DIFFERENCE BETWEEN ARTICLES OF ASSOCIATION AND SHAREHOLDERS’ AGREEMENT

Many entrepreneurs confuse the Articles of Association (Contrato Social) with the Shareholders’ Agreement, but while both address ownership and corporate governance, they serve different legal and practical purposes.

🧾 What is the Articles of Association?

In Brazil, the Articles of Association is the mandatory founding document for a limited liability company (LTDA). It must be filed with the state’s Board of Trade and includes:

• Company name and business purpose

• Capital contribution and ownership percentages

• Registered office address

• Management and representation rules

• Decision-making quorum

  
  

It is a public legal instrument and essential for obtaining a CNPJ (Brazilian Tax ID) and formal company recognition.

🤝 What is a Shareholders' Agreement?

The Shareholders’ Agreement is a private contract among partners that outlines internal rules, strategic goals, and dispute resolution mechanisms. It typically includes:

• Buy-sell clauses

• Profit distribution policies

• Voting rights and obligations

• Confidentiality and non-compete clauses

• Conflict resolution procedures

  
  

Unlike the Articles of Association, it is not mandatory and does not need to be filed with public agencies unless intended to have enforceability against third parties.

⚖️ Key differences

Articles of Association	Shareholders’ Agreement
Mandatory	Optional
Public document	Private agreement
Registers the company	Regulates internal relationships
Filed with Board of Trade	Can be filed or kept private
Legal structure	Strategic and relational terms

📌 Final thoughts

The best practice is to have both documents in place. The Articles of Association formalizes the company, while the Shareholders’ Agreement ensures clarity and stability among the partners, helping to prevent internal conflicts.