Page 207 - Albanian law on entrepreuners and companies - text with with commentary

interests on the group level, for example failure to consult employees concerning group
restructuring, would thus become a breach of (‘network’) duty.

4. However, the new approach to groups introduced by the new Albanian Company Law
has also some limits which derive from a careful balance of all interests involved. The Law of
Groups must not be so rigid as to frighten off (foreign) investors. Group building may bring
advantages to the local economic environment. Law should not penalize it but rather provide
disclosure and avoid negative internal and external effects. It therefore cannot be excluded
that a serious impact of one company on another occurs without exercising the control
envisaged by Article 207 (1) or having a controlling share (in voting) in accordance with
Article 207 (2). This does not mean though that the subsidiary and its members or
shareholders and creditors are without any protection. In case of damages caused by such a
(false) ‘parent’ to the (false) ‘subsidiary’, compensation claims may be based on breach of the
general fiduciary duties among members or shareholders of the ‘subsidiary’ (Articles 14 to
18), on breach of duty of the ‘subsidiary’s’ managers, or on general Civil Code Law on
contracts and torts. Members, shareholders and creditors may exercise the rights provided by
Articles 91-94 and 150 to 153.
Another limit derives from the fact that, due to its attempt to find the right balance for
the present Albanian economic system, the new Law of Groups only applies to companies; it
does not apply to simple partnerships and to individuals including entrepreneurs. The Law
follows its predecessor Law No. 7638 in this respect (see Article 217 of Law No. 7638). This
is, on the one hand, a notable restriction as both a single individual or entrepreneur may
possess enough economic means and power to dominate the management of a company, and
also simple partnerships could be used to do so. However, it seems that simple partnerships in
Albania cannot be members or shareholders in another company as they are not investing
‘persons’: even by registering they do not obtain legal personality (see above Comments on
182
Article 22); and for an individual or entrepreneur who is a significant shareholder (and
manager) or ‘holds’ a significant share through others (see paragraph 3 of Article 207), the
aforementioned fiduciary duties and general Civil Code rules also apply.
The scope of these restrictions becomes clearer if we take another aspect of group
regulations into account which has been discussed in those legal systems where individuals,
entrepreneurs and simple partnerships may be ‘parents’, like in Germany. It is widely
accepted by the Federal Court and by legal doctrine that a ‘person’ (individual, entrepreneur,
simple partnership or company) can only be a ‘parent’ if it holds a significant shareholding
and has other business interests outside the ‘subsidiary’ which give sufficient reason to expect
the ‘subsidiary’s’ interests to be harmed in favour of those outside interests. In other words,
even a company which has a significant shareholding in another company does not become its
‘parent’ with the consequences envisaged by the law of groups, if no conflicts of interests are
involved which derive from the fact that it runs a business itself or has a shareholding in

182 In the German system, a simple partnership can be member in another organization. This is due to its semi-
autonomous status which allows it to have rights and obligations. See U. Eisenhardt, footnote 73, p. 50 et seq.
206