Liability of Partners and Managers for Acts Committed During the De Facto Dissolution of a Business Company

This article examines the liability of partners and managers for legal acts committed during the period in which a company is de facto dissolved but still formally registered. Many businesses cease operations without properly completing deregistration with the Commercial Registry, creating legal uncertainty regarding the continuity of legal personality and the attribution of liability for obligations assumed during that period. The study discusses the applicable legal grounds, the distinction between formal and material dissolution, and the judicial criteria used to hold those involved liable, including the application of the doctrine of appearance and the disregard of legal personality.

In Brazilian business practice, it is common to encounter companies that, due to economic, operational, or personal reasons, cease actual operations while maintaining formal registration— or conversely, irregularly terminate operations without filing formal dissolution with the competent authority.

This phenomenon, known as de facto dissolution, occurs when a company halts its activities without completing dissolution, liquidation, and deregistration procedures with the Commercial Registry, remaining legally existent but operationally and economically inactive.

As a result, several legal implications arise, especially regarding liability for acts performed after the practical cessation of the business and the consequences for partners and managers, who may be held accountable for civil, tax, or labor obligations.

2. De Facto Dissolution vs. Formal Dissolution of a Company

2.1 Formal Dissolution

According to the Civil Code (Articles 1,033 to 1,038), regular dissolution requires:

1.       Dissolution by decision, expiration of term, or legal event;

2.       Liquidation (settlement of assets, payment of creditors);

3.       Distribution of remaining assets;

4.       Deregistration with the Commercial Registry and the Federal Revenue.

Only after these steps is the legal personality fully extinguished, with corresponding exonerative and extinguishing effects.

2.2 De Facto Dissolution

Occurs when the company ceases business operations, even though:

• The termination agreement has not been filed;

• The corporate tax ID (CNPJ) remains active;

• Liabilities remain outstanding (including hidden liabilities);

• It remains formally registered with public authorities.

Case law acknowledges the possibility of holding partners and managers directly liable due to the abandonment of legal personality without proper formal dissolution.

3. Legal Basis for Partner and Manager Liability

Even in limited liability companies—where partners are generally only liable up to their capital contributions (Art. 1,052 of the Civil Code)—courts have applied complementary legal principles to assign personal liability when the company is de facto dissolved but still operating or burdened with obligations.

3.1 Article 50 of the Civil Code – Piercing the Corporate Veil

“In the event of misuse of legal personality, characterized by deviation of purpose or commingling of assets, the judge may extend the effects of certain obligations to the personal assets of the administrators or partners.”

3.2 Article 1,003, Sole Paragraph, of the Civil Code

“The withdrawing partner remains secondarily liable, together with the others, for obligations incurred prior to the registration of their withdrawal, for a period of two years.”

3.3 Doctrine of Appearance

Even if the company is inactive, if it presents itself to third parties as operational, it remains liable for its acts, and its partners and managers may be held responsible for omission or the maintenance of a false appearance of legality.

3.4 Tax and Labor Jurisprudence

In tax and labor matters, unpaid debts may be enforced against managers or partners based on the National Tax Code (Art. 135) or on grounds of fraudulent execution.

4. Case Law on Liability in De Facto Dissolved Companies

“The de facto dissolution of a legal entity, without formal termination, does not prevent the liability of its partners for subsequent obligations, especially where there are indications of business continuity or willful omission.” (STJ, AgInt in REsp 1.487.736/SP, Justice Herman Benjamin, judgment on 04/27/2021)

“Even if inactive before the tax authority, a company that does not formalize its dissolution remains legally existent and liable for its actions. Its partners may be held liable if enforcement is frustrated.” (TJSP, Civil Appeal 1009372-53.2020.8.26.0100, judgment on 10/18/2022)

“Failure to formalize dissolution constitutes mismanagement and may lead to personal liability of the managing partner for breach of legal duties.” (TRF3, Civil Appeal 0007891-89.2019.4.03.6100, judgment on 06/06/2023)

5. Legal Consequences of Failing to Formalize Closure

Maintaining a company in a dormant state without formal dissolution may result in:

• Personal liability of partners and managers, even years after operational cessation;

• Suspension of tax and fiscal prescription periods due to lack of formal closure;

• Initiation of veil-piercing proceedings based on willful omission;

• Registration of the partner’s name in default databases or tax enforcement actions as co-debtor;

• Enforcements arising from obligations triggered by administrative inaction (e.g., automatic contract renewals, assessed taxes).

6. Best Practices to Avoid Improper Liability

• Complete formal and documented dissolution, filing the termination agreement with the Commercial Registry;

• Notify the Federal Revenue, municipal authorities, and state tax agencies of the closure;

• Resolve outstanding tax, labor, or contractual issues;

• Document commercial inactivity from its onset for future evidence;

• Refrain from using the company’s bank accounts or entering into contracts after practical cessation.

7. Final Considerations

The informal dissolution of a company without proper documentation exposes partners and managers to liability for acts carried out in the company’s name, even if it is no longer operational. The persistence of legal existence without operation becomes a source of liabilities, tax obligations, and hidden debts that may directly affect the individuals involved.

Brazilian case law has taken a firm stance in holding accountable those who, even after the factual end of business activity, preserve the appearance of legality or fail to take the necessary steps to formalize dissolution.

Preventive action, through complete and regular termination of the company, is essential to avoid future legal risks and to protect the personal assets of the partners.