The growing complexity of corporate relationships, particularly in closely held corporations, has led shareholders’ agreements to assume a central role in corporate governance. However, a sensitive and recurring issue arises in business practice: is unilateral termination of a shareholders’ agreement possible?
The answer requires a technical analysis that lies at the intersection of corporate law and the general theory of obligations.
The Legal Nature of Shareholders’ Agreements
Shareholders’ agreements are grounded in Article 118 of Law No. 6,404/1976 (Brazilian Corporations Law). Although inserted within corporate legislation, their essence is predominantly contractual in nature.
As noted by Modesto Carvalhosa, the formal source is corporate law, but the substantive source is contractual.
Accordingly, a shareholders’ agreement constitutes a legal transaction governed by private autonomy, objective good faith, and the social function of the contract. This means that, although corporations are traditionally conceived as capital companies, the agreement may introduce elements of personal commitment, loyalty, and cooperation among the signatories.
Does Affectio Societatis Also Exist in Corporations?
The idea that corporations are purely institutional entities devoid of subjective ties does not fully withstand practical scrutiny.
Authors such as Fábio Konder Comparato and Nelson Eizirik acknowledge that, particularly in closely held corporations, there may be a genuine subjective bond among shareholders, especially in voting agreements and control agreements.
In such circumstances, there is a community of interests and ongoing cooperation, elements that characterize the so-called affectio societatis.
The breakdown of this subjective element may produce significant legal consequences, including with respect to the possibility of termination of the agreement.
Agreements with a Fixed Term: The Rule Is Binding Effect
In agreements executed for a fixed term, the legal framework is clear: termination may only occur in the situations expressly provided for in the instrument itself.
Paragraph 6 of Article 118 of the Brazilian Corporations Law establishes that an agreement subject to a term or resolutory condition may only be terminated according to its own stipulations.
In other words, the binding force of the contract prevails.
Unilateral termination without cause, in such cases, tends to be rejected, except under exceptional circumstances demonstrating relevant just cause, such as default or a serious breach of trust.
Breach of Affectio Societatis as Just Cause
Case law recognizes, in specific situations, the termination of a shareholders’ agreement based on the breakdown of affectio societatis.
The Superior Court of Justice (STJ) has already acknowledged the possibility of terminating a shareholders’ agreement based on the general theory of obligations.
Similarly, the Court of Justice of the State of Paraná (TJPR) admits the partial dissolution of closely held corporations where there is a serious rupture of loyalty and trust among shareholders, giving precedence to the principle of preservation of the company.
The breakdown of affectio societatis cannot be invoked merely as rhetorical argument. It must be serious, objective, and capable of compromising the very continuity of the corporate relationship.
CORPORATION. SHAREHOLDERS’ AGREEMENT. TERMINATION BASED ON BREACH OF AFFECTIO SOCIETATIS AND OF THE DUTY OF LOYALTY AND COOPERATION AMONG THE PARTIES. LEGAL POSSIBILITY.
The termination of a shareholders’ agreement is admissible due to breach by the parties or failure of performance in general, as well as due to the breakdown of affectio societatis, based on the general theory of obligations, and the possibility of specific performance of obligations under the agreement, provided in Article 118, paragraph 3 of Law No. 6,404/76, does not preclude such claim.
(STJ – REsp 388.423/RS, Justice Sálvio de Figueiredo Teixeira, Fourth Panel, decided May 13, 2003, published August 4, 2003.)
BUSINESS LAW. CIVIL PROCEDURAL LAW. APPEAL. ACTION FOR REVERSE PARTIAL DISSOLUTION OF A CLOSELY HELD CORPORATION (EXCLUSION OF A SHAREHOLDER) COMBINED WITH VALUATION OF EQUITY INTERESTS.
Partial dissolution of a corporation is admissible in companies where the subjective bond among shareholders prevails, in accordance with the principle of preservation of the company. The breakdown of affectio societatis, characterized by conduct contrary to corporate loyalty and trust, particularly in family-owned closely held companies, constitutes serious misconduct capable of justifying the exclusion of a shareholder.
(TJPR – 17th Civil Chamber – Appeal No. 0001605-72.2021.8.16.0050 – Bandeirantes – Justice Mario Luiz Ramidoff – decided July 6, 2023.)
And What About Agreements with an Indefinite Term?
This is where the greatest controversy lies.
From the perspective of the general theory of obligations, no one may be compelled to remain associated in perpetuity. Accordingly, part of the doctrine understands that termination without cause may be possible, provided there is prior notice.
On the other hand, there is a consistent line of reasoning holding that unilateral termination—even in agreements with an indefinite term—may compromise corporate stability and violate objective good faith, thereby requiring just cause.
Therefore, the analysis must be case-by-case.
What Does Business Practice Teach?
The discussion is not merely academic. It involves concrete business risks, such as:
- Instability within the controlling block
- Deadlock in corporate decision-making
- Shareholder disputes
- Judicialization of conflicts
- Impact on the company’s valuation
For this reason, the technical drafting of shareholders’ agreements is decisive.
Clear clauses addressing term, termination mechanisms, events of default, exit mechanisms, and valuation criteria for equity interests significantly reduce the risk of litigation.
Conclusion
Unilateral termination of shareholders’ agreements is not the rule, but the exception.
In fixed-term agreements, the binding force of the contractual provisions prevails.
In indefinite-term agreements, the possibility of termination requires a careful analysis of good faith, the social function of the contract, and corporate stability.
More than debating the abstract legal possibility, the central issue is strategic: prevention begins with the proper structuring of the agreement itself.
In the contemporary business environment, well-structured governance is not a mere formality — it is asset protection.
