Page 57 - Albanian law on entrepreuners and companies - text with with commentary

when commenting on the standards of acting in the best interest of the company and applying
the standard of the skill and care of a ‘reasonable director’ according to Articles 98 and 163.
Article 13 (1) ‘objectivizes’ the fitness standard by referring to unfitness as proved by the fact
that a person was convicted for ‘crimes committed in trade associations’, Articles 163- 70 of
the Albanian Criminal Code.
The consequence Article 13 (1) imposes for such a gross breach of duty and criminal act
is disqualification of that person to take on management, supervising or representative
functions in a company for five years. In the Albanian system, this disqualification has penal
character; it is a ‘supplementary punishment’ according to Article 30 of the Criminal Code.
Article 30 (1) allows the criminal court to inflict supplemental punishments besides the
principal punishment on a person who has committed offences or criminal contravention. The
disqualification of Article 13 (1) is covered of Article 30 (1) and by Article 40 Criminal Code,
the “deprivation of the right to undertake leading positions related to juridical persons”. This
deprivation “is a result of any punishment for criminal acts (…) when the convicted has
abused his authority or has acted in violation of the rules and regulations related to his duty”,
Article 40 (2) Criminal Code.
Article 13 (1) limits this disqualification to last no longer than five years. This provision
complies with Article 40 (2) Criminal Code which allows the court to inflict the
disqualification within a range from one month to five years. That means the court has
sufficient discretion to adapt the supplementary punishment to the seriousness of the breach in
each case. In this respect, Article 30 (2) Criminal Code also establishes for any supplementary
punishment that “in particular cases, when the criminal punishment is deemed to be
inappropriate and when the law provides for imprisonment up to 3 years or other lighter
punishments, the court may decide only for the supplementary sentence.”

3. Article 13 (2) and (3) try to cope with the above-mentioned ‘conflicts of interest’ in the
company. These provisions are a specific expression of managing or supervising directors’
fiduciary duties to always “perform their duties established by law or Statute in good faith in
the best interests of the company as a whole which includes the environmental sustainability
of its operations”, Article 98 (1) and 163 (1). If a director puts himself into a position where
this duty to the company is in conflict with his other interests or the interests of persons
related to him (paragraph 3), he is in peril of being held to be in breach of his duty of good
faith to the company. The rule in question here is a specific expression of the self-dealing rule
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of Article 67 Civil Code. The director truly has the general duty to “avoid actual and
potential conflicts between personal interests and those of the company”, Articles 98 (1) and
163 (1) ç). Some provisions of the Law are designed to avoid similar conflicts, like those on

provisions on revocation of management rights and on expulsion of partners and members for serious breach of duties in
Articles 35 (2), 48 and 102 of the new Company Law.
89 Article 67 Civil Code:
“The representative may not perform legal transactions on behalf of the represented with himself or other others
represented by him, except when the represented has expressly allowed this, or when the substance of the legal
transaction does not adversely affect his interests.”
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