Page 204 - Albanian law on entrepreuners and companies - text with with commentary

dominant influence and control are mediated by a shareholding relation (and
177
contract). The Albanian approach accepts that one of the most important factors
defining the existence of a significant relationship between companies is the flow of
money rather than the share structure, and therefore uses a dominance concept
without referring to significant ownership and voting powers. 178 Such economic
dominance in decision-making may lead to an application which also includes
relationships such as franchising or other kinds of supply or distribution,
outsourcing of certain enterprise functions or quality-assurance systems which ‘at
the surface’ are using the contractual instrument, but ‘in reality’ build organizations
which may be treated according to group parameters. 179

On the other hand, the approach applied by the Law No. 9901 is more restrictive
than the German concept because it is not enough that the possibility of control
based on shareholdings, agreements or a de facto impact exists. The control must
actually be realized by concrete “directions or instructions” which are not only
carried out in one or a few single cases but require some degree of repetition: the
subsidiary must be ‘accustomed’ or used to act in compliance with them. This
appears to be a generalization of the German de facto group rule which requires that
single instructions may be given in case any disadvantages created by them for the
subsidiary are compensated within one year, paragraph 311 et seq. German Law on
Shares (Aktiengesetz). In this context, a ‘right’ of the parent to give instructions and
to manage the group ‘in a unified manner’ is not recognized. Such a right is only
conferred on those parents who conclude group contracts with their subsidiaries,
paragraphs 291 et seq. German Law on Shares. Only in this case, German Law
applies the legal consequences which the Albanian Company Law reserves to
control groups in Article 208: compensation of annual losses, shareholders sell-out
right, creditors’ right to claim security. In other words and from a German
viewpoint, the Albanian approach avoids the practical disadvantages of the German
system and tries to realize its advantages: continuous de facto control is allowed,
whatever it is based on, and leads to legal consequences (compensation of annual
losses, shareholders sell-out right, creditors’ right to claim security) which German
Law reserves for contractual relations. 180 The reason for this legal treatment is

177 See U. Eisenhardt, footnote 73, p. 482 et seq.
178 See also J. Dine, M. Blecher and M. Koutsias, footnote 12, p.181.
179 Bachner, Schuster and Winner, “Critique of the Legal Capital Concept” in The New Albanian Company Law, 2009, p.
103 consider that the Group provisions (207-2212) while aiming to limit potential conflicts of interests between
companies in a group “overshoot the target and practical render the concept of groups unworkable”. This comment
clearly shows a lack of understanding of the power of multinational companies and the damage that they wreak in the
environment, in labour violations and even in violations of Human Rights.
180 For many years, the German Federal Court applied these legal consequences for LLC groups which written German
Law does not cover. The Federal Court applied JSC law on contractual groups accordingly, i.e. it recognized the parent’s
right to exercise control power and the obligations we mention above in the text. However, in the meantime, the Federal
Court has changed its jurisprudence. The Court now applies an approach based on fiduciary duties similar to the one
used by the Albanian Law for the second type of company groups. See in this respect, U. Eisenhardt, footnote 73, p. 495
et seq., and Volume 149, collection of the jurisprudence of the Federal Court, p. 10 et seq., ‘Bremer Vulkan’ (BGHZ
203