De Facto Economic Groups: When Joint Business Conduct Triggers Joint and Several Liability

This article analyzes the concept and legal effects of de facto economic groups in Brazilian Corporate Law. While Brazilian law formally recognizes economic groups organized under the Corporation Law (Law No. 6,404/76), courts increasingly recognize informal (de facto) economic groups formed by companies that act in a coordinated manner, share a unity of interests, or exhibit asset commingling. This study explores the criteria for establishing such groups, the risks of joint and several liability, and the distinctions from the doctrine of piercing the corporate veil.

In today’s corporate environment, it is common for companies, although formally independent, to operate jointly, in a coordinated and functionally integrated manner—especially when they belong to the same family, investment group, or operational structure.

This reality gives rise to the concept of a de facto economic group, which, even without formal agreement or registration, can result in joint and several liability among the involved companies, based on principles of good faith, the social function of business, and the prohibition of misuse of legal personality.

This article examines the elements that characterize a de facto group, how it differs from formal economic groups, and the legal risks arising from interconnected corporate activity without proper legal safeguards.

2. De Jure vs. De Facto Economic Groups

2.1 De Jure Economic Group

Established under the Corporation Law (Law No. 6,404/76, Articles 265–277), and requires:

• The existence of a controlling company;

• A formal group agreement approved by shareholders and duly registered;

• Governance relationships between the parent and subsidiaries governed by specific legal standards.

  
  

2.2 De Facto Economic Group

Arises from business practice, regardless of formalization. Its existence is determined by a factual analysis of the relationships between companies that:

• Share partners or managers;

• Operate from the same address or share infrastructure;

• Conduct business in the same market segment with overlapping clientele;

• Engage in resource transfers or cross-asset transactions.

  
  

3. Legal and Jurisprudential Basis

Although not specifically regulated by statute, the liability of de facto economic groups is supported by:

• Art. 50 of the Civil Code – abuse of legal personality;

• Art. 265 of the Civil Code – solidarity is not presumed but may arise by law or implied agreement;

• Art. 2, §2 of the CLT (by analogy) – companies with common interest and direction;

• Principles of good faith, the social function of the company, and fraud prevention.

  
  

“The formation of an economic group does not depend on formalization, but on coordinated actions between companies with a common interest and operational integration.” (STJ, REsp 1.749.593/SP, Justice Luis Felipe Salomão, judgment on 11/17/2020)

4. Criteria for Recognizing a De Facto Economic Group

Courts apply a set of factual indicators, including:

Criterion	Practical Example
Common ownership or management	Companies with the same controllers or executives
Shared assets or asset confusion	Property of one company registered under another
Shared headquarters or operations	Companies operating from the same location or sharing staff
Frequent resource transfers	Informal loans, shared bank accounts
Coordinated market activity	Artificial competition to divide clients or influence pricing
Unified business strategy	Integrated tax or corporate planning

“Operational coordination, control unity, and asset commingling are sufficient to hold companies liable as part of a de facto economic group.” (TJSP, Civil Appeal 1009233-81.2021.8.26.0100, judgment on 12/12/2023)

5. Legal Consequences of Recognizing a De Facto Economic Group

5.1 Joint and several liability

• Once recognized, companies may be held jointly liable for civil, labor, tax, or commercial obligations;

• Individual fault is not required—proof of coordinated conduct and common interest suffices.

  
  

5.2 Expansion of the defendant pool in enforcement actions

• Allows companies in the group to be directly included in enforcement proceedings, even if not listed in the original judgment.

  
  

5.3 Risk of cross piercing of the corporate veil

• A de facto economic group may justify piercing the corporate veil between formally distinct companies if there is misuse of purpose or asset commingling.

  
  

6. Difference Between De Facto Economic Group and Piercing the Corporate Veil

De Facto Economic Group	Piercing the Corporate Veil
Holds interconnected companies liable	Holds shareholders or managers personally liable
Requires proof of coordinated business activity	Requires proof of misuse of legal personality
May result in joint liability among legal entities	Extends liability from legal entity to individual
No bad faith required; functional relationship suffices	Requires evidence of abuse or fraud

7. Best Practices to Mitigate Risk of Cross-Liability

• Separate the operations of group companies both formally and materially;

• Maintain independent accounting records for each company;

• Formalize all intercompany transactions (including loans);

• Avoid shared offices, staff, or resources without contractual justification;

• Establish distinct governance structures with real decision-making autonomy;

• Disclose any control or ownership relationships where applicable.

  
  

8. Final Considerations

The existence of a de facto economic group is not limited to formal agreements. Coordinated business activity, shared interests, and operational integration may give rise to joint and several liability and significant legal exposure, especially in tax, labor, and collection proceedings.

Judicial recognition of such groups does not require bad faith—evidence of shared structure, management, or business purpose is sufficient. Therefore, business owners, managers, and legal advisors must act preventively to properly structure intercompany relationships, preserve each company’s patrimonial autonomy, and minimize the risk of cross-liability.