Page 54 - Albanian law on entrepreuners and companies - text with with commentary

Directive is, inter alia, the protection of third parties, the ECJ held that the provision disabling
the representative where a conflict of interest arose, was valid, even if the third party was
adversely affected. The rationale of this decision is that in case an ‘outside’ legal rule
changes the governance structure of the company by adding decision-making structures, the
latter prevail due to the recognition of other legal interests considered prior to those of
company organs and third parties involved (in this case: the transparency of economic
interactions). We will come back to this formula of opening companies’ governance structure
when treating fiduciary duties, the involvement of employees and the corporate governance
structure itself.

4. Third parties are also protected in case of irregularity of appointments of the
representative. Article 12 (4) transposes here Article 8 of the First Directive. The company is
bound, if, for example, appointment procedures have not been correctly followed. Irregularity
of appointment is, however, only one aspect of the more general situation that apparent
representatives deal with third parties. In Civil Law countries, rules for such cases can usually
be found in Civil Codes, or they have been developed by jurisprudence if the Civil Code had
no provisions in this respect, as was the case in Germany.

There is no sign of such rules in the Albanian Civil Code. Article 78 of the Civil Code
treats the situation when the representative acts without any authorization, not even an
apparent one. However, (at least the translation of) this Article is contradictory and requires
amendment. The general rule that Albanian courts may want to apply is the following: A
person who permits another to repeatedly act as his representative in a way that leads third
parties to trust in the existence of authorization shall be treated as if s/he had authorized the
apparent representative unless the third party knew of the lack of authorization or could not,
in view of the circumstances, have been unaware of it.

Article 13
Conflict of Interests and Related Persons
(1) Persons who have been convicted of crimes committed in the course of their
duties to the company as of Chapter III of the Special Part of the Criminal Code, may
not, for up to five years after conviction, carry out the functions of legal representatives,
members of the Board of Directors or the Supervisory Board, and of representatives of
shareholders at the General Meeting.
(2) A person authorized to represent or to supervise the company may not enter
into contracts or into other relationship with the company unless, after disclosure of the
terms of the transaction and the nature and scope of the interests of the person, they are
approved:
a) by all the other partners in case of a partnership;
b) by all the members or all other members in case of limited liability companies;
c) by the Board of Directors or Supervisory Board in case of Managing Directors
of joint-stock companies;

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