The compensation of loss in limited liability groups

Abstract

Corporate groups are regulated by the Brazilian civil code and the law nº 6,404/76 (LSA). However, corporate groups aggregate, under a single directory, legal and economic autonomy with the objective of sharing risks, losses and also to improve productivity and profit. Most companies are under control of their holding company due to the holding's interests, which could cause individual losses in favor of potential collective gains, leads to several conflicts, which is a big challenge to the legal practitioner. Concerning this matter, this article sheds light on the imputation limits to situations that result disadvantageous to an affiliate limited liability company but advantageous to the controlling company and the whole group. This article will identify these kinds of asymmetrical situations happen and point out answers from the Brazilian legal system to minimize the impact and to guarantee the rights of the minority shareholders and creditors as these agents can have their rights guaranteed on their financial claims. This text will also examine the effectiveness and viability of legal alternatives to provide balance in the practical world in the Brazilian legal context. I this based on the legal literature, including literature from other legal systems.