Disputes & Arbitration
Shareholder exit valuation
Withdrawal, exclusion or death of a partner, in court, arbitration or by agreement.
Withdrawal, exclusion or death of a partner, in court, arbitration or by agreement.
When a partner leaves a company through withdrawal, exclusion or death, the company must pay the partner or the heirs the value of the interest (apuração de haveres), unless the heirs join the company by agreement or under the articles (Civil Code, art. 1,028). The valuation follows the articles of association first and, when they are silent, the rules of the Brazilian Civil Code and Civil Procedure Code.
Unless the articles provide otherwise, the Civil Code requires the interest to be settled on the basis of the company's financial position at the resolution date (the date on which the partner's membership ends), verified in a balance sheet prepared for that purpose (art. 1,031). Payment is made in cash within ninety days of settlement, unless otherwise agreed or provided in the articles (art. 1,031, para. 2).
In a partial dissolution action, the judge sets the resolution date, defines the valuation basis in light of the articles and appoints the expert (art. 604). If the articles are silent, the value is determined in a determination balance sheet, with tangible and intangible assets and liabilities measured at exit price (art. 606).
Civil Code, arts. 1,028 to 1,032 · Civil Procedure Code, arts. 599 to 609
The determination balance sheet remeasures each asset and liability at exit price, including intangibles such as brands and customer relationships. When the articles provide for another basis, such as discounted cash flow, multiples or book value, the articles prevail.
The basis and the resolution date are among the most disputed points. Marketability and control discounts are not provided for in the law, and their application depends on the contractual basis and the grounds of each case.
The Civil Procedure Code provides that the court-appointed expert should preferably be a specialist in business valuation (art. 606, sole paragraph). CBG acts as party-appointed technical expert, supports counsel in drafting questions and reviewing the court expert's report, and carries out valuations in arbitrations and exit negotiations.
Civil Procedure Code, art. 606, sole paragraph
The work starts from the articles, shareholder agreements and decisions already issued, to establish the basis and valuation date. Real estate, machinery and intangibles are valued by the team of each discipline, and the working papers allow any reviewer to rebuild the calculation.
On a partner's death, the date of death. On withdrawal without cause, the sixtieth day after the company receives the notice, and on dissent-based withdrawal (recesso), the day the company receives it. On out-of-court exclusion, the date of the meeting that resolved it. On judicial exclusion and on withdrawal for cause from a fixed-term company, the date the decision becomes final (Civil Procedure Code, art. 605).
They can, and the judge defines the basis in light of the articles (Civil Procedure Code, art. 604, II). The buyout clause therefore deserves attention when the articles are drafted.
When the articles are silent, the law calls for the determination balance sheet, with assets and liabilities at exit price. The Superior Court of Justice has rejected discounted cash flow in that situation because it builds in future profits (REsp 1.877.331/SP, decided in 2021). The topic remains debated among commentators.
In cash, within ninety days of settlement, unless otherwise agreed or provided in the articles (Civil Code, art. 1,031, para. 2).
The law does not provide for them. Their application depends on the contractual basis and the grounds of each case, and they are frequently contested. CBG discusses the topic in its article on DLOM and DLOC in Brazilian shareholder disputes.