Page 220 - Albanian law on entrepreuners and companies - text with with commentary

The management and supervisory organs and licensed experts of all companies
taking part in the merger are jointly and severally liable for any damage caused to members
or shareholders and the creditors by the merger, Article 224. It is important to note that this
liability is established ‘as against the members or shareholders’. This is an exception from
the usual liability rule, for example of Article 98 (3) and 163 (3), which establishes liability of
the management as against the company. Article 224 aims, above all, at the situation that the
share exchange ratio has been wrongly computed to the disadvantage of the members or
shareholders of the acquired company. In this case, there is indeed no damage of the acquired
company itself but only of its members or shareholders.
Article 225 provides special rules in case of mergers taking place inside of a group of
companies. If the acquiring parent company holds at least 90% of the company to be acquired,
a General Meeting of the acquiring parent company is only necessary if at least 5% of the
remaining members or shareholders so request. Moreover, Article 225 (2) establishes that, if
all shares of a subsidiary belong to the parent company, the acquiring company does not need
to comply with the rules on merger reports, on examination by licensed experts, on exchange
of shares and on liability of managers.

4. Divisions: At first sight, division of companies seems to be the mirror image of
mergers. While mergers unite assets, division split property. Therefore, division is the
adequate legal instrument to split up huge companies. On the other hand, the similarity to
mergers cannot be denied, since also in the case of divisions the entire assets of the company
being divided are transferred, shares exchanged and the company being divided ceases to
exist. The cross-reference to mergers approach applied by the new Company Law for
divisions is, therefore, adequate. It follows the Sixth Directive 82/891/EEC precisely and is
therefore consistent with it.
The difference from mergers lies only in the fact that the assets of the company in
question are divided according to a division agreement and received by at least two existing
or newly founded companies; in other words, an undivided transfer uno actu to another
company is not possible. For members or shareholders, creditors, and employees, this
difference is certainly irrelevant: their interests are concerned are in dividing the assets fairly
rather than worrying about the exact structure of the transfer.
The only case of division which the Law provides is an company being divided by
transferring its assets to two or more existing or new companies by decision of the General
Meeting, in which case the company being divided shall cease to exist, Article 227 (1) and
216
(4).
The legal effects of the division are the same as in the merger case, Article 227 (4)
(‘automatic’ transfer of assets, share exchange, end of the divided company). However, as the
assets of the divided company are received by at least two companies, several modalities of

216 There are no provisions on divisions where the company being divided keeps parts of its assets and its members or
shareholders and therefore continues to exist. In this case, these members or shareholders do not exchange their shares;
instead, they receive additionally shares of the recipient company. See above Comments with respect to the legal policy
decision taken here by Albanian law-makers.
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