The government has released for public consultation a draft law on Commercial Companies, introducing changes that address several loopholes in the current legislation while strengthening the integrity of management bodies and enhancing financial transparency.
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Under the current law, individuals convicted of certain criminal offenses in Albania are prohibited from serving in executive functions such as administrator or board member. However, the legislation does not cover cases of convictions abroad for similar offenses, nor does it address situations where an individual is banned from exercising a profession in another country.
This gap has allowed individuals convicted in EU countries for fraud, corruption, or other serious crimes to continue holding executive positions in Albanian companies. The draft law corrects this omission by expanding the criteria for disqualification and introducing the creation of a public register of individuals barred from company administration.
The existing legal framework also lacks a clear obligation to return profits distributed in violation of financial requirements, leaving shareholder liability ambiguous. The proposed changes stipulate that unlawfully distributed profits must be returned and that shareholders will bear responsibility for such breaches. This aims to protect company capital and safeguard the interests of creditors.
Another gap in the current legislation is the absence of detailed provisions regarding the handling of a company’s own shares, such as the creation of special reserves or detailed reporting, as well as the lack of an explicit prohibition on financial assistance (loans or guarantees) for the purchase of its own shares. These omissions have created opportunities for abuse, including the concealment of share buybacks through complex transactions or using such shares as collateral for third-party loans. The draft law sets clear restrictions, banning practices that undermine transparency and financial stability.
For the first time, the law introduces a specific provision allowing the annulment of a company merger in cases of procedural or legal violations. This measure aims to ensure legal certainty by setting clear time limits and avoiding uncertainty in subsequent transactions.
By aligning with EU rules, the draft law will facilitate the operation of Albanian businesses in other European markets and remove legal and procedural barriers. Foreign investors will benefit from a more predictable business environment, while new measures such as electronic branch registration, simplified reporting, and clarified financial rules are expected to encourage entrepreneurship and innovation.
The proposed changes—covering the integrity of administrators, profit distribution, handling of own shares, and financial transparency—seek to strengthen governance standards and increase the accountability of management bodies to both shareholders and creditors.
According to the government, this draft law lays a solid foundation for the transposition of future EU directives, including those related to gender equality in management bodies and fiscal transparency.