Page 161 - Albanian law on entrepreuners and companies - text with with commentary

administration may be either dependent upon a majority shareholder or hold itself the majority
of shares. Minority protection is essential for the willingness of outside investors to invest in
the company. Above all, experience in some transformation countries like Russia has shown
that share prices of companies without minority protection are remarkably low and this in turn
makes the raising of capital extremely expensive, because investors will ask for an excessive
risk premium.

2. Minority protection is particularly important for JSCs whose shares may be sold to the
public. JSCs are explicitly designed to raise investment capital on the capital market so as to
allow even the very small investors to invest their savings directly or indirectly in shares. This
type of company is therefore crucial for the private funding of large investment projects:
many small investments may be pooled so as to finance a large enterprise. Investors therefore
need special protection against abusive behaviour by those who are in control of a JSC. This
is a matter not only for company law but also for capital market law and stock exchange
regulations which are, therefore, a crucial element of a viable system for such companies in
Albania. The intense coordination between the Company Law and the Securities Law is part
of this system.
In the Albanian Company Law, protection of the position of investors (shareholders) is
very much the concern of management’s fiduciary duties. As well as this the management
must be fair between investors (shareholders) as discussed in Comments to Article 14 et seq.
and Article 98. Moreover, the new Law provides the new rules on company groups including
minority shareholders’ rights, Articles 205 to 212. However, there are also other provisions
protecting minorities of shareholders throughout the JSC section of the Company Law.
One of them is Article 139 which provides the right for a minority holding 5% of the
company’s capital (or less, depending on the Statute) to request the Managing Directors in
writing to convene a General Meeting and/or to put certain issues on the agenda. The
minority may convene the meeting and/or set the agenda by itself if its request was not
accepted, Article 139 (1) last sentence. However, the interesting part comes in paragraph 2: if
the minority is prevented by the management from holding the meeting, it may either ask the
court to declare the management in breach of fiduciary duties or require the company to
purchase its shares. It is important to note that these consequences express an alternative: if
the minority wants the management to be sued this is taken as an expression of interest in the
continuation of membership in that company. In this case the option of a share refund is not
open. This solution is intended to make the minority use the legal tools provided by Article
139 (2) responsibly in the interest of the company.
According to the statute, the same minority number may be entitled to appoint a
member of the Board of Directors or Supervisory Board, Article 155 (3). This decision must
be taken during a special meeting in accordance with Article 149 (3).
The same minority (or a number of creditors whose unsatisfied claims against the
company amount to at least 5% of the basic capital) may require the board to perform its
supervisory duties and, in particular, to check the lawfulness of the administration’s work,

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