Page 148 - Albanian law on entrepreuners and companies - text with with commentary

Article 127
Mandatory and Other Reserves
(1) The company shall allocate at least 5% of the income for the past year less the
expenditure for that year as mandatory reserve until 10% of the basic capital or a
higher ratio established by the Statute has been reached.
(2) The Statute may envisage other reserves being allocated from annual profits.
(3) Profits shall be calculated and dividends distributed only after the amounts
earmarked for reserves referred to in paragraphs 1 and 2 have been deducted from the
profit.

Article 128
Declaration of Dividends
(1) Each shareholder shall have the right to his share in the distribution of annual
profits (dividends) as determined by the General Meeting.
(2) Profits shall be calculated in accordance with the principles adopted by Law
No. 9228 “On Accounting and Financial Statements”.
(3) Profits shall be distributed proportionately to the par value of shares unless the
Statute provides otherwise.
(4) Respecting the principles established by Article 14, the General Meeting may
decide that profit is not to be distributed or that it is not to be paid to shareholders
owning a specified class of shares, and that it is to be used for other purposes instead.
The shareholders rights as set out in the statute may only be overruled by a decision
taken by a three quarters majority in accordance with Article 145.

Comments:

One of the rights inherent in a share relate to the distribution of profits (dividends). Such
distribution is, however, subject to a resolution by the General Meeting, Article 128 (1). The
General Meeting is free to refuse or distribute dividends of profits via a special resolution
accordingly to Article 145 (1), Article 128 (1) and (4). Although this rule is totally legitimate,
it may give rise to abuse by controlling shareholders at the expense of minority shareholders.
If dividends are withheld from the shareholders for an extended period of time, this may
amount to an oppression of the minority which may only be controlled on the basis of general
legal principles. However, Article 128 (4) subjects the decision of the General Meeting to the
fiduciary duties of Article 14 which not only provides for the principle of equal treatment of
all shareholders under the same circumstances, Article 14 (2), but also for the duty of
shareholders to take the interests of other shareholders adequately into consideration, Article
14 (1); this obviously also includes the relation of controlling shareholders towards minority
shareholders.

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