Page 217 - Albanian law on entrepreuners and companies - text with with commentary

contract establishing, for example, the transformation of a JSC into a LLC would require the
transfer of each single piece of property including real estate from the old company to the
new. The reserves of the old company would need to be transformed into cash and taxed; not
to mention other transfer costs for land registration, notaries, etc. The company would be
obliged to go through a dissolution procedure which would entail very significant costs and
prevent the continuity of business.
The restructuring provisions of the new Law (Articles 214 to 229) are in line with the
Third Directive 78/885/EEC and the Sixth Directive 82/891/EEC and loosely follow the
organization of the German Restructuring Law of 1994. 214 The Cross-Border Mergers
Directive and the new Albanian Law on Cross-border Mergers also used these similar
provisions. They apply, however, notable simplifications: first, the restructuring provisions
only apply to LLCs and JSCs, Title of Part IX and Article 214 (2). There is no reason why the
complex restructuring procedure should apply to partnerships as they can agree to merge with
another partnership (or divide respectively) by agreement. Further, transformation into an
LLC will now be extremely easy due to the simplified registration process and the (virtual)
absence of any capital requirement. If they wish to adopt the provisions of Part IX, that would
be a matter for the partners to decide. Second, the new Law does not include the whole
merger and division variety that some Member State Laws provide. It did not seem reasonable
to Albanian law-makers to overload the new Law with a complexity which does not reflect
the present status of the Albanian business environment. Instead, the creation of new
companies, above all of LLCs, was notably simplified by the new Company Law and the
NRC Law. The policy decision went therefore towards a clear-cut structure that would
improve the old legal set up of Articles 243 et seq. of Law No. 7638 and towards reasonable
simplification in compliance with the Third and Sixth Directive.

2. Art. 214 (1) envisages a complete set of procedures for the restructuring of LLCs and
JSCs by merger, Articles 215 to 226, division, Article 227, or transformation, Articles 228
and 229. Restructuring mainly creates four legal problems that the law should adequately
solve:

 The protection of members or shareholders of the companies involved in the
restructuring. Members or shareholders of the company to be acquired or divided
have to accept an exchange of shares. Therefore an adequate share exchange ratio
must be guaranteed. The exchange, however, has also effects on the old members or
shareholders of the acquiring or recipient company: if compensation by shares of
the acquiring or recipient company is too high, this results de facto in a ‘subsidy’
which the old members or shareholders ‘grant’ the new ones. Members or
shareholders who are opposed to the restructuring, must get the chance to have the

214 Provisions on division were introduced into the German system only in 1991 after unification with the former German
Democratic Republic; see ‘Law on Division of Enterprises Managed by the Treuhandanstalt’. All forms of restructuring
were integrated by the ‘Restructuring Law’ of 1994.
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