Page 123 - Albanian law on entrepreuners and companies - text with with commentary

assessment and protection standards linked to specific company activities like the emission of
gases, CO2 emissions, treatment of hazardous waste, etc. Such standards must be translated
into internal information and consultation procedures as part of a company’s governance and
decision-making.
The example shows that the ‘best company interest’ cannot be simply identified any
more with the interest of company members or shareholders. ‘Environmental sustainability’ is
only one aspect of the general tendency to ‘internalize’ other interests (‘stakeholders’). This
ongoing process is reflected by a change in corporate communication policies which today
prefer to present firms as institutions not as individuals. 119 We briefly want to explain here,
why and how the legal consideration of management duties has changed in this respect. The
explanation considers JSCs in the first place. However, the standards on Corporate
Governance, Corporate Responsibility and Human Rights must be implemented by all
company forms with limited liability.
As ownership and control of companies are separated and structured by the role of the
organs of a company constitution, and as such companies play an important role in the
production of social economic welfare, the question was raised how control of company
management can be achieved and maintained. Based on spectacular company breakdowns
caused by short-sighted competitive pressure on managements to maximize profits and the
philosophy of deregulation in America and Europe, it is extremely important that there should
be strong regulation and, important checks and balances between all company stakeholders
and the wider community. In particular it was clear during the financial debacle of 2007 there
were shortcomings in the control which shareholders are supposed to extend over
management decisions under the classical ownership model. This is why the ‘interests’ which
the management is supposed to owe to the stakeholders have been widened. If the ongoing
health of the company is to be management’s continuous concern and defines the social
expectation towards the company, the interest of shareholders can be only one aspect in the
formulation of adequate policies. The fiduciary duty is, first of all, also owed to creditors and
employees whose participation has widely been accepted to add to the insufficient traditional
control functions of shareholders.
The Company Law recognizes this by introducing derivative action of creditors (in
Articles 10, 91, 92, 150, 151), employees participation (in Articles 19 - 21) and special
organizational duties which the management needs to observe if it wants to avoid liability.
Such duties are contained in Article 82 (3) - (5), and Article 136 (3) - (5) (convening the
General Meeting in case of substantial capital loss); Article 95 and Article 158 (3) - (5)
(creation of an early warning system); the list of Article 98 (4) and of Article 163 (4) which
includes the ‘wrongful trading’ provision of continuation of business and failure to open an
insolvency procedure in case the company is obviously not able to pay its debts, Article 98
(4), Article 163 (4) - (6), and finally, Article 164 (probity of financial statements and other
key data). Also the ‘ultima ratio’ rule of piercing-the-veil for abuse of legal form and its

119 See the special review on chief executives, ‘Humbled—Pity the poor, post-Enron company boss’, in The Economist,
20 December 2003, pp. 87–89.
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