voting rights are permitted in closely held corporations, subject to statutory limits, but are not allowed in publicly held companies. Electronic voting is expressly permitted, provided that the company ensures the authenticity, security and integrity of the voting process.

Under Brazilian law, shareholders have the right to request that specific matters be included in the agenda of a shareholders’ meeting, provided they meet the applicable ownership thresholds and submit the request before the meeting is convened. Once the notice of the meeting has been published, no new matters may be added to the agenda, and issues not previously included may only be considered if all shareholders unanimously agree.

Shareholders may challenge a resolution passed at a general meeting if it violates the law, the company’s by-laws or articles of association, or constitutes an abuse of rights. Challenges must be brought before the courts and are subject to the relevant statute of limitations.

Institutional investors and shareholder groups influence and monitor companies primarily through active engagement, voting and participation in general meetings. They also exercise influence by engaging with management on governance practices and strategic matters. In addition, they monitor companies through public disclosures, including financial statements, material facts and corporate governance reports required by law and by regulatory authorities, such as the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários; CVM).

Brazilian law does not recognise the concept of nominee shareholders as understood in common law jurisdictions. However, in the case of book-entry shares held through the centralised securities depository, investors commonly hold their shares through custodians or brokerage institutions acting as intermediaries for administrative purposes. In such cases, the beneficial owner retains full rights to information and voting, which may be exercised directly or through voting instructions given to the custodian or intermediary.

The possibility of passing written resolutions applies only to limited liability companies, where unanimous written approval by all shareholders may replace a formal meeting. Written resolutions must clearly set out the matters approved and be signed by all shareholders, with the same legal effect as if passed at a meeting. For corporations, all corporate decisions must be formally taken at a general meeting.

Existing shareholders have pre-emptive rights to subscribe for new shares issued in a capital increase, in proportion to the number of shares they already hold. Such rights may be limited or excluded in specific cases set forth by law for corporations, such as public offerings.

In corporations, shares are generally freely transferable, except when the company’s by-laws or a shareholders’ agreement provide for restrictions or rights of first refusal among shareholders. In limited liability companies, the transfer of quotas to third parties requires the approval of the existing shareholders, unless otherwise provided in the articles of association or shareholders’ agreement.

Shareholders may grant a security interest over their shares, unless the company’s by-laws or a shareholders’ agreement provide otherwise.

In limited liability companies, the articles of association are publicly registered with the commercial registry, so the identity of shareholders and their ownership interests are publicly available. In corporations, the share register is not public, except for publicly held companies, where shareholders must disclose significant shareholdings to the company and to the CVM whenever their direct or indirect interests reach, exceed or fall below certain thresholds.

In addition, all shareholders – whether individuals or legal entities – must disclose their ultimate beneficial owner to the Brazilian Federal Revenue Service (Receita Federal do Brasil) and update such information whenever changes occur. Brazilian resident individuals and companies are also required to report their shareholdings in their annual tax filings.

Shares may be cancelled as a result of a capital reduction or partial dissolution – for example, in cases of withdrawal, exclusion or death of a shareholder.

Companies may buy back their own shares, provided that the acquisition is made with funds available from retained earnings or capital reserves, other than the legal reserve. The buy-back must comply with the procedures and restrictions set forth by law and, in the case of publicly held companies, by the CVM.

Dividends may be paid out of accumulated profits, profit reserves, or annual net income, provided that the company has sufficient distributable profits. The payment of dividends is generally approved by shareholders at the AGM but may also be declared at an extraordinary general meeting.

If authorised by the company’s by-laws, the board of directors or officers may declare interim or quarterly dividends based on profits shown in interim financial statements. Companies that prepare semi-annual balance sheets, either by law or under their by-laws, may also declare dividends based on the profits reflected in those statements.

Shareholders have the power to appoint and remove directors at any time by resolution passed at a general meeting.

In corporations, the matter must be included in the meeting’s agenda, and the resolution is approved by the majority of votes validly cast unless the company’s by-laws establish a higher quorum.

In limited liability companies, the appointment and removal of managers follow specific thresholds. If the manager is a partner appointed in the articles of association, both appointment and removal require approval by partners representing more than half of the capital. If the manager is not a partner, the appointment requires the approval of partners representing two-thirds of the capital while it remains unpaid, and more than half once it is fully paid in. These thresholds may be increased by the articles of association or a shareholders’ agreement.

Shareholders cannot directly overrule management decisions but may challenge or seek review of directors’ actions. If a decision taken by the board is unlawful, contrary to the company’s by-laws or detrimental to the company’s interests, shareholders may request that the matter be submitted to a general meeting.

If approved by the general meeting, the company or the shareholders, in case the company fails to do so, may also bring a judicial action to annul the decision or to hold the directors personally liable for losses caused to the company, in accordance with the procedures set forth by law.

The appointment and removal of the company’s external auditors fall within the exclusive powers of the shareholders, who decide the matter at a general meeting, usually the AGM. In the case of publicly held companies, such appointment and removal must also comply with the requirements and procedures established by the CVM.

Directors are not required to prepare a separate report specifically on the company’s corporate governance arrangements. However, they must provide shareholders with information that effectively covers governance-related matters in connection with the AGM.

At least one month before the meeting, management must make available the management report on the company’s business and main administrative events during the fiscal year, the financial statements, the independent auditors’ report (if any), the fiscal council’s opinion (if any) and other relevant documents related to the meeting agenda. The management report must also include the company’s equity policy and, following recent legislative changes, information on gender representation and pay equity within the company.

The controlling shareholders must exercise their power with the goal of ensuring that the company fulfils its corporate purpose and social function. They have duties and responsibilities towards the other shareholders, the company’s employees and the community in which the company operates, whose rights and interests must be loyally respected and observed.

The controlling shareholder is liable for any losses caused by acts performed with abuse of power, including actions that are unlawful or contrary to the company’s best interests.

When a company becomes insolvent, shareholders have very limited rights, as control over the company’s management and assets passes to the court-appointed judicial administrator. Shareholders may monitor the insolvency proceedings and are entitled to receive information, but they cannot influence the company’s day-to-day management or the administration of the estate.

In bankruptcy proceedings, shareholders rank after all creditors in the order of payment and are only entitled to any residual value remaining after all debts have been satisfied.

Shareholders may seek legal remedies against the company if its actions violate the law, the company’s by-laws or shareholders’ rights. They may bring judicial actions to annul unlawful corporate resolutions, claim damages, or protect individual or collective shareholder rights, in accordance with applicable law.

Shareholders may bring legal actions against directors or officers who engage in unlawful acts, act beyond their authority, or cause losses to the company through wilful misconduct (dolo) or negligence.

Shareholders may request that the company file a liability action against its directors or officers. If the company fails to do so within the statutory period, shareholders representing at least 5% of the company’s capital may bring a derivative action on its behalf to seek compensation for losses caused to the company.

Shareholder activism in Brazil is primarily governed by the Brazilian Corporations Law (Law No 6,404/1976) and by regulations issued by the CVM. These rules define the rights and duties of shareholders, the powers of corporate bodies, and the transparency and disclosure obligations of publicly held companies.

While shareholders enjoy important rights – such as voting, requesting information and inspecting corporate documents – they are not allowed to interfere directly in the company’s management or to have unrestricted access to internal information.

The legal and regulatory tools available to activist shareholders include the right to submit proposals for inclusion in the agenda of general meetings, to request information and documents within the limits permitted by law, to call general meetings when management bodies fail to do so, and to challenge corporate resolutions or acts that violate the law or the company’s by-laws.

In Brazil, activist shareholders primarily seek to enhance corporate value and governance by influencing management decisions, capital allocation and strategic direction. Their objectives often include strengthening transparency, board independence and accountability, as well as promoting the efficient use of corporate resources. Activist investors also aim to protect minority shareholders’ rights, and to ensure that controlling shareholders and management act in the best interests of the company and all its stakeholders.

In Brazil, activist shareholders commonly build their stakes through gradual share acquisitions or by forming alliances with other investors to increase their influence. Once positioned, they typically pursue agendas aimed at improving corporate governance, transparency and capital allocation efficiency, often advocating for stronger dividend distributions, enhanced board independence, and better alignment between management performance and shareholder returns.

There are no clear or consistent recent trends regarding specific industries or sectors targeted by activist shareholders in Brazil. Activist activity remains relatively limited and case-specific, generally being concentrated in publicly held companies with dispersed ownership structures or significant state or institutional investor participation.

While no particular market capitalisation range has been consistently targeted, activism tends to be more feasible in mid- to large-cap companies, where liquidity and governance standards facilitate shareholder engagement.

In Brazil, shareholder activism has historically been driven by institutional investors – such as pension funds, asset managers, and development banks – rather than hedge funds, which play a comparatively smaller role than in other jurisdictions.

There are no publicly available or reliable data in Brazil indicating the proportion of activist shareholder demands that were met in full or in part over the past year. Activist campaigns in the country are typically private and case-specific, and outcomes are rarely disclosed.

In responding to an activist shareholder, companies in Brazil typically focus on maintaining constructive dialogue and transparent communication to understand and address the investor’s concerns. Management may also review governance structures, board composition, and strategic or capital allocation plans to respond to legitimate issues and demonstrate accountability.

To minimise the risk of shareholder activism, companies often strengthen their corporate governance practices, enhance disclosure and investor relations policies, monitor shareholder engagement on an ongoing basis, and ensure that decision-making processes are well documented and aligned with market best practices.