Reorganization is the change of a business entity's legal structure without completely shutting down the business. The corporate reorganization process in Albania is an important step for businesses that want to adapt to market demands. Two companies can merge into one, a company can split into two, or its legal form can change from an LLC to a corporation and vice versa.
The procedures are mandatory, carried out at the QKB, and free of charge. The applicable law is No. 9901 of April 14, 2008 “On Traders and Commercial Companies,” as amended.
Basic requirement: the company must have been registered for at least one year before any reorganization.
Read also: LLC: legal definition, partners and the manager
The law provides for three forms:
✔ Merger — two or more companies merge into one.
✔ Division — a company is split into two or more companies.
✔ Transformation — the company moves from one legal form to another.
Each form has its own procedure and documentation. All three are carried out free of charge at the QKB.
Merger is the process by which two or more companies become one. Assets, liabilities, contracts, and employees are transferred to the resulting company.
Example: Two LLCs in the construction field decide to join forces to increase capacity and bid as a single entity on tenders.
Absorption merger: Company A absorbs Company B. Company B is dissolved, its assets and liabilities are transferred to Company A. The partners of B receive shares in A according to the exchange ratio.
Merger with a new company: Company A and Company B are dissolved and create Company C. The partners of both become partners of C.
The first phase is preparatory. The company administrators draft the merger agreement, which contains the names and registered offices of the companies, the terms of asset transfer, the share exchange ratio, the rights of partners, and the consequences for employees.
Phase One Documents:
✔ Merger Agreement Draft
✔ The merger report prepared by the administrators
✔ Annual financial statements for at least the last three years
✔ Independent expert report on the evaluation of the exchange report
✔ Legal representative's identification document
✔ Act of Representation, if the applicant is not the administrator
The draft agreement is filed with the QKB and published. Creditors and partners have a legal deadline to object (no later than one month before the assembly).
Phase two: the shareholders' assembly of each company approves the merger by a three-quarters vote. After approval, the final registration with the QKB is carried out.
Notice: Mergers are always carried out in compliance with competition law. If a dominant position in the market is created, permission must be obtained from the Competition Authority.
When the absorbing company already owns 90% or more of the shares of the absorbed company, the procedure is simplified. The approval of the absorbing company's assembly is not required, and if the parent company owns 100%, neither is the expert's report.
The e-Albania service for the union:
Apply: Merger by absorption — existing company
Apply: Merger by absorption — new company
Download templates prepared by AlProfit:
Model: Merger by absorption draft agreement
Model: Assembly minutes — approval of the merger
Dissolution is the reverse process of merger. A company is dissolved and its assets are transferred to other companies.
Example: A limited liability company that simultaneously carries on commercial and construction activities decides to split into two independent companies for tax or strategic reasons.
Complete division: Company A is completely dissolved and wound up. Its assets and liabilities are transferred to Companies B and C. The partners of A become partners in B and C according to the division ratio.
Partial division: Company A continues to exist, but a portion of its assets is transferred to Company B (existing or new).
The separation procedure follows the same two phases as the merger. Approval requires three-quarters of the votes in the assembly.
The e-Albania service for separation:
Separation — existing society:
Phase 1: Notice of the draft subdivision
Phase 2: Approval of the separation
Division — newly established societies:
Phase 1: Notice of the draft subdivision
Phase 2: Approval of the separation
Conversion is the change of legal form without altering ownership or activity. The company continues with the same partners and assets, but under a new legal structure.
Example: A limited liability company with increased capital and multiple partners converts into a joint-stock company to access capital markets.
The transformation does not affect the company's rights and obligations toward third parties. It is decided by the assembly with a three-quarters vote and registered with the QKB.
Documents:
✔ The assembly's decision on the conversion
✔ Administrator's report
✔ Minutes of the assembly
✔ New statute in the new legal form
✔ Legal representative's identification document
The e-Albania service for conversion:
Proclamation 1: The First Call of the Partners
Proclamation 2: The Second Call of the Partners
Final approval of the transformation
Download the template prepared by AlProfit:
Model: Assembly resolution — approval of the conversion
The reorganization has significant tax implications that need to be planned in advance.
Capital gains are not taxed when assets are transferred during mergers, divisions, or stock exchanges. This transfer is not considered a sale.
Tax losses carry forward: the acquiring company can use the acquired company's losses to reduce its taxable profits in future periods.
Caution: if the assets are transferred outside Albania or the company changes its tax residence during the reorganization, a 15% tax is applied on the market value.
Read also: Corporate Income Tax: Capital Gains and Reorganization
Employees: reorganization does not terminate their employment contracts. Employees continue working under the same conditions. Their right to object is protected under the Labor Code.
Creditors: They have the right to object within the period specified for publishing the draft agreement. If they have unpaid claims, they may request guarantees or payment before completion.
Read also: Labor Code: the rights and obligations of the employer
No. The law requires at least one year of registration before any reorganization.
A merger involves two or more companies that become one. A conversion occurs within a single company, which changes its legal form without merging with another.
It depends on the type. A full split destroys the society. A partial split leaves it active but with smaller active components.
As a general rule, yes. It may be waived if all partners give written consent. It is not required for a simplified partnership (100% quota).
The first phase, with the draft agreement and the creditors' objection period, lasts at least one month. The second phase, with registration at the QKB, is completed within one business day.
After merger and demerger, the dissolved companies withdraw their NIPT. The resulting company obtains a new NIPT. After conversion, the NIPT usually remains the same.
Read also: LLC: deregistration
Read also: LLC: changes in the QKB
Law No. 9901, dated April 14, 2008, “On Traders and Commercial Companies,” as amended (Articles 214–247)
Law No. 9723, dated May 3, 2007, “On Business Registration,” as amended
Law No. 9920, dated May 19, 2008, “Tax Procedures in the Republic of Albania,” as amended
Law No. 9880, dated February 25, 2008, “On Electronic Signature”
Law No. 10273, dated April 29, 2010, “On the Electronic Document”
Note: Mergers that create a dominant market position are also subject to Law No. 9121 of July 28, 2003 “On the Protection of Competition,” as amended, and require approval from the Competition Authority.