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This article analyzes the clawback clause  — also referred to as a reversion clause  — applied to the purchase and sale of equity interests, especially in investment agreements or corporate reorganization transactions. It is a contractual mechanism that allows for the restitution of amounts or assets transferred if certain future conditions are not fulfilled. The study explores its legal nature, validity under the Brazilian Civil Code, contractual limitations, modalities, and key legal risks, with support from legal doctrine and recent case law. The purchase and sale of corporate quotas often involve conditional or resolutory clauses , used to allocate risk between the parties based on the company’s post-transaction performance. Among these, the clawback clause stands out. This clause enables the seller or investor to recover part of the transferred equity or paid amount if the buyer or the company fails to meet pre-established targets — whether financial, strategic, or regulatory. However, its use requires legal caution, as it may be deemed null, abusive, or even fraudulent if not aligned with the principles of good faith , proportionality , and the social function of contracts . 2. Concept and Legal Nature of the Clawback Clause The clawback clause is an accessory contractual provision, legally characterized as: ·       A resolutory condition  (Articles 121 and 127 of the Civil Code), whereby the contract is undone if the agreed-upon event occurs; or ·         A conditional obligation  to partially return the price or equity, based on future non-performance. Its structure is grounded in private autonomy  (Article 421 of the Civil Code) and the freedom of the parties to modulate contractual effects based on the business risks undertaken. 3. Purpose and Common Use Cases Clawback clauses are used to: ·         Protect the seller when the purchase price is contingent upon future performance assumptions; ·         Ensure reversibility of the transaction where there is uncertainty about hidden liabilities; ·         Protect the investor if the financial statements misrepresent the company’s actual financial condition; ·         Correct post-sale distortions due to late disclosures, unexpected litigation, or loss of strategic contracts. 4. Common Modalities of Clawback Clauses Modality Characteristics Proportional price refund A portion of the purchase price is refunded if revenue or profit targets are not met. Equity reversion Equity interests are returned to the seller, fully or partially, upon breach. Automatic price adjustment The deal value is reassessed based on post-closing adjustments. Compensatory indemnification The buyer agrees to compensate for hidden liabilities or underperformance. 5. Legal Validity Requirements To be valid, the clawback clause must meet the following requirements: 1.       The future and uncertain event must be clearly defined (objective condition); 2.       A reasonable time frame must be set for verifying the condition; 3.       The clause must not result in unjust enrichment  or unilateral excessive burden ; 4.       The right to due process must be ensured in verifying the condition (e.g., right to accounting expertise or access to records); 5.       The clause must be duly recorded in the articles of association when involving equity in limited liability companies. 6. Case Law on Clawback Clauses " A contractual clause that provides for proportional refund of the purchase price of corporate quotas is valid when it is proven that the financial statements provided by the seller did not reflect the company’s actual condition. " (São Paulo Court of Appeals, Civil Appeal No. 1002891-42.2021.8.26.0100, judgment dated 07/12/2023) " Clawback clauses must be interpreted restrictively; generic default or subjective dissatisfaction is not presumed. " (STJ – Superior Court of Justice, REsp 1.809.871/SP, Reporting Justice Ricardo Villas Bôas Cueva, judgment dated 05/10/2021) " As long as expressly agreed upon, the clawback clause is effective in ensuring the financial balance of equity purchase and sale transactions. " (Minas Gerais Court of Appeals, Civil Appeal No. 1.0000.21.127671-2/001, judgment dated 11/14/2022) 7. Legal Risks and Drafting Considerations ·         Generic clauses may be deemed void due to uncertainty or abusiveness; ·         Clauses allowing unilateral reversion  without objective criteria are likely to be disregarded by courts; ·         Lack of clarity regarding deadlines and performance indicators leads to litigation and legal uncertainty; ·         Any penalty or default clause must be reasonable and proportionate , pursuant to Article 413 of the Civil Code. 8. Contractual Best Practices ·         Use auditable financial indicators  (e.g., EBITDA, net revenue); ·         Provide for technical verification mechanisms , such as accounting expertise or specialized arbitration; ·         Set a clear deadline  for the resolution condition to be verified; ·         Register the clause in the articles of association , when dealing with corporate equity; ·         Avoid subjective language , such as “at the sole discretion of the buyer” or “if dissatisfied.” 9. Final Considerations The clawback clause is a valuable tool for risk allocation  and contractual balance  in equity transactions. However, its enforceability depends on technical drafting , objectivity , and proportionality — failure to observe these may result in disputes or invalidation. Preventive legal counsel  is essential to structure clear, auditable, and legally effective clauses, ensuring predictability for the parties and avoiding conflicts over targets, timeframes, and the economic consequences of the transaction.

This article examines the liability of corporate officers for omissions in the performance of their duties when business insolvency is imminent or already established. Based on the duties of care, loyalty, and preservation of corporate interest set forth in the Brazilian Civil Code, the study explores the legal consequences of managerial inaction in the face of a company’s economic deterioration, including civil and criminal liability for willful or negligent omission. The article also analyzes case law on failures to adopt asset protection measures, to timely file for judicial reorganization, or to duly inform creditors. Corporate officers play a central role in managing the affairs of a business entity and must act in accordance with principles of sound management, corporate interest, and preservation of the company. In the context of financial distress, this duty becomes even more critical, as omissions may worsen the company’s condition and harm creditors, employees, and other stakeholders. This article proposes an analysis of directors’ liability not only for wrongful acts (e.g., fraud, deliberate mismanagement), but especially for unjustified omissions in the face of insolvency scenarios, focusing on the objective limits of the duty of care and the civil and criminal consequences of inaction. 2. Duty of Care of Corporate Officers under Brazilian Law 2.1 Legal Basis in the Civil Code Article 1,011, §1  – "The officer must exercise, in the performance of their duties, the care and diligence that any active and honest person customarily employs in the management of their own affairs." This provision establishes an objective duty of care , which includes: ·         Ongoing monitoring of the company’s financial health; ·         Implementation of measures to prevent insolvency; ·         Transparent communication with shareholders and creditors; ·     Seeking legal alternatives to preserve the company (e.g., judicial or out-of-court reorganization, debt restructuring). Failure to take or undue delay in taking such measures may constitute gross negligence or reckless management. 3. Omission and the Establishment of Civil and Criminal Liability 3.1 Civil Liability The omission of the officer may give rise to liability for damages when: ·         Reasonable steps to prevent the worsening of the crisis are not taken; ·         A false sense of normality is maintained while hidden liabilities accumulate; ·         The officer fails to inform shareholders and creditors about the insolvency status. " An officer is liable when, in the face of evident insolvency, they fail to adopt appropriate legal measures, thereby increasing creditors’ exposure. " (São Paulo Court of Appeals, Civil Appeal No. 1044520-39.2021.8.26.0100, judgment dated 08/15/2023) 3.2 Criminal Liability Brazil’s Bankruptcy and Judicial Reorganization Law (Law No. 11,101/2005) provides for criminal sanctions for willful or negligent omission by officers: Article 168, I  – It constitutes a bankruptcy crime to fail to file for bankruptcy or judicial reorganization when the state of insolvency is evident, to the detriment of third parties. Penalty : imprisonment from 2 to 6 years, plus a fine. 4. Duty to Preserve Corporate Assets and Mitigate Damages Corporate officers are required to take effective steps to avoid further deterioration of the business, such as: ·         Renegotiating contracts with suppliers and creditors; ·         Suspending new hires or high-risk investments; ·         Timely initiating judicial or extrajudicial reorganization proceedings; ·         Proposing capital contributions, ownership restructuring, or the sale of non-core assets; ·         Winding down operations in an orderly fashion if continuity is no longer feasible. Failure to meet these obligations may sever the relationship of trust between management and stakeholders, justifying the officer’s removal, disqualification from management roles, and personal liability. 5. Case Law on Managerial Omission in Business Crises " An officer’s failure to timely disclose the company’s bankruptcy status, while maintaining a façade of normalcy, constitutes a breach of good faith and results in joint liability for debts incurred during that period. " (STJ – Superior Court of Justice, REsp 1.812.501/SP, Reporting Justice Marco Aurélio Bellizze, judgment dated 09/12/2022) " It is improper for an executive to remain inactive in the face of deteriorating cash flow, delaying legal action to the detriment of third parties. " (Minas Gerais Court of Appeals, Civil Appeal No. 1.0024.18.320521-0/001, judgment dated 04/19/2023) " Passive and negligent management in pre-insolvency situations constitutes mismanagement and may justify the piercing of the corporate veil. " (São Paulo Court of Appeals, Civil Appeal No. 1038711-77.2020.8.26.0100, judgment dated 11/22/2022) 6. Best Practices for Corporate Officers in Times of Crisis ·         Regularly analyze financial and accounting indicators; ·         Seek professional advice on corporate restructuring and debt renegotiation; ·         Notify shareholders and co-managers about imminent risks; ·         Document decisions and justify the adopted alternatives; ·         Avoid assuming new obligations without realistic ability to fulfill them; ·         Timely assess the feasibility of judicial recovery or an orderly wind-down. 7. Final Considerations Corporate officers may be held liable not only for acts of bad faith or intentional wrongdoing, but also for omissive conduct  that, in the face of the company’s economic deterioration, reflects unjustified inaction and mismanagement. Civil and bankruptcy law impose objective duties of care and asset preservation , the breach of which may lead to personal, financial, and even criminal liability . A responsible and transparent approach to business insolvency is not only a legal obligation , but also an ethical duty  for those entrusted with leadership in business organizations.

This article examines the use of reverse mergers and the merger of dormant companies as tools for corporate reorganization, focusing on the distinction between lawful strategic planning and simulated or fraudulent schemes. The analysis considers the legal treatment of corporate mergers, the typical objectives pursued in reverse transactions or involving inactive entities, and the limits imposed by civil, tax, and corporate law. Doctrinal and case law criteria are highlighted to assess the legality and economic substance of such operations. Corporate restructuring is a legitimate and widely adopted instrument for operational optimization, business succession, tax efficiency, and the reorganization of corporate groups. Among the mechanisms recognized under Brazilian law are mergers, spin-offs, and incorporations (Articles 1,116 to 1,122 of the Civil Code and Articles 227 to 229 of the Corporations Law). Among these, incorporation refers to the operation by which one or more companies are absorbed by another, with the full transfer of their assets and liabilities. A particular variation — the reverse merger  — occurs when a parent company is merged into its own subsidiary, thus reversing the traditional merger logic. Another common yet legally sensitive practice is the merger of dormant companies (i.e., companies without active operations, maintained for accounting, tax, or registration purposes). This article analyzes the legal aspects of such operations, differentiating lawful planning from artificial or simulated structures based on corporate law, the Civil Code, and prevailing jurisprudence. 2. Reverse Merger: Concept and Legal Basis 2.1 Concept A reverse merger occurs when a parent company is absorbed by its subsidiary, resulting in the formal dissolution of the parent and the continuation of the subsidiary as the surviving entity. Example: Company A, which controls Company B, is merged into B. A ceases to exist as a legal entity, and B assumes its entire estate, including A’s stake in B. 2.2 Legal Basis Corporate law does not expressly prohibit reverse mergers, provided that: ·         There is proper resolution by the competent corporate bodies; ·         The transaction is duly documented and registered as required by law; ·         The interests of the company and its shareholders are preserved (Arts. 1,116–1,122 of the Civil Code). 3. Lawful Purposes of Reverse Mergers ·         Simplification of corporate structure (eliminating intermediate holding levels); ·         Use of tax benefits or accumulated tax credits in the subsidiary; ·         Succession planning, particularly in family holding companies; ·         Centralization of specific assets or liabilities, enabling accounting and administrative efficiency. Courts and legal scholars acknowledge the legitimacy of reverse mergers when supported by a lawful business purpose, proper documentation, and economic substance. " Although uncommon, a reverse merger is permissible when its economic purpose is proven and there is no fraud or sham involved. " (São Paulo Court of Appeals, Civil Appeal No. 1001982-23.2020.8.26.0100, judgment dated 05/11/2022) 4. Merger of Dormant Companies: Risks and Legal Boundaries 4.1 Concept This refers to the incorporation of companies with no regular business activity, which remain legally registered—sometimes with specific assets or liabilities, or with no relevant transactions at all. 4.2 Identified Risks ·         Use of the dormant company to absorb liabilities of the merging entity; ·         Attempt to "revive" a legal entity without economic purpose; ·    Simulated reorganization aimed at asset concealment, debt redirection, or hindering enforcement proceedings. " The merger of a dormant company without a demonstrable business purpose may be disregarded by the courts if characterized as a sham or fraud. " (STJ – Superior Court of Justice, REsp 1.689.718/SP, Reporting Justice Paulo de Tarso Sanseverino, judgment dated 10/14/2020) 5. Criteria for Distinguishing Lawful Planning from Simulation Lawful Planning Simulated or Fraudulent Structure Clear economic purpose No real business activity or objective Regular documentation and legal filings Flawed or incomplete documentation Functional and economic substance Shell company or merely a formal “vehicle” Valid and transparent shareholder decisions Concealment of shareholders or controllers Compliance with accounting standards Misuse for asset shielding or improper purpose The ality of a transaction will often depend on the demonstrable economic substance and good faith in structuring and executing the corporate acts. 6. Relevant Case Law " Corporate reorganization does not preclude liability where the misuse of legal entities to conceal assets or commingle patrimony is proven. " (STJ, REsp 1.780.245/SP, Reporting Justice Ricardo Cueva, judgment dated 06/23/2021) " The absorption of a dormant company without real business activity may constitute fraud on execution if carried out after the debt became known. " (Minas Gerais Court of Appeals, Civil Appeal No. 1.0000.21.102931-1/001, judgment dated 02/02/2022) " The validity of a merger depends on a legitimate economic purpose and the absence of harm to creditors or third parties. " (São Paulo Court of Appeals, Civil Appeal No. 1011122-67.2021.8.26.0100, judgment dated 09/30/2023) 7. Best Practices for Structuring Reverse or Dormant Mergers ·         Explicitly justify the economic purpose of the transaction; ·         Properly register all corporate acts with the Board of Trade and Federal Revenue; ·         Maintain active and regular accounting records for the involved entities; ·         Avoid corporate movements during enforcement proceedings without a clear purpose; ·         Adhere to transparency principles and protect minority shareholders’ interests. 8. Final Considerations Reverse mergers and the incorporation of dormant companies are legally recognized transactions, but their validity hinges on economic substance, transparency, and alignment with legitimate business goals. When used for asset concealment, sham transactions, or creditor fraud, such operations may be annulled by courts, potentially triggering the disregard of legal personality and liability for shareholders, managers, and third parties involved. Preventive legal counsel plays a crucial role in ensuring that strategic operations are not perceived as abusive, thereby safeguarding their legality, economic function, and documentary integrity in corporate reorganizations.

This article examines the contractual clauses known as tag along  and drag along , widely used in shareholders’ agreements, investment contracts, and corporate reorganizations. These clauses govern scenarios involving the transfer of corporate equity interests, ensuring protection for minority shareholders ( tag along ) or enabling joint exit coordination ( drag along ). The analysis considers their legal basis, validity limits, and criteria for enforceability, in light of case law and specialized legal doctrine. Best drafting practices are also discussed to ensure effectiveness and legal certainty in liquidity events. In business corporations—especially those with dispersed ownership structures or undergoing investment processes—it is crucial to include clauses regulating shareholder exits or the transfer of corporate control. Among such mechanisms, tag along  and drag along clauses stand out as contractual instruments aimed at managing liquidity events while balancing the interests of majority and minority shareholders. The tag along clause grants the minority shareholder the right to sell their stake under the same conditions offered to the controlling shareholder, protecting against unilateral transfers that may alter the company’s control. Conversely, the drag along clause allows the majority shareholder to compel the minority to sell their shares under previously agreed terms, thereby facilitating the full sale of the company. This article explores the legal aspects of these clauses, their contractual basis, practical application, and limitations, focusing on their growing relevance in the Brazilian corporate environment. 2. Legal Basis and Contractual Nature Both tag along and drag along clauses are atypical provisions permitted under the Brazilian legal system based on the principles of private and contractual autonomy (Articles 421 and 421-A of the Civil Code). They are obligatory in nature and must be included either: ·         In the articles of association (to be enforceable against third parties); or ·     In a shareholders’ agreement (binding only upon the signatories, by analogy to Article 118 of the Corporations Law for limited liability companies). These clauses are legitimate provided that they: ·         Do not contravene mandatory legal norms; ·         Respect the essential rights of shareholders, including withdrawal rights and fair valuation of their stake; ·         Are drafted clearly and objectively. 3. Tag Along Clause: Protection of the Minority Shareholder 3.1 Definition The tag along clause grants the minority shareholder the right to sell their interest under the same conditions offered to the majority shareholder in the event of a transfer of control. 3.2 Purpose To prevent the minority shareholder from being forced into a business relationship with a new controlling party not of their choosing, thus safeguarding against unilateral changes in control and potential abuses of controlling power. 3.3 Practical Example If shareholder A (holding 70%) sells their stake to a third party for R$100.000, shareholder B (30%) may exercise their tag along  right and require the third party to also purchase their stake under the same proportional conditions. 3.4 Essential Requirements ·         Applicability in cases of control transfer or significant shareholding changes; ·         Parity of sale conditions; ·         Deadline for exercising the right (e.g., 15 days after notice); ·         Mandatory prior notice to the minority shareholder. 4. Drag Along Clause: Coordination of Joint Exit 4.1 Definition The drag along clause allows the majority shareholder to compel the minority to sell their shares jointly, under pre-agreed terms and conditions, enabling the full sale of the company. 4.2 Purpose To prevent a minority shareholder from blocking strategic corporate transactions, such as mergers, acquisitions, or third-party investments, when a qualified majority agrees to proceed. 4.3 Practical Example Shareholder A (70%) wishes to sell their stake to an investor who requires 100% ownership. Under a drag along  clause, A may compel shareholder B (30%) to sell their shares under the same terms, thereby ensuring the transaction's feasibility. 4.4 Essential Requirements ·         Predefined quorum for invoking the clause (e.g., 66% or 75%); ·         Fair market value, based on an independent appraisal if necessary; ·         Safeguards against abuse by the majority; ·         Penalty clause for unjustified refusal. 5. Case Law and Legal Treatment " The tag along clause is obligatory in nature and aims to protect the minority shareholder against unconsented transfers of control, provided it is included in the articles of association. "(São Paulo Court of Appeals, Civil Appeal No. 1037819-35.2021.8.26.0100, judgment of 06/12/2023) " The exercise of the drag along clause cannot result in unjust enrichment and must ensure a fair and reasonable market value. " (Minas Gerais Court of Appeals, Civil Appeal No. 1.0000.21.103498-1/001, judgment of 09/28/2022) " The drag along clause is valid provided it is expressly included in the articles of association and complies with the principles of good faith and the social function of the contract. "(STJ, REsp 1.806.112/SP, Reporting Justice Paulo de Tarso Sanseverino, judgment of 08/09/2021) 6. Best Practices for Drafting the Clauses ·         Explicitly include them in the articles of association to ensure enforceability against third parties; ·         Clearly define price terms and payment methods; ·         Establish a fair and impartial valuation mechanism in case of disputes; ·         Set deadlines for the exercise of the rights or the triggering of the drag along ; ·         Provide penalties for non-compliance or omission; ·         Ensure compatibility with lock-up provisions, non-compete clauses, and buyback arrangements. 7. Final Considerations Tag along  and drag along clauses are essential legal tools in modern companies, particularly those with shared capital structures, institutional investors, or succession planning strategies. When clearly drafted, balanced, and pre-agreed upon among shareholders, these clauses enhance legal certainty, predictability in shareholder exits, and protection for minority investors. Conversely, their absence or improper formulation can result in complex litigation, hinder strategic operations, or allow abuse of control. Preventive legal planning, supported by technical and legal expertise during clause drafting and registration, is critical to safeguarding shareholder rights and avoiding costly corporate disputes.

This article examines earn-out clauses inserted in share purchase agreements, with an emphasis on legal aspects related to their validity, enforcement, risks, and controversies arising from their interpretation. Common in mergers and acquisitions (M&A) transactions, these clauses tie part of the purchase price to the future performance of the company, frequently giving rise to disputes over accounting criteria, performance targets, and duties of cooperation. The study analyzes the legal treatment, recommended contractual parameters, and the case law that guides their practical application. In share purchase transactions, especially in M&A deals, the use of earn-out clauses has become increasingly common. These clauses make part of the transaction price conditional upon the economic performance of the acquired company in a future period. This practice seeks to mitigate uncertainties regarding the company’s operational capacity and reduce the risk of information asymmetry between seller and buyer. However, the implementation of earn-out mechanisms requires precise contractual provisions, under penalty of complex litigation involving the calculation of results, accounting manipulation, lack of cooperation between the parties, or frustration of legitimate expectations. This article analyzes the legal structure of earn-out clauses, their contractual nature, the recommended safeguards for their drafting, and the main points of judicial conflict. 2. Concept and Legal Nature of the Earn-Out The earn-out is an ancillary contractual clause whereby the parties agree that part of the purchase price for the equity interest shall be paid subsequently, on a variable basis, depending on agreed financial, operational, or strategic targets—usually after the closing of the transaction (post-closing). Examples of targets include: • Gross or net revenue; • EBITDA (earnings before interest, taxes, depreciation, and amortization); • Profit margin; • Customer retention; • Expansion of units/franchises. Legally, the earn-out has the nature of a conditional and future obligation, governed by Articles 121 to 130 of the Brazilian Civil Code, and falls within the scope of the economic and distributive function of the contract (Articles 421 and 421-A of the Civil Code). 3. Purpose and Practical Applicability Earn-out clauses aim to: • Reduce uncertainties regarding valuation in companies with a short operating history, accelerated growth, or dependence on external factors; • Align incentives between the former controlling party and the new buyer; • Allow the seller to participate in future results, especially when there is growth potential. This structure is common in: • Emerging companies (startups, healthtechs, fintechs); • Family businesses undergoing succession; • Mergers involving gradual integration. 4. Risks and Common Sources of Disputes The main causes of controversy in earn-out agreements include: 4.1 Ambiguity in performance criteria • Vague metrics, incomplete formulas, absence of applicable accounting standards. 4.2 Manipulation of results • Changes in accounting policies, revenue suppression, artificial cost increases. 4.3 Lack of cooperation or access to information • Denial of access to financial documents required to assess performance. 4.4 Fraud or bad faith in post-closing management • Deliberately hindering the achievement of targets to avoid payment. “The earn-out clause must observe the principle of objective good faith and guarantee the seller reasonable access to the accounting information necessary to assess the agreed condition.” (TJSP, Civil Appeal 1037894-29.2021.8.26.0100, judged on 06/15/2023) 5. Contractual Requirements for Greater Legal Certainty To avoid litigation, the contract should include: • Objective and technical definition of performance indicators; • Clearly defined assessment period; • Applicable accounting standards (IFRS, BRGAAP, etc.); • Audit or independent expert clause in case of disagreement; • Seller’s right to access operational information; • Penalty clause or fine for breach of the payment obligation; • Rules concerning any changes in the business model (e.g., mergers or spin-offs during the earn-out period). 6. Case Law and Judicial Trends on Earn-Outs Although there is no specific legislation on earn-outs in Brazil, case law has recognized their validity, provided there is no abuse, deviation of purpose, or bad faith in the company’s management after the sale. “The earn-out clause is valid, provided that the criteria are clearly defined, and there is no right to payment if the target is not objectively met.” (TJMG, Civil Appeal 1.0024.19.264758-2/001, judged on 03/03/2023)   “The lack of transparency and cooperation between the parties, combined with unilateral accounting changes to frustrate the earn-out, justifies judicial review of the contract.” (STJ, REsp 1.942.013/SP, Justice Ricardo Cueva, judged on 11/18/2022)   7. Best Practices for Drafting and Executing Earn-Out Clauses • Draft clauses with the support of specialized legal and accounting professionals; • Include calculation simulations in the contract as an annex; • Ensure the seller’s access to documentation during the assessment period; • Avoid clauses that rely solely on the buyer’s discretionary actions; • Include an arbitration or independent expert clause, with clearly defined deadlines and procedures for dispute resolution. 8. Final Considerations Earn-out clauses represent a legitimate and efficient negotiation tool, provided they are structured with clarity, transparency, and contractual balance. Although useful for aligning expectations between buyer and seller, their success depends on the consistency of the adopted criteria, good faith in execution, and the predictability of the suspensive condition. Failure to observe care in contract drafting, combined with unilateral management of business activities after the sale, may give rise to complex litigation and discussions regarding nullity, revision, or breach of the earn-out obligation. The preventive role of the corporate lawyer—from due diligence to final contract drafting—is essential to ensure legal certainty, financial predictability, and protection of the interests of both parties involved in the transaction.

This article analyzes legally valid strategies for asset protection—commonly referred to as asset shielding—under Brazilian law, with emphasis on the distinction between lawful planning practices and fraudulent conduct aimed at evading creditors. The use of family holding companies, restrictive clauses, fiduciary assignments, and corporate instruments is a common practice, but it must observe ethical and legal limits to avoid falling into simulation, fraud upon execution, or abuse of legal personality. The article explores the legal foundations, validity requirements for protection structures, and case law that delineates the boundary between legitimate planning and fraud. In the context of modern business management, asset protection has become a relevant strategic practice, especially given the inherent risks of business activity, corporate expansion, increased litigation, and heightened tax oversight. When conducted lawfully, asset shielding represents a legitimate exercise of property rights, private autonomy, and succession and corporate planning. However, the line between valid preventive structuring and creditor fraud is often fine, requiring technical attention and legal caution. This article examines the legal instruments used for asset protection, the legal limits on their implementation, and the circumstances under which the judiciary recognizes abuse or invalidity of artificial or disguised structures, particularly in light of the social function of the enterprise and the principle of good faith. Legal Foundations of Lawful Asset Shielding The Brazilian legal system permits asset planning, provided that it does not violate: Article 50 of the Civil Code (abuse of legal personality); The Law on Tax Enforcement and the rules of the Code of Civil Procedure, with regard to fraud upon execution; The principles of good faith, the social function of the company, and the prohibition of abuse of rights (Articles 187 and 421 of the Civil Code). Lawful planning is supported by the following principles: Legal separation of assets between legal entities and individuals; Freedom of business organization (Articles 44 et seq. of the Civil Code); Succession planning and division of family assets; Prevention of legitimate business risks (tax, environmental, labor liability, etc.). Common Structures for Asset Protection Establishing a holding company: A company created to centralize and manage family or business group assets, segregating personal assets from operational risks. Restrictive clauses in contracts and notarial acts: Inclusion of clauses of non-commingling, inalienability, and immunity from seizure in deeds of donation or inheritance divisions. Fiduciary assignment of assets or equity interests: Conditional transfers with retention of title, based on Law No. 10.406/2002 (Brazilian Civil Code) and Law No. 9.514/1997, depending on the nature of the asset. Separation between operating and asset-holding companies: Distinction between the company that operates in the market (subject to operational risk) and the company that holds strategic assets (real estate, equipment, intellectual property). Ethical and Legal Limits of Asset Shielding Asset protection becomes unlawful when: There is fraudulent intent to frustrate creditors or obstruct judicial enforcement; The structures are created with the appearance of legality but lack real economic substance; Assets are transferred after the debtor becomes aware of a pending lawsuit, or by backdated or simulated instruments. "Fraud against creditors occurs when a debtor transfers assets after valid service of process in an enforcement action, even through intermediaries." (STJ, REsp 1.104.900/SP, Justice Nancy Andrighi, judgment on 04/14/2010) "The formation of a holding company does not prevent patrimonial liability if there is asset commingling, lack of economic purpose, or fraud against creditors." (TJSP, Civil Appeal 1023487-29.2022.8.26.0100, judgment on 08/21/2023) Case Law on Fraudulent Asset Shielding "The mere existence of legal entities does not preclude joint liability if there is misuse of corporate personality to frustrate enforcement." (STJ, REsp 1.101.021/SP, Justice Luis Felipe Salomão, judgment on 12/10/2013) "The sale of real estate to a company related to the debtor, during enforcement proceedings, constitutes fraud even if made through a formally valid legal instrument." (TJMG, Civil Appeal 1.0024.15.101010-6/001, judgment on 03/25/2022) "The simulation of a donation with inalienability and immunity clauses, after the formation of a debt, may be nullified as a fraud upon execution." (TJPR, Civil Appeal 0034576-61.2018.8.16.0001, judgment on 02/14/2023) Criteria to Differentiate Lawful Planning from Fraud Lawful Planning Fraud Against Creditors Conducted before the obligation arises Conducted after knowledge of the debt or pending lawsuit Aimed at legitimate asset organization Aimed at frustrating enforcement or concealing assets Structure has real economic substance Shell company with no operational function Proper public registration and transparency Simulated, backdated, or undisclosed acts Best Practices for Structuring Lawful Asset Protection Set up a holding company before the emergence of significant liabilities; Formally register all transactions, with clear contracts and proper tax compliance; Avoid transactions lacking economic purpose or supporting documentation; Maintain effective asset separation between individuals and legal entities; Do not use abusive or simulated clauses to obstruct third-party rights; Seek legal and accounting assistance for preventive structuring. Final Considerations Asset shielding is a legitimate tool for protecting property and for succession and corporate planning, as long as it is carried out transparently, with economic substance and prior to the emergence of future obligations. When used to obstruct the fulfillment of legal duties, defraud creditors, or hinder judicial enforcement, it ceases to be lawful protection and becomes subject to annulment, disregard of legal personality, and personal liability. Business lawyers play a central role in preventive guidance and lawful structuring of asset protection models, ensuring legal security for their clients without infringing on the principles of contractual loyalty and the social function of the company.

This article analyzes the validity and legal boundaries of non-assignment clauses in equity interests (quotas) in limited liability companies (LLCs), focusing on their contractual admissibility, the effects on third-party transferees, and potential conflicts with property rights and the free transferability of corporate interests. Such clauses are common in articles of association, shareholders’ agreements, or family holding structures, aiming to preserve corporate governance and control. The analysis considers provisions of the Brazilian Civil Code, specialized legal doctrine, and recent case law, also addressing the effects of unenforceability against good-faith third parties and drafting best practices for enforceability. In Brazilian limited liability companies (sociedades limitadas), contractual freedom allows partners to regulate, through the articles of association or separate agreements, matters related to the transfer of equity interests, including restrictions on their sale, assignment, or transfer. Among such restrictions, the non-assignment clause stands out, by which the partners agree not to transfer their corporate participation to third parties (or even to other partners) for a certain period or under certain conditions. These clauses aim to ensure corporate stability, maintain control, protect assets, and preserve affinity among partners. However, they also raise important legal questions concerning the limits of party autonomy, enforceability against third parties, and potential infringement of property rights. This article offers an analysis of the main legal, doctrinal, and jurisprudential aspects of such clauses, along with practical suggestions for drafting valid and effective provisions. 2. Legal Basis and Contractual Autonomy The Brazilian Civil Code, when regulating limited liability companies, ensures broad contractual freedom among partners: Art. 1.053.  In the absence of specific provisions in this chapter, the rules applicable to simple partnerships shall govern limited liability companies. Sole paragraph.  The articles of association may provide for rules on management, decision-making, and assignment of equity interests, among others. Art. 421-A.  In commercial contracts, parity and symmetry between the parties shall be presumed, unless proven otherwise, and the business risks assumed by the parties must be respected. Based on these provisions, it is legitimate to include restrictive clauses on the transfer of equity interests, provided that proportionality, reasonable time limits, and adequate disclosure—especially in relation to third-party enforceability—are observed. 3. Types of Restrictions on Equity Transfers The most common clauses include: Fixed-term non-assignment clause : temporary prohibition on the sale or transfer of interests; Prior consent clause : requiring approval from partners before transferring to third parties; Right of first refusal clause , in accordance with Civil Code Art. 1,057; Lock-up clause : often used in investment agreements; Anti-dilution clause : protects minority partners from loss of ownership interest. These clauses may be included in the articles of association or in separate shareholders’ agreements. However, for the restrictions to produce erga omnes effects, it is strongly recommended that they be expressly included in the articles of association. 4. Legal Limits on Non-Assignment Clauses To be valid and effective, non-assignment clauses must comply with specific legal limits: 4.1 Reasonable time limits Clauses that prohibit the transfer of interests indefinitely or for excessively long periods may be declared void for violating the social function of the contract and the principle of free disposal of property. Doctrine suggests that the duration should be proportionate to the purpose of the restriction, such as preserving control during a transition period, ensuring family succession, or honoring an investor lock-up. 4.2 Prohibition of absolute and irreversible restrictions A clause that absolutely and irrevocably prohibits the transfer of equity interests is not permissible, as it infringes on property rights and the free disposition of assets (Civil Code Art. 1,228). 4.3 Legitimate business purpose The clause must serve a legitimate business purpose (e.g., protecting family unity, corporate governance, asset shielding), or else it may be deemed an abusive or oppressive retention mechanism. 5. Enforceability Against Third Parties: Registration and Notice A non-assignment clause creates binding obligations between the partners, but it is only enforceable against third parties if included in the articles of association and duly filed with the Board of Trade (Junta Comercial). “A non-assignment clause in equity interests is only enforceable against good-faith third-party transferees if it is set forth in the articles of association and properly filed.”(TJSP, Civil Appeal No. 1008791-42.2021.8.26.0100, judgment on 10/20/2023)   “A shareholders’ agreement, if not recorded in the articles of association, binds only the signatories and is not enforceable against third-party transferees.”(STJ, REsp 1.157.676/SP, Reporting Justice Luis Felipe Salomão, judgment on 09/18/2014)   Therefore, the enforceability of non-assignment clauses against third parties depends on transparency, proper registration, and effective notice. 6. Consequences of Breaching a Non-Assignment Clause If equity interests are transferred in breach of a non-assignment clause, potential consequences include: Relative nullity  of the transaction, if the clause is set forth in the articles of association; Compensation  for damages suffered by the aggrieved party; Enforcement of contractual penalties under the shareholders’ agreement; Exercise of preemptive rights or forced buyback , if contractually provided. It is essential that the contract includes clear enforcement mechanisms for breaches, including termination clauses, arbitration provisions, and specific performance remedies. 7. Contractual Best Practices Include restrictive clauses directly in the filed articles of association; Establish a specific and reasonable term for the restriction; Define exceptions or consensual approval mechanisms; Clearly state the penalties applicable in the event of breach; Provide for fair exit mechanisms, such as third-party valuation and buyout clauses. 8. Final Considerations Non-assignment clauses are lawful mechanisms for protecting corporate stability, widely used in limited liability companies and family business structures. However, their validity depends on compliance with core contractual principles, such as the social function of the contract, the reasonableness of restrictions, and proper disclosure to third parties. The effectiveness and legal certainty of such clauses lie in clear drafting, objective limits, and formal registration, combined with good faith among partners and a preventive approach to corporate disputes.

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.

This article examines the concept of the de facto manager in business companies, particularly regarding their liability in situations involving abuse of power, mismanagement, fraud against creditors, or acts with significant legal implications. Although the Brazilian Civil Code provides for the formal appointment of managers, business practice reveals the existence of individuals who, without contractual designation, perform typical management functions. The article explores the legal criteria for identifying de facto management, its distinction from formally appointed (de jure) managers, and the legal grounds that support their liability toward third parties, including in corporate veil piercing and tax enforcement proceedings. Under the Civil Code, the management of a business company is assigned to partners or third parties formally appointed in the articles of association or by resolution of the partners. However, Brazilian business reality shows that some individuals exercise control or management functions without regular appointment. This figure, known as the “de facto manager,” is especially relevant in disputes involving civil, tax, labor, or bankruptcy liability, as it raises the question of who is truly responsible for corporate acts when the manager is not formally constituted. This article examines the legal criteria for characterizing a de facto manager, the legal consequences of this status, and the ways such individuals may be held liable both in relation to the company and to third parties. 2. Distinction Between De Jure and De Facto Managers • A de jure manager is someone formally appointed to manage the company, with powers defined in the articles of association and registered with the Commercial Registry, in accordance with Article 997, VII of the Civil Code. • A de facto manager, on the other hand, is someone who, without formal appointment, exercises typical management powers and represents the company before third parties, even in an informal, irregular, or concealed manner. The distinction is not in the title, but in the actual exercise of decision-making authority within the company’s structure. A de facto manager may be a hidden partner, a relative of a partner, a service provider, or any third party with real decision-making influence over the company. 3. Legal Grounds for Holding De Facto Managers Liable The liability of de facto managers arises from the combination of several provisions within the Brazilian legal system: 3.1 Civil Code – Articles 50 and 927 Art. 50 – In cases of abuse of legal personality, characterized by deviation of purpose or asset commingling, the judge may extend the legal obligations of the company to the personal assets of its managers or partners. Art. 927 – Anyone who, by an unlawful act, causes harm to another is required to repair it. Case law admits that these effects may also extend to de facto managers when their conduct significantly contributes to the wrongdoing or resulting damage. 3.2 National Tax Code – Article 135, III Company directors, managers, or de facto representatives are personally liable for tax debts when they act with abuse of power or in violation of the law, articles of association, or company bylaws. 3.3 Bankruptcy Law (Law No. 11.101/2005) – Article 82, §1 The liability of de facto managers is recognized in cases of fraudulent bankruptcy or mismanagement. 4. Case Law on De Facto Management and Liability “When the de facto manager is proven to be the decision-maker in the company’s operations, they may be held liable for obligations undertaken in the name of the company, including under veil-piercing claims.” (STJ, REsp 1.775.091/SP, Justice Ricardo Cueva, judgment on 03/24/2022) “De facto management liability in tax matters is permissible when the exercise of management powers involves abuse or legal violations.” (STJ, AgInt in AREsp 1.640.721/SP, judgment on 08/17/2020) “The lack of formal appointment does not prevent the recognition of liability for a third party who actually performs management functions.” (TJSP, Civil Appeal 1039293-26.2021.8.26.0100, judgment on 11/21/2023) 5. Criteria for Identifying De Facto Management To hold a de facto manager liable, it is necessary to demonstrate that they: • Performed typical management acts, such as bank transactions, signing contracts, deciding on suppliers, and hiring; • Participated in the company’s operational and strategic decisions; • Personally benefited from the profits or structure of the company, despite lacking formal appointment; • Assumed commitments or represented the company before third parties. Documentary and testimonial evidence is essential to demonstrate the individual’s actual management role, even if their name does not appear in public records. 6. Practical Effects of Liability A de facto manager may face liability on various fronts: • Civil : compensation for mismanagement, abuse of power, asset commingling, or fraud; • Tax : personal liability for tax debts where legal violations or overreach are proven; • Bankruptcy : attribution of fraudulent bankruptcy, disqualification from business management, and personal liability; • Labor : joint liability for unpaid labor obligations arising from informal management conduct. 7. Best Practices to Prevent De Facto Management • Formally register all managers with the Commercial Registry; • Prevent unauthorized third parties from performing management acts on behalf of the company; • Maintain clear separation between investor-partners and operational managers; • Control access to bank signatures, powers of attorney, and accounting documents; • Properly document corporate resolutions and decisions. 8. Final Considerations De facto management is a recurring phenomenon in Brazilian companies and, although often tolerated for practical or informal reasons, it can lead to serious legal consequences for those who assume control or managerial roles without formal appointment. The liability of de facto managers is recognized under Brazilian law, especially when it is shown that their conduct contributed to illegal acts, fraud, evasion of obligations, or deviation from the company’s lawful purpose. Documentary formalism and compliance with legal representation requirements are essential to ensure legal certainty in corporate structures and to protect the legitimate interests of partners, creditors, employees, and contracting third parties.

This article analyzes the legal boundaries of business activities conducted by former partners following the dissolution of a partnership, with an emphasis on the characterization of unfair competition. The dissolution of a business partnership does not, in itself, authorize the use of privileged information, client lists, operational structures, or the former company’s know-how. Based on the principles of contractual loyalty, objective good faith, and trade secret protection, this study addresses scenarios in which a former partner’s conduct may be deemed abusive, the use of preventive contractual clauses, and the mechanisms for civil liability and enforcement against unfair competition. The dissolution of business partnerships—particularly limited liability or closely held companies—does not always terminate all ties and disputes between former members. It is common for a former partner to establish a business in the same industry, often relying on knowledge, commercial relationships, and strategies developed while part of the former company. Although the free exercise of economic activity is constitutionally protected, this right is not absolute, and a former partner’s actions may amount to unfair competition under Article 195 of the Industrial Property Law (LPI) when they exceed market norms and infringe on the rights of the former company. This article seeks to define the legal limits of a former partner’s post-dissolution conduct, distinguishing between legitimate and unlawful competition, based on legal doctrine, case law, and applicable legislation. 2. Principle of Good Faith and Post-Contractual Duty of Loyalty The partnership relationship, like any long-term contract, gives rise to post-contractual obligations that extend beyond the formal termination of the company. Objective good faith, as set forth in Article 422 of the Civil Code, imposes duties of: • Business loyalty • Prohibition on misuse of confidential information • Protection of the legitimate trust built during the partnership “Contracting parties are bound to observe the principles of honesty and good faith during the formation and performance of the contract.” In the corporate context, this means a former partner may not use the previous company’s clientele, strategies, internal systems, or other intangible assets to gain an unfair competitive advantage. 3. Unfair Competition: Legal Grounds and Application to Former Partners The Industrial Property Law (Law No. 9.279/96) establishes in Article 195 the acts that constitute unfair competition, including: Art. 195. Engaging in unfair competition includes: [...]XI – Disclosing, exploiting, or using, without authorization, the content of confidential information used in industry, commerce, or services, accessed through a contractual or employment relationship.III – Employing fraudulent means to disrupt a competitor. [...] These acts may occur even in the absence of direct fraud, as long as the former partner’s conduct exceeds the normal bounds of fair competition, such as: • Targeted solicitation of former clients using databases acquired during the partnership • Mass recruitment of the former company’s employees • Use of know-how, business models, or technology developed jointly • Creating confusion among consumers regarding the identity or continuity of the former company 4. Case Law on Improper Competitive Conduct by Former Partners “It is abusive for a former partner to establish a competing business using strategic information obtained during prior management, which characterizes unfair competition.” (STJ, REsp 1.501.091/SP, Justice Paulo de Tarso Sanseverino, judgment on 11/24/2020) “The mere formation of a new company does not constitute unfair competition. However, using the former company’s clientele without express authorization may violate the post-contractual duty of loyalty.” (TJSP, Civil Appeal 1007743-65.2021.8.26.0100, judgment on 08/14/2023) “Trade secret protection does not require formal registration. Unauthorized acquisition and use by a former partner entitles the injured party to compensation for losses and damages.”(TRF3, Civil Appeal 5004726-98.2020.4.03.6100, judgment on 04/27/2022) 5. Preventive Measures: Non-Compete and Confidentiality Clauses The most effective way to prevent disputes is to include in the articles of association or a separate instrument (e.g., shareholder agreement or termination agreement) specific clauses addressing: • Non-compete obligations for a defined period after withdrawal • Confidentiality regarding internal and strategic information • Contractual penalties for breaches of post-dissolution obligations • Return of documents, databases, and electronic devices The enforceability of these clauses depends on reasonable temporal, geographic, and functional limits, otherwise they may be deemed abusive or unenforceable. 6. Legal Remedies for Unfair Competition If a former partner engages in unfair competition, the affected company may pursue: • Legal action for material and moral damages • Injunctive relief to stop the harmful conduct (e.g., prohibition on client contact, removal of websites or platforms) • Search and seizure of documents or equipment containing confidential data • Enforcement of penalty clauses and compensation claims, if contractually provided Evidence may include emails, witness statements, communication records, technical reports, and digital forensic analysis. 7. Final Considerations The end of a business partnership does not extinguish all obligations between former partners. Subsequent business activity must respect legal boundaries imposed by objective good faith, professional secrecy, and commercial loyalty. Although entrepreneurial freedom is constitutionally guaranteed, it does not authorize conduct that results in the misappropriation of intangible assets, clientele, or structures from the former company, under penalty of civil liability and compensation for unfair competition. Preventive contractual clauses, coupled with swift legal action in case of breach, are effective tools to protect the legitimate interests of companies in post-dissolution scenarios.

This article analyzes the legal protection of know-how in the business context, focusing on its nature as an unregistered intangible asset and its vulnerability to unfair competition practices. Based on the Brazilian legal framework—especially the Industrial Property Law, the Civil Code, and contractual principles—the discussion addresses the feasibility of protection against the misuse of technical knowledge, methods, processes, and business strategies. It also examines violations committed by former partners, employees, or competitors, and the legal mechanisms available for preventive and compensatory protection. The digital economy and technological innovation have placed intangible assets—such as trademarks, reputation, customer base, and know-how—at the core of business strategy. Unlike trademarks and patents, know-how, which encompasses undisclosed technical, operational, and commercial information, does not require registration for its protection, but demands heightened attention regarding its management and legal safeguarding. The misappropriation of know-how can cause serious and often irreversible damage, particularly when committed by former employees, partners, consultants, or commercial associates, highlighting the need to understand the legal grounds available to protect this intangible asset and to penalize its misuse. 2. Concept and Legal Nature of Know-How Know-how is defined as a set of practical and confidential knowledge applicable to business activities, which provides a competitive advantage to its holder. It may include: • Technical formulas and processes • Production methods • Marketing and pricing strategies • Client and supplier databases • Market data and logistical structures It is a non-registrable asset protected by confidentiality and the prohibition of unfair competition, unlike patents, which require public registration with the Brazilian Patent and Trademark Office (INPI). 3. Legal Grounds for Know-How Protection The legal protection of know-how stems from multiple normative sources, including: 3.1 Industrial Property Law (Law No. 9.279/96) Art. 195, XI – Engaging in unfair competition includes: “disclosing, exploiting, or using, without authorization, the content of confidential information used in industry, commerce, or service provision, [...] to which one had access by virtue of a contract or employment relationship.” 3.2 Civil Code – Civil Liability Art. 927 – Anyone who, by unlawful act, causes harm to another shall be obliged to repair it. Art. 187 – An abuse of rights also constitutes an unlawful act when the exercise of a right clearly exceeds the limits imposed by good faith, good customs, or the economic and social purpose of the right. 3.3 Contracts with Specific Confidentiality Clauses Clauses imposing duties of secrecy, non-misuse, and prohibition of disclosure to third parties, even after the termination of the contractual relationship. 3.4 General Data Protection Law (Law No. 13.709/2018) When know-how involves customer databases, consumer behavior, or algorithms, it may also fall under the scope of data protection legislation. 4. Common Forms of Know-How Misappropriation Know-how is typically misused in the following scenarios: • Former employees or partners starting a competing business using previously acquired knowledge • Service providers disclosing internal strategies to third parties • Consultants, suppliers, or distributors improperly using data obtained under confidentiality agréments • Unauthorized disclosure of information in tenders, technical proposals, or public presentations Such conduct may be deemed unlawful even in the absence of manifest bad faith if it results in the misuse of information protected by legal or contractual confidentiality. 5. Legal Measures Available in Case of Violation 5.1 Preventive Measures • Injunctive relief or urgent measures to cease disclosure or unauthorized use • Search and seizure of documents or digital media containing confidential information • Extrajudicial notifications reinforcing the confidentiality duty 5.2 Compensatory Measures • Damages for actual loss and lost profits • Liquidated damages if provided in the NDA or primary contract • Public retraction or prohibition of using derived technology Documentary and technical evidence is essential and may include digital forensic reports, emails, signed contracts, access logs to systems, among others. 6. Relevant Case Law “The unauthorized use of know-how transferred under a confidentiality clause constitutes unfair competition and gives rise to compensation, regardless of formal industrial property registration.” (STJ, REsp 1.839.078/SP, Justice Ricardo Villas Bôas Cueva, judgment dated 11/10/2020) “Unfair competition does not require proof of literal copying of documents; it is sufficient to show the use of non-public strategic information obtained through contractual or employment ties.” (TJSP, Civil Appeal 1009821-33.2022.8.26.0100, judgment dated 06/12/2023) “Even if unregistered, a company’s business methodology and operational model constitute trade secrets and are protected under the Industrial Property Law and the principle of objective good faith.” (TRF3, Civil Appeal 5008374-39.2021.4.03.6100, judgment dated 08/18/2023) 7. Best Practices for Know-How Protection • Execute customized NDAs with specific clauses and penalties • Include confidentiality and non-compete clauses in employment and service agréments • Implement internal access controls to sensitive information • Formally identify what constitutes “confidential information” • Document routines, training, and policies that reinforce internal confidentiality practices • Conduct periodic audits and monitor potential information leakage channels 8. Final Considerations Know-how is one of the most strategic assets of modern businesses and, despite lacking formal registration, enjoys solid legal protection under Brazilian law. Its effective protection relies on a combination of contractual instruments, internal best practices, and legal mechanisms for both preventive and remedial measures. A proactive legal approach—focused on information compliance and contractual shielding—is essential to preserve a company’s competitive advantage and ensure that internally developed knowledge does not become an unfair benefit to competitors or former members of the business structure.

This article examines non-disclosure agreements, commonly known as NDAs, within the context of business relations. These contractual instruments are widely used in preliminary negotiations, commercial partnerships, mergers and acquisitions (M&A), and in relationships with employees and service providers. The study addresses the legal nature of NDAs, the limits of confidentiality clauses, cases of breach, and the legal mechanisms available for compensation arising from the improper disclosure of strategic information. Recent case law is analyzed to illustrate the practical application of business confidentiality protection. In today’s corporate environment, information has become one of the most valuable assets. Business plans, strategic data, product formulas, client lists, pricing models, and proprietary technology represent significant competitive advantages, making their protection essential for business continuity and success. Accordingly, NDAs have become increasingly common tools to formalize confidentiality obligations and regulate the legal consequences of any improper disclosure. This article explores the legal foundations of NDAs, their applicability in business relationships, and the legal remedies available to parties harmed by a breach of confidentiality. 2. Legal Nature and Basis of the NDA A non-disclosure agreement is an atypical contract, but it is fully valid under the principle of freedom of contract (Articles 421 and 421-A of the Brazilian Civil Code). It may be entered into independently or as an ancillary clause within a principal contract (e.g., service provision, M&A, partnerships, supply, consultancy, etc.). The confidentiality clause imposes an obligation not to disclose, transfer, or use any sensitive information obtained during the business relationship for one’s own benefit or that of third parties. The confidentiality duty is reinforced by general principles such as: ·         Objective good faith (Art. 422 of the Civil Code); ·         Duty of loyalty in contractual relations; ·         Prohibition of unjust enrichment and unfair competition . Additionally, NDAs may intersect with intellectual property law, competition law, and data protection regulations (e.g., Brazil’s LGPD, Law No. 9.279/96). 3. Practical Applications of NDAs in Business Law NDAs are widely used in the following contexts: ·         Preliminary negotiations and due diligence processes (e.g., partnerships, mergers, acquisitions); ·         Contracts involving specialized services; ·         Joint development projects involving technology or innovation; ·         Relationships with employees or outsourced professionals; ·         Startups, incubators, and investor pitches. In such scenarios, the NDA seeks to preserve informational advantage and prevent the misuse of strategic data, know-how, or intellectual property. 4. Recommended Clauses in NDAs An effective NDA should contain clauses that: ·         Clearly define what constitutes “confidential information”; ·         Establish the duration of the confidentiality obligation (including post-contractual periods); ·         Specify exceptions (e.g., legal disclosure obligations, public information); ·         Provide sanctions for breach, such as liquidated damages, compensation for material and moral damages, and lost profits; ·         Determine the competent jurisdiction or include an arbitration clause for dispute resolution; ·         In some cases, provide for a complementary non-compete clause. 5. Breach of Confidentiality: Civil Liability and Evidence A breach of contractual confidentiality may give rise to: ·         Contractual civil liability , based on Articles 389, 395, and 402 of the Civil Code; ·         Damages , including actual losses (e.g., damage control costs, lost contracts) and loss of profits; ·         In serious cases, injunctive relief or emergency measures to cease disclosure or prevent competitors from using the information. Evidence of a breach may include: ·         Electronic communications; ·         Public disclosure of protected material; ·         Witness testimony from employees or third parties; ·         Market changes indicating misuse of the confidential information. 6. Case Law on NDAs and Liability for Breach “Unauthorized disclosure of strategic information obtained during due diligence constitutes a contractual breach and gives rise to compensation, even in the absence of a final agreement.”( TJSP, Civil Appeal 1003781-26.2021.8.26.0100, judgment on 05/15/2023 ) “Confidentiality, even in the absence of a penalty clause, triggers civil liability when violated, due to the breach of good faith and contractual loyalty.” ( STJ, REsp 1.639.672/SP, Justice Marco Aurélio Bellizze, judgment on 12/10/2021 ) “The improper use of trade secrets, even if obtained without fraud, gives rise to damages under Article 195, XI of Law No. 9.279/96.” ( TRF3, Civil Appeal 5006542-87.2020.4.03.6100, judgment on 02/03/2022 ) 7. Final Considerations Non-disclosure agreements are essential legal tools for protecting strategic information in the business sphere. Although atypical contracts, NDAs are supported by the principles of private autonomy and civil liability law. Their effectiveness, however, depends on clear, precise, and proportionate drafting, as well as preventive strategies involving compliance and information security. The proactive role of corporate counsel in drafting customized and legally sound NDAs is vital to preserving intangible assets and avoiding complex litigation in an increasingly data-driven and competitive market.