Page 151 - Albanian law on entrepreuners and companies - text with with commentary

1. No. Law 129/2014 makes a clarification of cross-holding of shares in joint-stock
companies. Under the original text of Article 133 of Law No. 9901, a daughter company may
not subscribe the shares of a parent company; however, that Article does not govern the
effects of cross-holding of shares when one company later becomes a subsidiary of the other
one. The amendment applies the sale rule of the company holding its own shares (i.e. transfer
or cancel the shares within one year).

2. Article 133 (1) 1 and (2) prohibit the subscription by the company or by one of its
subsidiaries of the company’s own shares. The reason for this lies in the fact that the company
does not gain any new investment; it reduces its assets without any compensation. Likewise,
acquisition of own shares endangers the company property. Economically it corresponds to a
return of contributions. This is not in line with the principal of capital raising and maintenance
and the interest of creditors. There is also the risk that management artificially keeps share
prices high by buying up shares of the company with company assets. Therefore, acquisition
by the company of its own shares should either be excluded or at least limited. Article 19 of
the Second Directive (as amended by Directive 2006/68/EC) allows for both solutions.
Article 133 (1) of the Company Law allows acquisition of the company’s own shares only in
the cases provided throughout the Law. There are actually only four cases of this kind in the
Law:

 Article 139 (2) b), in case a minority shareholder requests his share to be purchased;
 Article 186 (2) mentions the case that shareholders may transfer gratuitously fully
paid up shares to the company;
 Article 212: the minority’s sell-out right in case a ‘parent’ holds 90% or more of the
shares of their (‘subsidiary’) company;
 Articles 223, 227 (2), 229 (5): shareholders opposed to a merger, division or
transformation may require the ‘recipient’ company to buy up their shares.

For the rest, Article 186 treats the withdrawal of shares and is not in itself another case
of acquisition by the company of its own shares. Article 186 covers cases of withdrawal
(cancellation) of shares envisaged by the Statute or by Law, Article 133. Another case
provided by the Law is Article 124 (3): in case of failure to pay up the share in time, the
company may reduce its basic capital by the unpaid amount and withdraw the share in
accordance with Article 186.
Article 19 (1) letter c) of the Second Directive requires that a company may only
acquire those of its shares which have been fully paid up. However, if the acquisition involves
disputes involving minority rights, as is the case in Articles 139 (2), 212 and 223 of the
Company Law, or the failure to pay up a share, as is the case in Article 124 (3), this is not
necessary, because of the exceptions in Article 20 (1), letter d) of the Second Directive. This
is the reason why the requirement to acquire only fully paid up own shares does not appear in
Article 133. It is, however, mentioned in the case of gratuitous transfer in Article 186 (5).

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