The 3rd Panel of the Superior Court of Justice (STJ) [1] dismissed a special appeal filed by the directors of a civil association, which had its legal personality disregarded in a case involving the improper use of a trademark.

The Court, in a ruling authored by Justice Marco Aurélio Belizze, held that it is possible to disregard the legal personality of a civil association, but limited liability to the personal assets of members with management powers or capable of influencing decision-making that constitutes abuse of the legal personality.

As a rule, the institute of disregarding legal personality is applicable when abuse of personality is proven through confusion of assets or misuse of purpose, i.e. when the assets of the partners are confused with those of the legal entity or when the legal entity is used to achieve purposes for which it was not created. In these cases, the autonomy of the legal entity is allowed to be removed and the assets and rights of the partners themselves are affected. This is known as the Major Theory of Disregarding Legal Personality, which is set out in article 187 of the Civil Code.

Although it is an institute commonly used to resolve disputes in Brazilian courts, its application is generally restricted to legal models of companies, mainly limited liability companies, with few studies and judgments on its applicability to associations, foundations and corporations.

Thus, by deciding on the matter and recognizing the applicability of the disregard of legal personality in the case of civil associations, the STJ is helping to broaden the understanding and improve the technique for its effective use, avoiding conflicting decisions in other instances.

In his opinion on the applicability of the disregard of legal personality in the case of civil associations, Justice Marco Aurélio Belizze was clear in differentiating the type of relationship that the partner and the associate have, respectively, with the company and the association, thus underpinning the difference in treatment between the disregard of legal personality in one case and the other.

In his vote, the Justice stated that when the legal personality of a company is disregarded, what is achieved is a corporate contract, which binds its members in terms of obligations - with a strong personal element. In the case of associations, on the other hand, there is a legal agreement between the association itself and its members (and not between the members themselves) - there is not the same obligatory link.

Thus, there is a difference between the position of command occupied by some members and mere membership of the association, and it is unreasonable to extend the patrimonial liability that results from the disregard of the legal personality to the personal assets of a large group of members who did not participate in the acts that led to the sanction being applied.

The following excerpt is taken from the vote, which summarizes and defines the decision:

"Thus, the disregard of the legal personality of a civil association is admissible, but the liability must be limited to the members with management power or capable of influencing the decision that constitutes the abuse of the legal personality."

The decision thus seeks to ensure reasonableness and limit its effects to the assets of those who effectively act and have decision-making power over the association's course. It is these associates, members of the association's management or administration, who effectively gave rise to the applicability of disregard - whether through confusion of assets or misuse of functions - who will be personally liable for the damage they cause.

Therefore, this judgment serves as a warning to administrators and managers of civil associations, since they are the ones most affected by the recognition and application of the institute to the association. It is up to managers to ensure faithful compliance with the requirements governing the institution's legal personality, avoiding any decision that could lead to confusion of assets or misuse of functions and, consequently, direct liability for any damage.

[1] REsp nº 1812929 - DF (2019/0130084-7)

By: Luiz Eduardo Casarin Antonello

Corporate Law | CPDMA Team