THE LARGE-SIZED COMPANIES - New Orientation to Prepare and Publish Financial Statements due to the Law 11.638/07
Due to the Law 11.638 of December 28, 2007, significant amendments occurred on the Law 6.404 of December 7, 1976 (Corporations’ Law), in order to update the accountancy rules and adjust them to the International Financial Reporting Standards – IFRS.
Among the innovations carried out by the Law 11.638/07, it is highlighted the regulation of a new corporate type in the Brazilian Corporate Law: THE LARGE-SIZED COMPANIES.
In the terms of Law, Large-sized Companies are companies that, independently of its constitution form, individually or under a common control hold in the past fiscal year, total liquid assets superior to R$ 240.000.000,00 (two hundred thousand and forty reais) or annual gross income superior to R$ 300.000.000,00 (three hundred thousand reais).
Thus, Brazilian Companies characterized as above, including the Limited Liability Companies shall: (a) proceed with the elaboration and bookkeeping of the Financial Reports as established for the Corporate Law; and (b) accomplish an independent audit by auditor duly registered at Comissão de Valores Monetários – CVM (similar to the USA’s Securities and Exchange Commission)
With the publication of the new Law, understandings concerning the obligation to publish the Financial Reports came out. To the defenders of the obligation of publication, this would be requested until 05 (five) days counted from the date of the General Ordinary Assembly or the Annual Quotaholders’ Meeting that shall happens until 04 (four) months after the end of the accounting year.
With the purpose to eliminate this doubt, the National Department that regulates the corporate acts (Departamento Nacional de Registro do Comércio - DNRC) as a federal entity regulator of the procedures of mercantile register, issued the Technical Note nr. 099/2008 establishing that the Large-Sized Companies may, at their own choice, proceed with the publication of the Financial Reports as requested to the Corporations, in order to register its corporate acts.
However, recently occurred one more adjustment on this situation: as for the publication of this Technical Note, the Brazilian Association of Officials Gazettes (ABIO) filed a lawsuit against this understanding of DNRC, requesting in a preliminary injunction, the obligation of publication of the Large-Sized Company’s Financial Reports at the Official Gazette and in a newspaper of wide circulation.
In December 2008, the first Court judge agreed with the preliminary injunction request. Nevertheless, recently occurred the suspension of this preliminary injunction effects by the superior Court.
In this way, it returned to prevail the provisions of the DNRC’s Technical Note 099/2008, which moves away the obligation of the Financial Reports publication.
Incidentally, we inform that we are following the decisions regarding the exposed subject and we remain at your disposition to assist you in any further information that would be necessary.
SAEKI ADVOGADOS Corporate Counseling
