Page 124 - Albanian law on entrepreuners and companies - text with with commentary

derivatives in Article 16 should be mentioned here again as it refers to breaches of duty
regarding the organizational set up of the company form.
The major step to legal recognition of ‘outside’ interests being part of the (internal)
ongoing health of the company is to generally extend fiduciary duties to cover the creation of
proper control systems within the company. 120 The construction of proper systems of
governance is an essential component of the duty of loyalty to the company. “If proper
systems of management are not in place the company—whatever stakeholders are involved —
will be damaged.” 121 This ‘proper management’ or ‘good governance’ concept has various
aspects. First, it protects members or shareholders; but where duties are imposed by non-
company law regulations, such as health, safety and environmental regulation, the
management must be organized in order to respond also to these ‘outside’ duties. Otherwise
it will be in breach of the fiduciary duty to the company because the direct addressee of those
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provisions is the company even though the indirect beneficiaries are other stakeholders.
Finally, if interests which in former times were considered ‘outside’ interests
(externalities) become legally a part of the company’s internal decision-making process and
therefore also part of the company ‘constitution’. The company has duties to stakeholders
including employees, the environment, creditors and the community. The legal definition of
‘constitutional disability’ of company organs means that acts taken in ignorance or in
contravention of the organizational and decisional rules required either by the ‘internal’
company constitution or by ‘outside’ legal constraints are an abuse of the powers of the
company and, as such, a breach of fiduciary duties. Such a breach of duty cannot be ratified
by a decision of the General Meeting. 123 The ratification could be challenged by minority
members or shareholders according to Articles 94 (1), 92 and 153 (1) 151.
The legal definition of ‘interest groups or stakeholders’ which should have consultation
or participation rights in company decision-making procedures is certainly an open social
process depending on the economic and political conditions of the country and corresponding
expectations towards companies. It will be up to Albanian law-makers and courts to develop
the rules which define the (parts of) communities which should have an influence on company
decision-making due to the significant impact that company operations have on them. The
increasing relevance of international human rights standards in this context may play an
important role in this legal development. 124

3. In the context of their duty of loyalty towards the best interests of the company,
directors must apply reasonable care and skill, Articles 14 - 18, 98 and 163 (1), that is they
must act in good faith, based upon reasonable inquiry and information, and rationally related

120 See The Corporate Governance Code for Albania, 2012.
121 Cf. J. Dine, M Blecher and M. Koutsias, footnote 12, p.200.
122 See the Corporate Governance Code for Albania, principle 6.
123 Ibid. 198.
124 See the Ruggie Report: United Nations General Assembly, The Report of the Special Representative of the Secretary
General on the issue of Transnational Corporations and other business enterprises, A/HRC/11/13 and the Guiding
Principles on Business and Human Rights,
http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf
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