Severability and independence of assets in face of the decision to lift the corporate veil under the Brazilian “Economic Freedom Act”

Abstract

This paper analyzes the changes introduced in the Brazilian legal system through Act n. 13,874/2019, known as the Brazilian “Economic Freedom Act”, which alters the legal provision related to the lifting of corporate veil. First, a brief overview of concept in the original text of the Civil Code is presented. It is shown that the current understanding of the Brazilian Superior Court of Justice points to the absolute necessity to demonstrate the occurrence of fraud as a ground for the legal decision to lift the corporate veil. Subsequently, the paper shall bring a critical analysis of the amendment promoted by the Economic Freedom Act, while taking into account that the changes that were introduced through article 50 of the Civil Code make the scope of the disregard of legal entities unnecessarily large. Finally, the paper concludes that even in the face of the enacted legal changes, in a systematic analysis of the legal concept, fraud remains as a defining element to enable the decision.