This update examines two of the 33 proposed amendments contained in the final draft of amendments to the Commercial Law.

Share capital

The first amendment concerns the share capital of a limited liability company – the most commonly used legal form of company in Albania. According to the proposed amendment, the share capital of a limited liability company must be divided between the shareholders in a number of shares equal to the number of shareholders, and each shareholder shall own only one share of the company, representing part of the share capital in proportion to the value of its contribution.

This amendment is welcome as it aims to prevent any misinterpretation of the provisions of the law. In actuality, it makes little difference, given that the definition of 'share capital' is in fact broader than the existing formulation. According to the background documents circulated among participants, the aim of the amendment is to clarify the term 'share capital'. Pursuant to Article 68(2) of the Commercial Law, each shareholder owns its share in the company in proportion to its contribution to the share capital. The article further provides that the share capital of the company is divided proportionally into shares between the shareholders.

Confusion will most likely arise due to the structure of other articles of the Commercial Law - especially Article 88, which determines voting rights (also to be reformulated according to the proposed draft). Article 88(1) establishes that "unless otherwise provided in the bylaws, each share entitles to one vote". The formulation of the paragraph gives rise to misinterpretation, by which a single shareholder of a company might own more than one share depending on its contribution to the share capital.

Company dissolution

The second amendment relates to Article 99, on the dissolution of a limited liability company. Article 99(1)(c) is intended to read:

"(1) The limited liability company shall dissolve: c) if its object becomes unachievable due to continued failure of functioning of company bodies, or for other grounds that make the continuation of the activity absolutely impossible".

The dissolution of a company in this case is effected by decision of the shareholders' assembly; if the assembly fails to take appropriate measures, an interested party may address the court.

No specific provision is contained in the Commercial Law regulating this issue. To date, in order to overcome the issue, one must seek application of Article 99(d), which provides that a company shall be dissolved by way of court decision.

For further information please contact Ened Topi at Boga & Associates by telephone (+355 4225 1050), fax (+355 4225 1055) or email (etopi@bogalaw.com).