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The Position of the Administrator in Limited Liability Companies in Albanian Legislation: Systematic Analyses

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The Position of the Administrator in Limited Liability Companies in Albanian Legislation: Systematic Analyses The position of the administrator in limited liability companies in Albanian legislation: systematic analyses Assoc. Prof. Dr. Arber GJETA1 1 Department of Law, Faculty of Economy, University of Elbasan“A. Xhuvani” Email: [email protected] ABSTRACT The economic and legislative integration of South-East Europe countries within European Union is one of the most actual issues in the Western Balkan. Despite the differences that affect this process from country to country, business law moves toward unification with the EU acquis. In this paper we aim to investigate the role of the administrator in the limited liability companies according to the Albanian legislation and how the administrator enters in relationship with other organs. According to the Albanian law, in the l.l.c. the administrator is the central position in the everyday operations. The relationship between the company and the administrator is regulated within the law “On Entrepreneur and the Companies” (l. no. 9901/2008). Generally, the position of the administrator is regulated on the first part of the law enumerating his duties and the absence of the conflict of interest. Then in the specific title “Limited Liability Companies” there are various articles that deals with the position of the administrator. We aim through this paper to investigate all his duties and the liability that derives from its legal position in order to see in practice his position of liability toward the company, toward the shareholders and toward the third parties. Keywords: Limited liability companies; administrator/director; duties toward company; liability. 1. The Law no. 9901 of 2008 and its implementation in the Albanian legal system after the Reform of business law. In 1992, after a parenthesis of 50 years, the Albanian legal and political system shifted in a free market driven economic model. In that moment we return to a Romanic model system that firstly was established in Albania during the regime of King Zog I. In a short period, between 1991-1992, Albania changed all the economic and legislative models according to a European model of free market. Thus, regarding to the commercial law we followed the best models that were developed in Europe. In this path, there were approved the so-called “Three Commercial Laws” that intended to regulate not only the new free market system of companies but also, in their spirit and aim, wanted to offer a soft transition from a communist system to a complete new reality. As we stated above there were to many decisions to be taken within a brief period of time. As in regard to the new born market regulation it laid on law no. 7632/1992 “On general part of the Commercial Code”, law no. 7638/1992 “On Companies” and law no. 7512 “For the Regulation and Protection of the Private Property, Free Initiative, Independent Private Undertakings and Privatization”. Systematically, it was clear the intention of the legislator to follow the path of adopting a Commercial Code in order to build an autonomous legislative corpus within the broader civil law. Despite of this starting point, this legislative regulation remained the same with fem amendments until the reform initiated in 2006 and finalized with the adoption of the Law no. 9901/2008 “On Entrepreneur and the Companies”, which constitutes the main reform in the business law in Albania. This process of reform that culminated in 2008 with the adoption of this law is far from being a collection of experiences matured so far (from 1992 until 2006) in Albania. Yet, the new regulation that the law offers, especially when dealing with company law, has no point of continuity with the prior regulation in Albania. Basically the law has the main aim to fully implement the EU acquis in this sector and to encourage and foster the free undertaking in the private sector. The Albanian Government, with the adoption of this law and the law No.9723/2007 “On National Registration Centre”, intended to fulfill its obligation under the article 70 of the Stabilization and Association Agreement between Albania and European Union. It intends to align the Albanian Company Law with the spirit of the EU Directives in the sector. Thus, Albania opted for a non codification of the business law and it does not adopted a Commercial Code. For the interpretation and definition of several legal institutions these laws redirect to their notion under common civil law. In brief, this law that we are taking in consideration is composed by 231 articles divided in X parts when Part I states general provisions that refers and are common to all the other parts and basically deals with registration, constitution, representation, duty of loyalty, employee participation. Then in the following parts the law specifically and exhaustively deals with the forms of general partnerships (Part II), limited partnerships (Part III), limited liability companies (Part IV), Joint-Stock Companies (Part V), Solvent Liquidation (Part VI), groups of companies (Part VII), State owned companies (Part VIII), Company restructuring (Part IX), which applies to both LLC and Joint-stock companies, and transitional and final provisions (Part X)1. This law regulates the Limited Liability companies in part IV from article 68 to article 104 dealing with every aspect of its “physiological” activities from constitution to liquidation in condition of solvency. As we highlighted supra, it remains outside the scope of application of this law the registration of companies which is an administrative procedure to be made in accordance to the law no. 9723/2007. Yet, remains outside the field of this law the procedure of bankruptcy or insolvency procedures that are regulated newly in the Law no. 110/2016 “On bankruptcy”, that has to enter in force in May 2017, but yet lacks for the issue of by-laws. 1 The scope of application of the Law no. 9901/2008 is stated in article 1 according to which “(1) This Law shall regulate the status of entrepreneurs, the founding and managing of companies, the rights and obligations of founders, partners, members, and shareholders, companies’ reorganization and liquidation. Companies are general partnerships, limited partnerships, limited liability companies or joint-stock companies. (2) Entrepreneurs and companies register with the National Registration Centre in accordance to this law and Law No. 9723, dt. 03.05.2007 on the National Registration Centre amended. (3) Entrepreneurs and companies shall keep books, compile and disclose annual accounts and performance reports including verification of authorized auditors in conformity with Law on Accounting and Financial Statements” If this law that we are taking in analysis is far from being considered as a code of provisions that respects the continuity and the tradition of the Albanian legal system it offers a complete and exhaustive regulation on companies. It had been amended only twice in 10 years (in 2011 and 2014) only related to increasing the capital requirements for public joint-stock companies and changes to the procedures of merger and acquisition as stated in part IX2. This law is considered as the core regulation of the companies in Albania. It has to coexist, therefore, with other special legislation that affects business law in general like: the law on foreign investments, on small and medium enterprises or the law on public private partnerships. 2. The position of administrator/director of a L.L.C. under the actual law in force in Albania The LLC are regulated in part IV of the law in an extensive number of articles (art. 68-104) as a recognized form of exercising business activity and fully aligned with the acquis3. If we analyze the framework of regulation of LLC (Sh.P.K.) in these articles there are general provisions and articles on the creation of the companies, the nature and the division of the share among shareholders and their transfer, the relationship between company and shareholders, the organs and the ending, withdrawal or expulsion of the shareholders. The definition of a LLC is found in article 68 point 1 which states that “A limited liability company is a company founded by natural or juridical persons who are not liable for the company’s commitments and which personally bear losses only to the extent of any unpaid parts of stipulated contributions. Members' contributions constitute the company's basic capital” and that relation between shareholders are regulated according to their free will, with contribution in money or in kind. As in regard to the legal relationship between company and shareholders the law fixes that they are entitled to share profit but the company interests are separated from the interests of the single shareholders. They exercise the rights that the share reserve to them in the General assembly, when they are entitled to pursue their highest interest and the company interest voting according to the majority rules. So in the companies the interest of the single shareholder may not always meet the general interest of the company. Therefore, the shareholders (the ownership) exercise their administrative and financial rights according to this law, pursuing in first the highest interest of the company according to the majority rule for voting in the Assembly. Thus, according to the letter of the law, the main relationship between shareholders and the company is exercised through the participation in the Assembly. In practice, this relationship is very different due to the fact that in Albania there is a direct relation between the shareholders and the managing organs of the companies. Often, the will of the main shareholders is not canalized within the General Assembly meetings but the shareholders maintain administrative duties and bypass the Assembly, even formally. 2 Law no. 10475/2011 and law no. 129/2014 3 LLC are the most common organization among businesses.
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