Forms of Enterprises
Table of Contents
Foreign investors can do business in Albania by setting up either a new company fully owned by a parent company or a subsidiary/branch fully owned by the parent company or a representative office, or by acquiring shares in an existing company.
Investors may also form a partnership to do business in Albania. Partnership is also used as the main legal ground for forming unincorporated joint ventures. A person (regardless whether an individual or a legal entity) may participate as a shareholder/partner in more than one company.
Foreign nationals are entitled to take up economic activities in Albania as self-employed persons, and to set up undertakings, in particular companies, which they effectively control. Foreign companies can also do business in Albania through setting up subsidiaries and branches. Laws that govern trade and commerce in Albania are: Law on Entrepreneurs and Commercial Companies (which provides a comprehensive code of company law) and the Civil Code. Under Albanian law, foreign persons can use the following forms of commercial business organization:
- Sole trader
- General partnership
- Limited liability partnership
- Limited liability company
- Joint stock company
Entrepreneurs (sole traders)
An entrepreneur is a natural person whose independent economic activities require an ordinary business organization. The entrepreneur should register with the commercial register within 15 days from the commencement of his/her activities. For the initial registration, the entrepreneur should submit the following data:
- identification data
- place of economic activity
- area of activity, if defined
- signature specimen
The commercial registration in this case does not infer the establishment of a separate legal entity. The person, sole trader, preserves his/her status as individual, natural person, but adds up the ability of a trader, i.e. to be party to commercial relations.
Companies are founded by two or more persons, who agree on achieving joint economic objectives through contributions defined by the Statute. Limited liability companies and joint stock companies may also be formed by one person only (single-member company). The new Law requires only one document for company formation and constitution – the written Statute. The minimum requirements of the Statute are the same as those data necessary for the registration of the company with the NRC, i.e. name, company form, date of incorporation, identification data of founders, seat, object (if determined), duration (if determined), identification data of the persons responsible for administration and representation, the representation competences and the terms of their office, specimen of signature of the representatives.
A company is a general partnership if it is registered as such, conducts its business under a common name and the liability of partners towards creditors is unlimited.
A partnership is a limited partnership, if at least one partner’s liability is limited to the amount of his interest (limited partner), while the liability of other partners is not limited (general partners). General partners have the status of partners in a general partnership.
Limited Liability Companies (Shpk)
A Limited Liability Company is a company founded by natural or legal persons who’s liability for obligations undertaken by the company is limited to their contribution in the subscribed capital of the company. Each member acquires his/her share in the company in proportion to his/her contribution. The subscribed capital is divided between members accordingly. Limited Liability Companies may not offer their shares to the public. The basic capital of a Limited Liability Company is fixed to ALL 100.
Joint Stock Companies (Sha)
Sha are typically designed for large enterprises which satisfy their financial needs by offering shares to the public. A Sha is a company the basic capital of which is divided into shares and subscribed by the founders (natural or legal persons), which are not liable for the company’s commitments and which personally bear losses only to the extent of their contribution to the subscribed capital. The set up of a Sha should be resolved by a Meeting of the Founding Shareholders at which the subscription of shares in the capital and adoption of the Statute take place. The newly incorporated company comes to live after its registration in the Commercial Register. The basic capital of a Sha with private offering may not be less than ALL 3.500.000. The basic capital of a Sha with public offering may not be less than ALL 10.000.000. At least one-fourth of the nominal amount of the shares for contributions in cash must be paid up before registration. The remaining amount is paid in one or more installments, in accordance with the decision of the Board of Directors. The Sha is the only legal entity under Albanian law that is allowed to issue bonds.