Quotaholders’ Agreement in Limited Liability Companies: An Instrument for Stability, Conflict Prevention, and Protection of Corporate Will

This article analyzes the role, legal nature, and importance of the quotaholders’ agreement within limited liability companies, in light of the Brazilian Civil Code and contemporary corporate practice. Although widely used in corporations, the quotaholders’ agreement is becoming an increasingly relevant tool in limited liability companies (LLCs) for organizing internal governance, preventing disputes, and protecting the corporate will—especially in family businesses or companies with multiple partners. This article addresses the legal basis, the most common clauses, legal limits, and best drafting practices, supported by current doctrine and case law.

The growth of family-owned businesses and companies organized under the limited liability type (LTDA) highlights the importance of legal instruments that enhance the stability of internal partner relations. While the articles of association remain the company’s primary constitutive document, they often prove insufficient to regulate the complex and dynamic corporate relationships, particularly in scenarios involving succession, sale of quotas, strategic decision-making, or partner deadlock.

In this context, the quotaholders’ agreement emerges as an effective legal mechanism to prevent disputes, organize internal governance, and safeguard the common will of the partners, as supported by §1 of Article 1,053 of the Civil Code.

2. Legal Basis and Legal Nature

Article 1,053, §1 of the Civil Code provides:

“Limited liability companies shall be governed subsidiarily by the rules applicable to simple partnerships. Where the articles of association are silent, the rules applicable to corporations shall apply.”

This provision authorizes the subsidiary application of Article 118 of the Brazilian Corporations Law (Law No. 6,404/76), which governs shareholders’ agreements and serves as a model for quotaholders’ agreements.

The legal nature of the quotaholders’ agreement is contractual, with a parassociative character, binding only the signatories on the matters stipulated therein. Unlike the articles of association, the agreement need not be filed with the Board of Trade to produce effects among the partners—unless its enforceability against the company or third parties is intended.

3. Purposes and Practical Advantages

The quotaholders’ agreement aims to:

Increase predictability in corporate decision-making;

Establish clear rules on management, succession, and withdrawal;

Avoid judicial disputes among partners;

Preserve the culture and values of the family business;

Protect corporate assets from external interference (e.g., spouses, uninvolved heirs).

It is, therefore, a strategic governance instrument with significant practical utility.

4. Most Relevant Clauses in Quotaholders’ Agreements

4.1 Preemptive rights, lock-up, and non-transferability

These clauses restrict or regulate the transfer of quotas, requiring the selling partner to offer their interest first to the other partners and imposing lock-up periods.

4.2 Tag-along and drag-along clauses

These provide protection or impose obligations in corporate transactions, such as:

Tag-along: grants minority partners the right to sell their quotas alongside the controlling partner;• Drag-along: allows the controlling partner to compel minority partners to sell jointly.

4.3 Succession rules and heir admission

These clauses may condition heir entry on the approval of existing partners or establish alternatives such as:

Payment of equity value (buyout);

Maintenance of quotas under usufruct without voting rights.

4.4 Management rules and qualified quorums

These allow for the establishment of quorums different from those set by law for the appointment of managers, approval of investments, profit distribution, among others.

4.5 Profit distribution policy and partner withdrawalThese clauses define rules for voluntary withdrawal, penalties for breaches, lock-up periods, equity valuation procedures, and quota appreciation mechanisms.

5. Validity Limits and Relationship with the Articles of Association

The quotaholders’ agreement may not contradict mandatory legal norms or explicit provisions of the articles of association. The prevailing doctrine and case law hold that:

The agreement binds only its signatories;

If filed with the Board of Trade, it may be enforceable against the company;

It may not violate fundamental principles of corporate law, such as minimum quorums or arbitrary partner exclusions.

It is recommended that the articles of association reference the existence of the agreement to enhance its binding force and predictability.

6. Case Law on the Validity and Enforceability of Quotaholders’ Agreements

“The clause in a quotaholders’ agreement conditioning the entry of heirs on the approval of other partners is valid, provided it does not impair the right to receive the quota’s value.”(Court of Appeals of São Paulo, Civil Appeal No. 1007632-92.2021.8.26.0100, ruled on 03/17/2023)

“The quotaholders’ agreement is binding among the signatories and, if registered, may bind the limited liability company under the agreed terms.” (STJ, REsp 1.802.811/SP, Justice Ricardo Villas Bôas Cueva, ruled on 08/23/2021)

7. Best Practices for Drafting a Quotaholders’ Agreement

Draft with the support of specialized legal counsel;

Ensure consistency with the articles of association;

Include clear, coherent, and enforceable clauses;

Establish conflict resolution mechanisms (e.g., arbitration or mediation);

Periodically update the agreement as the company evolves.

Final Considerations

The quotaholders’ agreement is a highly effective tool for conflict prevention, safeguarding private autonomy, and protecting business unity. Its responsible use enables partners to anticipate corporate matters that might otherwise compromise business continuity and trigger legal disputes among partners, heirs, or third parties.

The strategic application of this instrument is especially valuable in family businesses, holding companies, and enterprises with multiple partners, contributing to sound, transparent, and stable governance.