The separation between the assets of a company and the personal assets of its shareholders and officers is one of the structural pillars of corporate law. It is on that separation, and on when it may legitimately be set aside, that Brazil's Superior Court of Justice (Superior Tribunal de Justiça, or STJ) has just ruled with binding effect.
On May 7, 2026, deciding Repetitive Appeals Theme No. 1,210 (REsp 1,873,187/SP and REsp 1,873,811/SP), on a report by Justice Raul Araújo, the Second Section of the STJ laid down the proposition that, in civil and commercial matters, piercing the corporate veil (desconsideração da personalidade jurídica) requires actual proof of abuse of the corporate form, shown by diversion from its purpose or by commingling of assets, under article 50 of the Civil Code. For the court, the mere absence of attachable assets and an irregular wind-up of the company's activities do not justify the measure.
This consolidates what Brazilian doctrine calls the Teoria Maior — the abuse-based standard, which requires improper use of the corporate form, and which is the more protective of the business owner and the more coherent with the foundations of corporate law. The Teoria Menor — the insolvency-based standard, which would allow the corporate form to be set aside in the face of any obstacle to the creditor being paid — has no application in civil and commercial matters, according to the court.
For a reader trained in the common law, the effect is familiar: Theme 1,210 places Brazilian civil and commercial matters close to the orthodoxy that follows Salomon v A Salomon & Co Ltd — separate legal personality as the rule, piercing as a narrow exception requiring improper use of the company. The laxer standard survives in Brazil only where a statute expressly chose it, in consumer and environmental matters.
What the ruling rules out
The central question the Second Section resolved was this: if a company is wound up irregularly, or holds no assets, is that enough to make the shareholders personally liable?
The answer was no. The simple fact that a company lacks assets sufficient to satisfy a debt, or was wound up without observing the legal formalities, does not on its own amount to abuse of the corporate form.
For the STJ, piercing requires a showing of diversion from purpose — the use of the company for ends other than those for which it was formed — or of commingling between the company's assets and the personal assets of its shareholders or officers.
That distinction matters. An insolvent company is, most of the time, not the result of abuse. Likewise, an irregular wind-up may attract administrative penalties and even specific liability, but it does not automatically amount to the kind of abuse that justifies reaching the shareholders' personal assets.
The abuse-based standard and its foundations
Article 50 of the Civil Code, which governs piercing in civil and commercial matters, was drafted on a clear logic: the company is an instrument for organizing economic activity, not a shield for abuse. It may be disregarded when the instrument is perverted — and only then.
That is the essence of the abuse-based standard: it is not enough that the creditor cannot recover. It must be shown that the difficulty in collecting flows from specific unlawful conduct by the shareholders or officers, whether diversion from the company's purpose or commingling of assets.
The legislative choice of that standard is not new. Commentators argued for it before the 2002 Civil Code. Law No. 13.874/2019 confirmed and refined the criteria in article 50, making the objective requirements of abuse explicit. In the commentary, the Third Civil Law Conference of the Federal Justice Council adopted, in Statement 146 (2004), a restrictive reading of article 50; and the Fourth Conference, in Statement 282 (2006), expressly rejected an irregular wind-up as a standalone ground for piercing — a position Theme 1,210 now consolidates with binding effect.
The insolvency-based standard, applied in consumer matters (art. 28 of the Consumer Protection Code) and in environmental liability cases (art. 4 of Law No. 9.605/1998), starts from a different premise: in those situations, the mere impossibility of satisfying the claim is already enough to reach the shareholders' assets. That is a sector-specific legislative choice, justified by the structural asymmetry between the parties and by the need to give special protection to consumers and to the environment. It does not, therefore, extend to relationships between market participants.
Binding effect and its immediate consequences
Because it was decided under the repetitive appeals procedure, the position laid down by the STJ binds the appellate courts and the courts of first instance throughout Brazil. Applications to pierce the corporate veil in civil and commercial matters must therefore be assessed against that standard.
In practice, this means that decisions granting piercing solely on the basis of the company's insolvency or of an irregular wind-up — with no finding of abuse — become vulnerable to the reading the court has settled. And that new applications, to succeed, will require a fuller evidentiary record than court practice has accepted in many cases.
One distinction that the STJ's Case Law Bulletin No. 889 took care to spell out should be noted: the position in Theme 1,210 does not conflict with Súmula 435 of the STJ, which presumes irregular dissolution where a company ceases to operate at its registered tax domicile without notifying the competent authorities, allowing tax enforcement to be redirected to the managing partner. These are distinct legal regimes: Súmula 435 operates within tax enforcement, under the National Tax Code; Theme 1,210 governs the application of article 50 of the Civil Code in civil and commercial matters. Confusing the two contexts is a common error in practice.
What a business owner needs to understand
The STJ's decision protects, but not automatically and not permanently. It protects those who maintain a corporate practice consistent with the foundations of asset separation. Where that practice is absent, personal exposure is real.
It should be stressed that the risk of piercing calls for active management, so that the absence of commingling can be demonstrated at any moment. In practice that means separate bank accounts for shareholder and company, no transfers of assets without documented consideration, observance of corporate records and formalities, and consistency between the declared corporate purpose and the activity actually carried on.
Faced with civil or commercial enforcement, the company's governance history stops being an administrative detail and becomes a central element of the defense. The STJ's decision reaffirms, with binding effect, that those who maintain that organization have their rights protected.
The dissent and the debate over the burden of proof
The decision was not unanimous. Justices Nancy Andrighi, Daniela Teixeira and Humberto Martins dissented, proposing a different outcome: returning the case to the court of first instance so that the shareholders would have the opportunity to rebut the presumption of abuse. On that view, in certain circumstances — such as an irregular wind-up of the company — it would not fall to the creditor to build the proof of abuse in full; it would fall to the shareholder to displace the presumption that certain conduct would already establish.
The dissent matters because it concerns the burden of proof. For the losing view, certain conduct would give rise to a rebuttable presumption of abuse. For the prevailing view — and this is the position that carried the day and binds the courts — abuse must be affirmatively demonstrated by whoever seeks the piercing, with no prior presumption.
The proposition adopted did not embrace the logic of presumption. The burden remains entirely on the applicant. That does not stop creditors from invoking the dissenting opinions in future arguments, which is why the point deserves the attention of anyone working in commercial litigation.
Closing observations
The ruling reaffirms a premise corporate law has carried since its formation: the corporate form is an instrument, not a privilege. It may therefore be set aside only where it is used abusively, never as a punishment for insolvency or as an automatic consequence of an irregular wind-up.
For anyone advising or forming part of a corporate structure, the message is clear: the protection of limited liability is not a permanent feature of the landscape. It is the result of a consistent practice of asset separation and of respect for corporate formalities. Where that practice exists, the STJ protects it. Where it does not, personal exposure is real — and now with sharper parameters as to what must be shown for it to materialize.
Note: the written judgments in REsp 1,873,187/SP and REsp 1,873,811/SP had not been published as of May 26, 2026. The propositions above were confirmed by the STJ's Case Law Bulletin No. 889 of May 19, 2026, which set out the grounds of the decision.
