Participation Agreement: Analysis of Ruling No. 11532 of 2024

The recent order No. 11532 of April 30, 2024, issued by the Court of Cassation, offers an important reflection on participation agreements, a legal institution that deserves to be explored for its practical implications. The ruling focuses on the associate's obligation to provide an accounting and the correct preparation of the financial statements, highlighting the principles that must guide this activity.

Accounting Obligation and Required Content

According to the ruling, the accounting that the associate is required to prepare must contain a clear exposition of the historical facts relating to the activity carried out. This implies the need to precisely document cash inflows and outflows, thereby determining the final balance. It is essential that this accounting is prepared in the form of civil law financial statements, in accordance with Articles 2423 and 2426 of the Civil Code.

Cash Basis Principle and Non-Collection of Receivables

Particular attention is deserved by the reference to the cash basis principle. The Court emphasizes that the accounting must also represent events subsequent to the creation of a receivable, particularly non-collection. This provision is crucial because it highlights how the economic reality of a participation agreement cannot be distorted by an exclusively positive outlook. In fact, the non-payment of receivables has a direct impact on the final result and must therefore be correctly represented. Professionals in the sector must be aware of this requirement to ensure adequate transparency and accountability.

Participation Agreement - Associate's Accounting Obligation - Content - Preparation Criteria - Civil Law Financial Statement Forms - Cash Basis Principle - Non-Payment of Receivables - Relevance - Consequences. Regarding participation agreements, the accounting that the associate is required to prepare must contain the statement of historical facts relating to the activity carried out that have generated cash inflows and outflows, determining their respective balance, and must be prepared in the form of civil law financial statements applying the cash basis principle, so that events subsequent to the creation of a receivable, and in particular its non-collection, must be represented therein, as they affect the final result.

Conclusions

In summary, ruling No. 11532 of 2024 represents an important reference point for all those operating within the scope of participation agreements. It clarifies the responsibilities of associates and the importance of transparent accounting that complies with accounting principles. The correct application of these criteria not only protects the rights of associates but also contributes to a healthier and more informed management of the economic resources involved.