In a recent decision, the 3rd Chamber of the Superior Court of Justice (STJ) of Brazil rendered a significant judgment related to the concept of disregarding legal personality in cases of de facto corporate relationships (Resp 2.055.325). This decision allowed for a broader application of the concept, extending to hidden partners.

The case in question revolved around the allocation of responsibility to a third party who acted as a partner in an individual business – the so-called hidden partner – in a debt enforcement process of the legal entity. It is worth noting that there is no doubt that the limited entrepreneur is personally liable for the legal entity’s debts.

The creditor’s defense was based on previous understandings of the STJ, which asserted that disregarding legal personality should be used to ensure the recovery of credits and combat fraudulent practices in business.

In line with this, Minister Nancy Andrighi, the case’s rapporteur, understood that the enforcement should encompass the hidden partner, applying the well-known “expansive disregard of legal personality.” This was based on the argument that this concept can be the subject of an incidental procedure, eliminating the need for a separate lawsuit for such discussions. Furthermore, it was argued that this procedure would respect the rights to due process and a full defense.

The vote also emphasized that extending the patrimonial liability of legal entities to hidden partners aligns with the objectives of the concept of disregarding legal personality.

Extrapolating the case under analysis, this ruling is important because it increases the fear of using of the expansive disregard of legal personality theory, which can imply a very strong mitigation of the legal personality itself, an ancient and fundamental institute for limiting responsibilities and enabling investments .