Page 58 - Albanian law on entrepreuners and companies - text with with commentary

limitation of functions that the same person may hold in various companies, Articles 96 (2),
156, 158 (2). However, as Article 67 Civil Code also shows, the self-dealing rule is by no
means absolute: the company will be ready to approve acts which will ‘breach’ the general
rule, provided there has been sufficient disclosure, the directors are apparently acting honestly
or the transaction is advantageous for the company. As Article 13 (2) requires that the director
“may not enter” the transaction “unless they are approved”, the approval must be gained
before the transaction is concluded.
This is also confirmed by Articles 98 (1) and 163 (1) No. 5 which list among directors’
duties a requirement to “ensure that approval is given where contracts described in paragraph
3 of Art. 13 are concluded”. The approval may, however, also be generalized and given in
advance of any action by directors, Article 13 (2), last sentence. It is important to note though
that such a generalized approval must explicitly be registered with the NBC in order to be
valid. Also, the approval can only be granted after the terms of the transaction and the nature
and scope of the interests of the person involved have been disclosed, Article 13 (2) letters a)
to ç). During a review in 2012 of the Company Law a number of issues concerning Article 13
were aired including this definition of ‘independence’ for directors. Eventually it was decided
that there would not be an amendment because of the difficulties of defining ‘independence’
which is used in some Articles (Articles 13 and 155, 158 etc.).
This is a very difficult term to define because of the facts of each case which will be
complicated. Because of this it is very difficult to define in the Law. To clarify the term some
proposed solutions are to draft extensive guidelines in the Corporate Governance Code and
adapt the Statutes, perhaps using the Model Statutes. This could be done quickly because
there are a number of Corporate Governance Codes in existence in the region as well as the
Albanian Company Governance Code and the Model Statutes. This Commentary suggests
using part of the UK’s guidelines on independence: “whether the director is independent in
character and judgment and whether there are relationships or circumstances which are likely
to affect, or could appear to affect, the director's judgment”.

4. Article 13 (3) extends the definition of the conflict of interest to so-called ‘related
persons’ whom the representative or supervisor has a personal or financial interest in. The
approval requirement of paragraph 1 also applies in case of company transactions with such
persons which are carried out or supervised by the representative or supervisor. Also they may
not vote on the approval and do not count in any quorum required for the decision, Article 13
(4).

5. Paragraph (5) of Article 13 of the Company Law was amended in 2014 to improve
Albania’s ranking in the World Bank, Doing Business Report under the Investment Protection
component, since it provides that, in the case of joint-stock companies, any agreements
requiring approval pursuant to Article 13 of Law No. 9901 must be communicated to the
shareholders as soon as possible but not later than 72 hours from the approval of the
agreement by the Board of Directors or the Supervisory Board. In case shareholders have
good reasons to believe that the approval was given abusively, i.e. in serious breach of the law

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