A triad of precedents from higher courts puts an end to the automatic application of the doctrine of piercing the corporate veil.
By Amanda Amorim and Heloísa Nogueira
The landscape of Brazilian corporate litigation is undergoing one of its most profound structural reconfigurations. Within a span of just seven months—between October 2025 and May 2026—the Supreme Federal Court (STF), the Superior Court of Justice (STJ), and the Superior Labor Court (TST) issued successive rulings that, taken together, block the use of piercing the corporate veil as a mere shortcut for enforcement. In practice, the higher courts have reaffirmed the autonomy of corporate assets as the legal norm and imposed strict limits on redirecting enforcement actions against other parties.
Historically, the business community faced a distorted application of liability doctrines, particularly in labor law and certain areas of civil litigation. Citing the subsistence nature of the claim or the failure to locate assets, a body of case law became established that applied the contours of the "Lesser Theory" (*Teoria Menor*) in situations where the law required the "Greater Theory" (*Teoria Maior*).
While the Lesser Theory (typical of consumer and environmental law) authorizes recourse to the partners' personal assets upon the company's mere insolvency, the Greater Theory (dictated by Article 50 of the Civil Code) requires proof of actual abuse, characterized by a diversion of corporate purpose or the commingling of assets. This recent shift in case law repositions the Greater Theory at the center of civil, commercial, and labor relations involving business entities.
The Chronological Alignment of the Superior Courts
This cycle of reformulation was initiated by the Supreme Federal Court (STF) with the ruling on General Repercussion Theme 1,232 (RE 1,387,795). By a wide majority, the Court prohibited the so-called "surprise inclusion" of companies belonging to the same economic group during the enforcement phase of a labor judgment. The established legal principle mandates that the claimant must identify any jointly liable legal entities in the initial complaint, thereby allowing them to participate actively in the merits phase (cognizance phase). Redirecting enforcement against such entities has become a strict exception, requiring rigorous adherence to due process and the right to a prior adversarial hearing; this puts an end to decades of practice that disregarded corporate autonomy without the requisite procedural inclusion of all parties from the outset.
Subsequently, the Second Section of the Superior Court of Justice (STJ) settled the matter regarding civil and business relationships when it ruled on Repetitive Appeal Theme 1,210 (REsp 1,873.811/SP). The court established that the mere absence of assets subject to attachment or the irregular cessation of a business entity's activities is insufficient to justify piercing the corporate veil. The ruling reaffirms the primacy of the "Major Theory" (*Teoria Maior*), placing the burden on the creditor to conclusively prove a diversion of corporate purpose or the commingling of assets. In doing so, the STJ eliminated the automatic mechanism that had previously transformed the risks inherent in economic activity into the personal and unlimited liability of partners.
The final convergence occurred within the Superior Labor Court (TST) with the ruling on the Repetitive Appeal Incident No. 26 (IRR 26 / Theme 26). The Full Court addressed the liability of partners in labor enforcement proceedings brought against companies undergoing judicial reorganization. While acknowledging the subject-matter jurisdiction of the Labor Courts to hear proceedings regarding the disregard of legal personality (IDPJ) in such cases—absent a contrary order from the court overseeing the reorganization—the TST established that redirecting liability requires unequivocal proof of abuse of legal personality pursuant to Article 50 of the Civil Code. Non-payment or the financial distress of the company undergoing reorganization no longer justifies the automatic recourse to a partner's personal assets.
Residual Distortions and Areas of Tension
Despite a strong trend toward harmonization, an internal divergence persists within the Supreme Federal Court (STF) that requires strategic monitoring by corporations. In June 2025, the Court *en banc* indicated, in Conflict of Jurisdiction Case No. 8.341, that jurisdiction over the Incident of Disregard of Legal Entity (IDPJ) could lie with the Labor Courts. However, in a single-judge decision issued in May 2026 regarding Complaint No. 94.440/SP, Justice Dias Toffoli applied "General Repercussion Theme 90" to overturn a ruling by the Regional Labor Court (TRT) of the 15th Region, thereby remitting the incident to the bankruptcy court. This lack of consensus regarding whether the jurisdiction of the reorganization and bankruptcy court is absolute or relative is expected to be resolved in the coming months, marking the final hurdle regarding legal uncertainty on this issue.
Practical Implications for Corporate Strategy
In light of this new landscape, the management of litigation and corporate governance must be immediately adapted based on well-defined technical guidelines:
- Preventive Review of Corporate Compliance: Given that the "Major Theory" (requiring proof of abuse of the legal entity) now prevails, it is vital to mitigate any signs of the commingling of assets. Internal audits must review financial flows between affiliates, intercompany contracts, and the strict separation between the personal accounts of executives and the company's operating cash.
- Defense Actions in Active Litigation: Companies currently named as defendants in labor or civil enforcement proceedings—having been included solely due to the principal debtor's lack of assets—should invoke STF Theme 1.232 and STJ Theme 1.210 to seek immediate exclusion from the proceedings, leveraging the retroactive effect (subject only to the limitation of *res judicata*).
- Collection and Asset Strategy: From the perspective of the corporate creditor, petitions for the Disregard of Legal Entity (IDPJ) can no longer be standardized or generic. Initiating the proceeding will require a robust preliminary asset investigation capable of substantiating the initial filing with documentary evidence of abuse of rights or diversion of corporate purpose; failure to do so risks summary dismissal and an order to pay court costs.
In short, decisions handed down by the higher courts restore the doctrine of disregarding the legal entity to its original status as an exceptional measure of last resort. Priority has been given to strengthening legal certainty and preserving the business enterprise, requiring legal practitioners to adopt a technical approach strictly grounded in evidentiary proof.
Given this context, strengthening the company by engaging specialized law firms—capable of assessing the specific impact of these precedents on your organization's litigation portfolio and corporate structure—can help ensure the protection of your personal and family assets.
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