Page 208 - Albanian law on entrepreuners and companies - text with with commentary

another (third) company. Albanian law-makers refrained from adopting this approach and
opted for a clear-cut rule which is also entirely practical: as regards companies (General and
Limited Partnerships, LLCs and JSCs, Article 3), it is taken for granted that such outside
interests exist. As regards individuals and entrepreneurs in present Albania, the Law takes for
granted that their outside interest is usually not strong enough to require the Law of Groups to
be applied. The latter also applies to simple partnerships which could still be ‘parents’ in a
control group exercising de facto control even when barred from being legal persons and
therefore members or shareholders. Also in this case, the Law considers the possibility of
using them for group building too remote as to subject them to the group rules. Furthermore,
the provisions on General Partnerships have become much clearer and simpler to apply so that
it is more likely that the General Partnership form is used for any ‘holdings’ (see below). Last
not least, the above-mentioned general rules are considered sufficient to cope with any case of
abuse.
However, one cannot exclude that courts apply the group rules to individuals,
entrepreneurs and simple partnerships accordingly also in cases not envisaged by the Law if it
becomes evident that these legal forms are used to avoid the application of the group
regulations while the group setting envisaged by the Law is created; and if the general
fiduciary duties and those required from the management are considered insufficient to cope
with the typical group constellations. The establishment of an unwritten law for LLC groups
by the Federal Court is a good example that such an extension of application can easily
happen. In this respect, Comments on Article 14 should be taken into account. Two ‘written
extensions’ can be found though in the Company Law itself: Article 206 applies the
information requirement regarding share ownership to ‘persons’. That would also include
individuals and entrepreneurs. Article 213 applies the Law of Groups also to public
authorities which may become a major shareholder in private companies. Obviously, the
(economic) power of the state is recognized here as a potential conflict of interests which
should be ‘monitored’ by the Law of Groups. See Comments to Article 213.

5. That brings us finally to an aspect of groups which came up during the consultation
process while the Law was drafted. Some participants in this process expressed the opinion
that the old Law No. 7638 had not covered ‘holdings’ and that the new Law of Groups should
now definitely and adequately regulate this phenomenon. However, the meaning of those
‘holdings’ was controversial. We would like to present here the following distinctions:
First of all, Articles 207 to 211 certainly deal with ‘holding’ companies in the wider
sense, i.e. with companies holding large shares in other companies. Articles 207 to 211
reflect the various aspects of the European, American and international debate on those
groups of companies.
However, it does not matter, how the company which is acting as a ‘parent’ is formed
and organized. The parent can, for example, be a partnership founded by two companies that
join the shares they hold in a ‘subsidiary’ and decide to administer these shares, and
therefore the subsidiary, through the partnership jointly. This is the classical form of a

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