Page 206 - Albanian law on entrepreuners and companies - text with with commentary

 the fiduciary duty to take into account the interests of the company group as a
whole;
 the fiduciary duty to take account of the interests of the subsidiary.

As regards breach of duty here, Article 209 (2) establishes that the parent’s
representative shall be in breach if no independent directors of the subsidiary
company could have reached the decision that was made. This standard allows the
court to consider all the aspects of a business decision. For example, an independent
director would probably recognize the advantages of a group decision even if it may
cause disadvantages for the moment. In the group context, the subsidiary’s directors
cannot but respect their company’s embeddedness into the group if this is beneficial
for the subsidiary. The interest of the subsidiary (paragraph 3 of Article 209) may
therefore change in the context of the interest of the group in so far as the subsidiary
gains a particular status in the group and sees its interest and benefits connected to
the one of the group as a whole. This must be recognized when defining for each
specific case what an independent director would (never) have done.

The consequences for breach of duty of both the parent’s and the subsidiary’s
‘administration’ (i.e. Managing Directors and, in some cases, Boards of Directors or
Supervisory Boards) are provided by Article 210. The right to derivative action is
provided by Article 211. Finally, if the parent company holds 90% or more of the
subsidiary’s shares, the holders of the remaining shares have the right to require the
parent within six months to buy their securities at market price, Article 212. Even
without being subjected to the parent’s instructions, the possible ‘totality of outside
influence’ represented by such a majority share may be reason enough for a
shareholder to request the sell-out. This sell-out right is more advantageous than the
one envisaged by the European Takeover Directive 2004/25/EC: shareholders have
the right to sell out at any moment, not just at the moment when control has been
acquired.

The aforementioned Comments show that the flexible rules on equity groups are
supposed to promote groups which guarantee a balance between the interest of the network
and the interest of a single company in this network by maintaining considerable
independence in their subsidiaries without subjecting them to continuous instructions or
exercising harmful influence in a single case. The application of the triple set of fiduciary
duties lead to a concept of ‘good governance of the group’ which applies organization and
liability standards of the single company accordingly to group management. We recall the
standards we discussed for directors’ duties (Comments to Article 98.): they are now applied
in the context of the group ‘network’: the directors of the parent are liable for ‘organizational
mismanagement’ if, when setting the group up and running it, they fail to consider properly
both, the ‘interests of the whole’ and the ‘whole of the interests’. Failure to address those

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