August 22 2011
Despite recent reforms to the Company Law (9901/2008), which regulates commercial companies, some aspects of the law still need to be developed by doctrine and jurisprudence. According to the Company Law, in limited liability companies a general meeting of shareholders is convened by the administrator or, in specific cases as indicated by the law, it may be convened by the shareholders.
In order to protect minority shareholders' rights, the Company Law provides that shareholders holding at least 5% of the total voting rights (or less if indicated in the bylaws) may, on written request to the administrator, ask that the general meeting be convened or that specific issues be included in the next meeting's agenda. Refusal of the request by the administrator entitles the shareholders to convene the general meeting and discuss the proposed agenda. In addition, failure of the administrator to accommodate the minority shareholders' request within 15 days entitles them to file suit with the court for breach of fiduciary duties, and to ask the company to acquire their participation in the share capital.
The Company Law contains no provisions regarding the situation where the administrator can no longer perform his or her duties, in particular due to death or disability. Given that the mechanism for convening the general meeting pertains exclusively to the administrator, failure or refusal by the latter to convene the meeting causes an 'administrative gap' that might affect the company's business activity, given that no new administrator may be appointed for as long as the meeting of shareholders does not take place.
In these circumstances, in the absence of an interpretation by the Albanian courts, in order to resolve the impasse created, the adoption of the mechanisms provided by the Company Law becomes necessary. As a first option, reference should be made to the mechanism in Article 83(2) of the Company Law, which provides that resolutions of the shareholders' meeting are valid even if the procedures for convening the meeting are not observed, provided that all shareholders agree to adopt the resolutions despite the irregularity.
Although notification of the shareholders' meeting is part of the duties of the administrator, the shareholders can move forward by meeting and agreeing on the adoption of the resolution to appoint a new administrator. In practice, this action will present no difficulties, given that in Albania limited liability companies do not usually have numerous shareholders.
The other option is that minority shareholders (ie, 5% or less) can act as if their request to convene the meeting was refused by the administrator, and go ahead with convening the meeting and adopting resolutions on the appointment of a new administrator. Hypothetically this strategy could be challenged before the courts by any interested party, given that in order to proceed with convening the meeting by minority shareholders, the administrator's refusal is required.
The procedure for convening the shareholders' meeting remains unclear if not all of the shareholders agree to meet and to resolve on the appointment of a new administrator. If the administrator fails to convene the meeting within 15 days of their request, the shareholders can file a lawsuit for breach of fiduciary duties pertaining to the administrator and revocation of its powers.
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