The Council of Ministers has introduced a new draft law to Parliament on amendments to the Law on Entrepreneurs and Companies (9901, April 14 2008).

The draft law introduces the option for administrators to resign and the relevant procedures. The proposed amendment is a novelty since the Law on Entrepreneurs and Companies does not set out specific rules on the resignation of administrators. Although companies may include such rules in their articles of association or internal regulations governing the functioning of the management body, this is not common practice. Thus, by such amendment, the government aims to fill a gap that has led to debate and practical problems.

The proposed amendment provides that if an administrator or member of the management or supervisory board intends to resign from his or her post, he or she must give written notice to the general assembly. The amendment requires the resigning administrator or board member to convene the general assembly in order to appoint a new administrator or board member before the date on which such resignation becomes effective. In this way, the company will not be left without management.

Should the general assembly fail to agree on the appointment of the new administrator or board member at the meeting convened by the resigning person, he or she must submit the written notice of resignation, along with the copy of the notice for the general assembly meeting, to the National Registration Centre (the entity in charge of filing corporate acts), which will record the resignation.

These rules will apply to administrators of limited liability companies and members of the management or supervisory board of a joint stock company. An administrator of a joint stock company shall provide his or her resignation letter to the management or supervisory board. In the written notice the resigning administrator should specify a date on which the resignation will become effective, in light of the company's activity. Even in such cases, the resigning administrator will have the right to file the resignation with the National Registration Centre if the management board does not agree on the appointment of a new administrator before the date on which the resignation becomes effective.

In any case, the resignation of the administrator or a member of the management or supervisory board will not affect the company's right to claim damages for a breach of fiduciary duties by the resigned administrator or member.

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

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