The process of Albania company formation is quick and efficient. Company formation in Albania is regulated by Law no. 9901 dated 14.4.2008 “On entrepreneurs and companies”, as amended and by the Albanian Civil Code. The following is a brief description of the main elements of the commercial entities identified above, who have the obligation to register in the commercial register of the NBC.
Natural persons
The process of Albania company formation is quick and efficient. Company formation in Albania is regulated by Law no. 9901 dated 14.4.2008 “On entrepreneurs and companies”, as amended and by the Albanian Civil Code. The following is a brief description of the main elements of the commercial entities identified above, who have the obligation to register in the commercial register of the NBC.
Simple companies
Even simple companies are regulated by the provisions of the Civil Code, which define simple company as a contract by which two or more persons agree to exercise an economic activity, in order to share the profits derived from it. In simple companies the contract is not subject to any special form. The company is considered simple, when it does not present the distinctive qualities of the company regulated in law no. 9901 dated 14.4.2008 "On traders and commercial companies".
Commercial Companies
Commercial company formation is regulated by the provisions of law no. 9901 dated 14.4.2008 "On traders and companies", which identifies 4 forms of organization of companies, as follows:
- General Partnership
A company is considered a general partnership if it is registered registers under this name and conducts business in which the liability of the partners to the creditors is unlimited.
- Limited liability partnership
A limited partnership is a company in which the liability of at least one of the partners is limited to the value of his contribution, while the liability of the other partners is not limited. A partner whose liability is limited to the value of his contribution is called a limited partner. A partner whose liability is not limited to the value of his contribution is called an unlimited partner. The unlimited partner has the status of a partner of the general partnership.
- Limited liability company
Limited liability company is the most widespread form of company. In this form of partnership, which may be established by natural or legal persons, the partners are not liable for the obligations of company and personally cover the company's losses up to the outstanding part of the signed contributions. The capital of a limited liability company is formed from the contributions of the partners, divided into quotas. Each partner enjoys his share in the company, in proportion to the contribution he has made to the capital.A limited liability company requires a minimum initial capital of only ALL 100 (approximately USD 0.99 or EUR 0.72).
- Joint stock company
A joint stock company is a company established by natural or legal persons, who are not personally liable for the obligations of the company and who cover its losses only with the outstanding value of the subscribed shares. The capital of the company is divided into shares signed by the founders. The joint stock company can be with a private offer or with a public offer.
The basic capital of a joint stock company with private offering may not be less than ALL 3.500.000. The basic capital of a joint stock company 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.
Branches of foreign companies
Branches are places of commercial activity and have the same legal personality. They operate in a sustainable manner, are organized and administered separately and carry out activities with third parties, on behalf of the company. A branch is subject to corporate income tax in the same manner as other Albanian companies but there is no withholding tax in Albania for the repatriation of after-tax profits. The foreign company shall be liable, with its entire assets, for the liabilities arising out of its branch’s operations.
Foreign investors may choose to use the registration as a branch for their investments, if they plan a temporary presence in Albania, or if they decide not to legally separate the Albanian entity from the parent company.
Though part of a foreign company, branches are considered independent and therefore must keep separate accounting books and prepare balance sheets. However, registered capital is not required for the establishment of a branch.
Representation offices of Albanian companies and foreign companies
Representative offices are places of business activity of the company and have the same legal personality as the company. The purpose of the representative offices is not to generate income, but to promote the activity of the company. These offices may enter into agreements in the name and on behalf of the company. Foreign companies may open representative offices in Albania to carry out non-commercial activities.
Credit savings association and unions
Savings and credit unions are regulated by the provisions of law no. 52/2016, "On savings and credit associations and their unions". Based on these provisions, the savings and loan association is considered a partnership based on the voluntary organization of members, who deposit their money in the association, to be used by it to provide loans only to members of the savings and loan association, with aimed at meeting the needs or interests of members.
Joint Ventures
Joint ventures are based on an agreement entered into between two or more persons, physical or legal, that agree to engage in an economic activity with the other party/parties.
What is particular to this type of partnerships is that joint ventures do not have legal personality: two companies might decide to create a new corporate entity for their joint venture and register it (under one of the forms indicated above); alternatively, they may agree by contract to start a joint enterprise without registering or creating a new corporation. In the latter case the activity shall be carried on by the two entities rather than through a new corporation.
As a practical matter, while considering to enter into a joint venture with a local partner should carefully determine previously the expectations of the parties concerning the various aspects of the relevant investment or project.
It is also recommended that foreign investors negotiate a dispute resolution mechanism (e.g. an arbitration clause) in the joint venture agreement.
Agricultural cooperation societies
Agricultural cooperatives are governed by the provisions of law no. 38/2012, "On agricultural cooperation companies". An agricultural cooperation company is considered a voluntary organization between natural or legal persons, in order to meet their needs or interests in the field of production, processing and marketing of agricultural and livestock products.