23-04-2013

Share Transfer Deals

Authors

  • Enyal Shuke, Αttorney at Law
    Partner at SHUKE Law Office

Joint Stock Companies shares

Types of shares

According the Albanian Law on Commercial Companies No. 9901/2008 (Company Law), the shares of a non listed joint stock company may be (i) ordinary or (ii) preferential. Ordinary shares entitle their holders to exercise their rights in the General Meeting and to receive a proportional share of profits and of liquidated assets. Preferential shares entitle their holders to have a certain amount or percentage of the par value of their shares paid from profits prior to ordinary shareholders if a dividend is declared, priority in the distribution of liquidated assets, and other rights set by the company statute. Such law establishes the presumption that the preferential rights established by the Statute are exhaustive (art. 116). Shares carrying the same rights shall make up one class (ordinary shares, preferential shares, voting shares and non-voting shares). Each ordinary share carries voting rights in proportion to the part such share represent in the share capital. Preferential shares may be issued without voting rights, in which case their par value may not be greater than 49 percent of the company’s basic capital. Shares which, at the same par value, give multiple voting rights are prohibited (art. 122).

Par value and issuance of shares

Each share shall have the same par value. Shares may not be issued before the registration of the company with the National Registration Centre. Shares issued earlier are invalid. The founders are jointly and severally liable as against the holders for any damage caused by such issuing. The rights connected with the shares cannot be transferred before registration of the company with the National Registration Centre (art. 109).

Value of issued shares

The overall value of issued shares may not be less than the basic capital. Therefore, shares may not be issued at below their par value. Issuing of shares for a higher amount is allowed (art. 110).

Types of contribution

Shares of share capital may represent shareholders’ contributions in cash or property and rights expressed in money. They may not represent contributions that consist of labour or services (art. 108).

Payment and transfer of contributions before registration

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 instalments, according to the decision of the Board of Directors. Higher amounts above the nominal value shares must be paid fully. Also contributions in kind must be transferred wholly before registration (art. 113).

Share registration and certification

Contents of the share issuance act

The share issuance act is drawn up when shares are first issued and contains the information required by Law No. 9723 “On the National Registration Centre” consisting mainly on the following:

  • the value of founding capital subscribed and of the paid in part of such capital;
  • number and form of subscribed shares;
  • par value of shares;
  • number of shares subscribed by each shareholder;
  • special conditions that pre condition the transfer of shares, if any;
  • description of each category of shares and of the rights enclosed to those, if applicable;
  • preferential rights of the shares, if any.

The company shall issue share certificates at the expense of any shareholder requesting it. The decision to issue the certificates is taken by the founders or the general meeting (art. 118) In the case of the listed companies private or public offer, the shares issuance must also comply with the procedures established by Law No.9879/2008 “On Securities” (Securities Law).

Registration of shares

The Company Law has abolished the bearer shares that have been regulated under the previous legal regime (i.e. former company law). Therefore actually all the shares will have to be registered shares and title to shares shall pass upon the registration in the share registry of the company. Joint stock companies are thereby obliged keep a share registry in which the ownership of all shares is evidenced. The data to be registered for each share are the surnames, first names or legal denomination, the home addresses or head office of the shareholder, the share’s par value, and the date of registration. Shareholders registered as described herein are presumed to be shareholders as against the company and third parties. The company may allow for online registration of the data required. The Administrator named in the statute as responsible for the company’s share register shall provide access to the information held there to the shareholders and the public. The information shall be made available via a website. The company shares registry must not be confused with the commercial registry kept by National Registration Centre as per Law No. 9723/2007. The joint stock companies list of shares should be registered with commercial registry also. The registration procedures described here above do not interfere with the obligation of listed joint stock companies to register their shares with the Securities Registry in accordance with the Securities Law.

Transfer of shares

Acquisition of shares

Shares and the rights they confer shall be acquired through: (i) participation in the authorized share capital at the incorporation of the company; (ii) purchase; (iii) inheritance; (iv) donation;(v) other forms provided by the applicable legislation (i.e. mergers etc). No rights so acquired may be exercised against any person or against the company until registration in the company’s share registry in accordance with the rules described here above is completed (art. 117).

Conditions on the transfer of shares

As a rule, shares can be freely transferred. However the shareholders of the company can limit the free transferability by setting in the company statute conditions on the transfer of shares, in particular the conditions to require the consent of the management and/or provide the shareholders of the company with pre-emption rights (art. 120).

Prohibition of the company subscribing or purchasing its own shares

The company may not subscribe its own shares. The purchase of its own shares is allowed only in cases foreseen by the Company Law. In case of such purchase the shares acquired shall be sold within one year from the date of acquisition. If the company fails to sell such shares within this period, it shall withdraw them and cancel them from its share register A subsidiary company may not subscribe or purchase the shares of its parent company. The company cannot avail itself of any rights attached to its own shares (art. 133)

Formal aspects of share transfer agreement

The Company Law does not contain any rules as to the form of the share sale agreement. However by practice such agreements are made in writing by parties and the legal representatives signatures authenticity of such agreements should be certified by the notary.

Registration of transfer of shares

Ownership of the shares and exercise of shareholders rights is related by the legislator with various registration requirements. Firstly, the ownership to the share passes only at the moment of the registration of the share transfer in the company share registry (art. 117/2 & art 119/2). The company and the third parties may treat as shareholders only the registered holders of shares. Secondly, the information is also required to be published in the company website, though in practice such is not always applied by the companies. Thirdly, the joint stock companies have to provide an updated list of shareholders to the National Registration Centre once per year, together with the balance sheet. Fourthly, a special duty of notification of National Registration Centre if a shareholder of a joint stock company, by means of acquisition or sale of shares, exceeds or falls below certain thresholds of the company voting rights (i.e. 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 70%). Moreover, according to Company Law, a joint stock company is in any case obliged to register every single shareholder of the company in the company’s share registry which should be accessible to the public (art. 119/3).

Income tax applicable on the sale of non-listed shares

According to the Law No. 8438, dated 28 December 1998 “On income tax”, as amended (“Income Tax Law”) the income generated from the sale of non-listed shares is subject of application of income tax of 10%. The income tax in such case shall be calculated on the basis of the difference between the income generated by such sale and the par value of shares sold. The above described tax is applicable to all local and foreign tax residents. For the foreign legal person to be a tax resident shall be required the registration with tax authorities and obtaining the tax number. The income tax on the sale of shares transaction shall be applicable also to the foreigner sellers that are not tax residents when the generation source of the income is Albania. In such case the tax of 10% shall be paid in the form of withholding tax. The 10% income tax is always payable within 20th day of the consequent month of the effective payment correspondent month.

Transfer of listed shares

The transfer of listed shares of joint stock companies is affected in accordance with rules established by Securities Law and respective implementation acts issued by the regulatory according to such law.

GREEK LAW DIGEST REPUBLIC OF ALBANIA MINISTRY OF INTEGRATION Union of Chambers of Commerce and Industry of Albania
Nomiki Bibliothiki ALBANIA INVESTMENT DEVELOPMENT AGENCY Foreign Investors Association of Albania
     

 

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