Disregard of the investment fund’s asset segregation in relation to its unitholders

Abstract

This article begins by examining the various means of constituting asset segregation under Brazilian law. It then explores the nature of investment funds and, in turn, investigates the possibility of disregarding the asset segregation of investment funds under Article 50 of the Civil Code, particularly considering the amendments introduced by Law 13,874/2019 regarding the regulatory framework of investment funds. The paper addresses the concept of piercing the corporate veil and the requirements of the ‘major theory’ as outlined in the general rule set forth in Article 50 of the Civil Code. Without neglecting the adverse economic consequences that may arise from an improper trivialization of the piercing the corporate veil doctrine, the work assesses its compatibility with investment funds and examines the prerequisites for disregarding the asset segregation of these funds and its legal effects, particularly from the perspective of the unitholders. The article also analyzes the possibility of both classical and reverse piercing of the corporate veil, while comparing these hypotheses with rulings from domestic courts. The study adopts the premise that the abuse of the corporate personality requires the unitholder to have effective control over the actions of the fund – an element not typically present in funds available on the market with a large number of unitholders – and concludes that disregarding the asset segregation is exceptional, generally limited to cases involving private funds, funds formed by unitholders with corporate or familial ties, and private equity funds. Such a measure depends on demonstrating acts of misuse of purpose or asset confusion. The methodology employed in this study consists of an extensive literature review, as well as an analysis of relevant legal provisions and case law on the matter.