Page 133 - Albanian law on entrepreuners and companies - text with with commentary

2. As regards the question of ‘undercapitalization’, we refer to our Comments to Article 16
and to Article 70. The capital raising and maintenance provisions and the corresponding
liability of the JSC management (see below Comments to Article 108 and Article 123) would
quite certainly prevent ‘undercapitalization’. So what can ‘undercapitalization’ mean in the
JSC context. As we said before (Comments to Article 16 and to Article 70),
undercapitalization may lead to ‘piercing the corporate veil’ and make JSC managers (or
dominant majority shareholders) personally liable. However, we also said that the emergence
of material undercapitalization does not lead as such to automatically piercing-the-veil. There
is no legal requirement for members to increase their contributions. The General Meeting
must decide what is to happen in case of any insolvency threat, Article 136 (3). So other
features are necessary to establish the conditions for piercing-the-veil here. The fact of
undercapitalization must always refer to the specific capital maintenance context of the
company form in question and to the respective behaviour of members, shareholder and
(Managing) Directors. With respect to the capital raising and maintenance provisions in JSCs,
only fraudulent intentions of founders or members could actually fulfil the piercing-the-veil
rule of Article 16 (1) (see Article 5 of the Law No. 129/2014, amending Article 16 of the
2008 Company Law.) In other words, the (presumed) knowledge regarding the impossibility
of meeting creditors’ claims required by this provision can, transforms into intentional or
fraudulent wrongful trading, Article 163 (4): a Managing Director who continues doing
business by intentionally making new debts he knows the company will never be able to pay
and therefore does not convene the General Meeting as required by Article 136 (3) not only
risks the compensation claim of Article 163 (4), but also personal liability according to Article
16. So do shareholders who have the power to convince the Managing Director to do so. This
is another example for the fact that, also in JSCs, capital raising and maintenance
requirements must increasingly be connected to Managing Directors’ duties.

Article 108
Types of Contribution
Shareholders’ contributions may consist of cash or property (movable and
immovable property or rights expressed in money. They may not consist of labour or
services.

Comments:

Raising of Capital: The Law makes sure that, in the interest of potential creditors, the
company’s capital is raised according to the provisions of the Law before a company may be
registered and thereby come into existence as an independent legal entity. The legal concepts
applied are in line with the Second Directive:

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