Page 65 - Albanian law on entrepreuners and companies - text with with commentary

example to shift losses and create the image of ‘solvency.’ Shareholders and managers
responsible for the creation of such companies may be directly liable. Another set of cases
regards company assets used by managers as their own assets; finally cases of extreme
(fraudulent) undercapitalization.

3. As these examples show, piercing-the-veil standards have been developed by
jurisprudence in the various legal systems (US, UK, Germany, etc.) in order to cover a ‘gap’
not otherwise covered by special liability provisions. This jurisprudence agrees that legal
personality and limited liability should not be set aside easily. Where existing provisions can
cover such abusive action, the general clause of ‘abuse of legal form’ is not necessary. The
new Company Law is, on the one hand, well equipped with provisions regarding duties and
liabilities of managers and (majority) members/shareholders towards (other) members/
shareholders and creditors. The new Law protects members/shareholders and creditors by
fiduciary duties of members and managers (Article 14); by the special fiduciary duties and
liability standards of Articles 98 and 163, in particular against trading in spite of pending
insolvency (paragraphs (4) of Article 98 and 163); by claims for annulment of decisions in
case of serious breach of law or statute (Articles 91 and 151); and, last but definitely not least,
by the new law of groups provisions in Article 206 to 212 which aim at the liability of parents
towards subsidiaries and their shareholders and creditors.

4. Albanian Civil and Company Law even has a basic rule against ‘undercapitalization’. It
can be found in the second sentence of Article 1076 Civil Code on simple partnerships: the
contribution must “reach an amount necessary for achieving the partnership’s objective”. We
think that the final part of the sentence “unless otherwise provided by the contract” only refers
to the quota of contribution which can be other than equal, not to the sufficiency of the
amount, as this particular part of the provision would otherwise not make sense. In other
words, the rule to contribute sufficient capital to make the company work can only be
mandatory. Due to the basic function that Civil Code rules on simple partnerships have for the
Company Law, this basic rule also applies to the companies of the new Company Law. The
rule highlights the fiduciary duty of founders, but also of future managing partners and
members and of (managing) directors not to send a company on the market unless it
possesses sufficient financial resources to run its particular business and to be able to pay its
creditors. However, the application of this basic rule must always take the specific capital
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maintenance model of the company and its actual situation into account. The requirement of
adequate capital is quite separate from the formal requirement of registration of an LLC with
only a capital of 100 Lekë. This makes sure that the company can be formed with the
minimum of bureaucracy. When the company actually commences its operations those taking
part must ensure that it has enough money to be able to pay its debts as they fall due.
Otherwise it will be in a position of insolvency and there will be liability both under the Civil
Code Rules and under paragraphs (4) of Article 98 and 163 of the Company Law. With

94 Bachner, Schuster and Winner, “Critique of the Legal Capital Concept” in The New Albanian Company Law, 2009, p.
63.
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