Page 38 - Albanian law on entrepreuners and companies - text with with commentary

mandatory (this provision excluding members in the General Meeting in deciding on their
performance, etc,). In fact it is very clear this provision is mandatory. Article 91 (2) is flexible
but it is simultaneously mandatory. The flexibility is limited and this is clear. It appears that
they think that the provisions must be either open ended (i.e. the member can decide whatever
they wish) or mandatory, but in fact the Company Law is much more subtle and includes
limiting the flexibility in certain situations.

2. It should also be mentioned that the Business Registration Law and the Company Law
do not violate Article 10 of the First Company Law Directive. In order to avoid defects of
foundation from the beginning, this Article 10 envisages that the foundation agreement or
statute must be publicly notarized if the Member State does not provide for other types of
preventive control. In the case of Albania, it seems sufficient that the NBC must review
applications for registration according to Article 54 of the Business Registration Law. The
fact that NBC “cannot examine the accuracy of the data or the veracity of the documents
attached to the application for registration” also does not conflict with Article 10 First
Directive. If the third party effect of registration is to protect against any irregularities of
foundation and any limitation of authorization to represent a company (Article 21 Business
Registration Law and Article 12 Company Law, below), there is neither a need for detailed
investigation nor for the cumbersome requirement of notarization of documents. However,
this is obviously only true as long as the centralized registration system itself provides for an
authenticity check of applications and documents and for an efficient system of disclosure of
company data. This is provided by the establishment and functions of the NBC (Articles 27
and 54) and of the Securities Registry envisaged by Article 126 of the Law No. “On
Securities”, for the case of listed companies offering securities in the market.

3. The Company Law does not apply any restrictions on company formation. That means
that, for example, a partnership may be formed by other legal persons, like single member
limited liability companies. The result is that no individual assumes personal liability for the
partnership’s debts; the companies involved are liable only to the extent of their assets. Of
course this is also true where there is personal liability of individuals since their liability is
also in effect limited to the extent of their assets. We therefore think that the confirmation of
the ‘no restriction on company formation’ policy is important. The risk that company
formation may be abused (for example, by the creation of ‘pyramids’ of single member
companies and partnerships the interdependence of which often remains completely un-
transparent for other market players) seems relatively irrelevant to us as compared with the
advantage of a ‘lightly but adequately’ regulated investor friendly company law system. The
Company Law gives the courts sufficient means to come to terms with various forms of abuse
(see, for example, Articles 14 to 16 on Fiduciary Duties, Articles 98 and 163 on Directors’
liability; Articles 205 to 212 on Groups of Companies). Moreover, the use of the mentioned
hybrid company forms in other EU Member States was often determined by taxation reasons.

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