The Possibility for Limited Liability Companies to Adopt Preferential Quotas: Limits and Restrictions

Abstract

The adoption of preferred quotas by limited liability companies was a relatively settled issue among Brazilian legal authors, with their possibility being recognized, although with certain limitations when compared to the legal treatment granted to preferred shares. Among these, the restriction of voting rights is highlighted: while such limitation may be adopted in preferred shares, it was not previously considered possible to attribute the same restriction to preferred quotas. However, recent changes introduced by the Department of Corporate Registration and Integration (DREI) regarding the regulation of corporate filing rules, which, innovatively, began allowing the restriction of voting rights for preferred quotas, have reignited this debate. This calls for an assessment of the extent to which DREI’s authorization is legally valid, as well as a reexamination of the current limits and restrictions applicable to preferred quotas in limited liability companies.