Shareholder exit and buy-out valuation in Brazil
A partner leaves — by their own choice, by the others’ decision or by court order. The company carries on, and one question decides everything: what the departing stake is worth.
5,0 · 18 Google reviewsBrazilian law does not call this an “exit”. It calls it resolution of the company as to one partner: the company survives, that partner’s bond ends. There are three routes — withdrawal, at the leaver’s initiative; expulsion, at the others’; and the partial dissolution action under arts. 599 to 609 of the Civil Procedure Code, where no agreement is possible. Whichever route is taken, the expensive stage follows: the buy-out valuation.
Which door the partner leaves by.
- Withdrawal from a company of indefinite durationArt. 1,029 of the Civil Code lets a partner withdraw on notice to the others, given at least sixty days in advance.
- Expulsion out of court, for causeOnly if the articles of association allow it. Art. 1,085 requires a majority of more than half the capital and acts of undeniable gravity that endanger the company’s continuity.
- Expulsion through the courtsArt. 1,030 allows expulsion in court, at the initiative of the majority of the remaining partners, for serious breach of a partner’s duties.
- Transfer of quotasWhere there is a buyer, the exit is negotiated rather than imposed, with price and security in one instrument.
- Death of a partnerHeirs do not automatically join the company. Article 1,028 normally requires liquidation of the quota, subject to the articles, dissolution chosen by the remaining partners or an agreement with the heirs for substitution.
- Partial dissolution in courtWhere nothing is agreed, the action under arts. 599 to 609 ends the bond and values the stake in the same proceeding.
Valuation: date, criteria and expert.
These rules depend on the company type; corporations have their own regime. Article 1,085 requires the statutory majority and contains a procedural exception for two-partner companies. Exit can be agreed without litigation; partial dissolution proceedings may address the relationship, valuation or both. Article 1,032 does not create universal personal liability and also requires review of later obligations while filing has not been requested.
The valuation date. Art. 1,031 of the Civil Code requires the quota to be liquidated on the company’s financial position as at the resolution date, verified on a balance sheet drawn up specially for that purpose, and paid in cash within ninety days of liquidation unless an agreement or the articles provide otherwise. On an unmotivated withdrawal, the Civil Procedure Code sets that date on the sixtieth day after the company receives the leaver’s notice — a reading the Superior Court of Justice confirmed in 2019.
The criteria. A valid valuation clause guides the calculation, subject to any legally available review. If they are silent, art. 606 of the Civil Procedure Code fills the gap: net asset value on a determination balance sheet, taking the resolution date as reference and valuing assets and rights, tangible and intangible, at exit prices, with liabilities assessed the same way. With no clause, therefore, brand, client base and goodwill may enter the calculation if technically substantiated, without double counting or automatically adding all future profits.
Who measures — and what remains. In court, art. 604 puts it all in one ruling: the judge fixes the resolution date, defines the criteria in light of the articles and appoints the expert, ordering the undisputed portion to be deposited, which the former partner may draw at once. And leaving does not erase the past: art. 1,032 keeps the departing partner liable for the company’s earlier obligations for up to two years after the resolution is filed with the commercial registry.
How we run it.
- Reading the articles before anything movesWithdrawal clause, expulsion for cause, valuation clause and quorum: that set decides the route.
- Notice or convening, in the right formNotice with proof of receipt and date, or a meeting convened with a specific agenda and time to be heard.
- Negotiating the criteria, not only the figureAgreeing the valuation date, the method and the payment terms settles faster than arguing over the final number.
- Amendment and filingExit instrument, capital adjustment and filing at the commercial registry, with effects on banks, contracts and the tax authorities.
- Partial dissolution and expert evidenceThe action under arts. 599 to 609, deposit of the undisputed portion and supervision of the accounting expert.
What to bring to the first review.
Documents that speed up the analysis
With this material we can say, in the first conversation, which exit route is open and which criteria are likely to prevail.
- Consolidated articles and every amendment
- Partners’ agreement, if any
- Minutes of meetings
- Notices exchanged between partners
- Financial statements for recent years
- Management pay, profits and drawings
- Loans and contributions by partners
Informational content under Brazilian Bar Association Rule 205/2021 — it does not replace an assessment of your case. Our fee proposal is put in writing after the initial review.
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Who leads this work.
Founding partner of Falchet e Marques (OAB/SP 344.334). Postgraduate in Business Law (FGV) and in Succession Law (PUC-Campinas), he advises on corporate, company and contract law and data protection — a specialist in estate planning and business succession. Straight to the point, no legalese.
Meet Renato FalchetArticles that go deeper.
Common questions.
The articles say nothing about leaving. Can a partner still get out?
For an indefinite-duration company subject to Civil Code article 1,029, withdrawal may be exercised by giving the other partners at least sixty days’ notice. The company type and governing rules must be checked. Silence in the articles does not require litigation: the valuation can be agreed, with court proceedings considered if a dispute remains.
Can a partner be expelled without going to court?
In a limitada, expulsion for cause under article 1,085 requires an articles clause, the statutory majority representing more than half the capital and seriously wrongful acts endangering the business. Notice and hearing rules apply, with a procedural exception for companies with only two partners; cause and the remaining requirements are not waived. Judicial expulsion under article 1,030 and other statutory grounds must be assessed separately.
Which date governs the valuation?
The resolution date, which varies with the reason for the exit. On an unmotivated withdrawal the Code sets it on the sixtieth day after the company receives the leaver’s notice (art. 605, II). In litigation, art. 604 has the judge fix the date, define the criteria and appoint the expert.
What goes into the calculation?
A valid valuation clause guides the calculation, subject to any legally available review. If they are silent, art. 606 of the Civil Procedure Code requires net asset value on a determination balance sheet at the resolution date, valuing tangible and intangible assets at exit prices, with liabilities assessed the same way.
After leaving, is the partner still liable for company debts?
Exit does not extinguish existing liability. Article 1,032 addresses earlier obligations for up to two years after filing and, on withdrawal or expulsion, later obligations while filing has not been requested, as provided by law. It does not create a universal personal guarantee: the company regime, guarantees, management conduct and specific employment or tax rules must be reviewed.
How much does it cost?
A consensual exit, settled by amendment and a valuation instrument, carries a fixed fee quoted before we start. Litigation is priced by complexity, with a written proposal after the review.
Do you act for companies outside São Paulo, or for foreign shareholders?
Yes. Notices, amendments and valuation instruments are handled remotely, with electronic signature and digital filing at the commercial registry of the relevant state. We work in English throughout, and with local agents where litigation runs elsewhere.
Is someone leaving the company?
Send us the articles of association and tell us where the conversation stands. We set out the route and the valuation criteria, with a written proposal. Review time depends on the documents and complexity.