Mergers & Acquisitions (M&A) in Albania: A Guide for Foreign Investors & Corporations

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Albania is rapidly becoming a sought-after jurisdiction for foreign investors and corporations engaged in mergers and acquisitions (M&A). With its strategic location in the Balkans, a growing economy, and an increasingly business-friendly regulatory framework, Albania presents significant opportunities for companies looking to expand, diversify, or restructure their operations in the region.

For foreign investors and multinational corporations, navigating the legal intricacies of an M&A transaction in Albania can be complex. However, with the right legal expertise and strategic guidance, the process can be streamlined to ensure optimal outcomes.

At Oracle Solicitors Albania, we specialize in providing comprehensive M&A legal services, offering expert advice and hands-on support throughout every stage of the M&A process. Our deep understanding of the Albanian legal landscape, combined with our experience in handling complex cross-border transactions, makes us the ideal partner for businesses looking to successfully execute M&A deals in Albania.

1. Overview of Mergers & Acquisitions in Albania

Mergers and acquisitions involve the consolidation of companies or assets, and in the case of Albania, the legal framework governing these transactions is relatively straightforward compared to many other jurisdictions. That said, foreign investors must be cognizant of certain regulatory, tax, and compliance requirements that are integral to executing an M&A successfully.

In Albania, M&A transactions are governed by several key legislative and regulatory frameworks, which include:

The Civil Code of Albania (Law No. 7850/1994) – This Code regulates matters related to civil law, including the purchase and sale of shares, property, and other assets.
The Albanian Competition Law (Law No. 9121/2003) – This law regulates mergers that might potentially impact competition within Albania, requiring certain mergers to be cleared by the Albanian Competition Authority.
The Law on Foreign Investments (Law No. 7764/1993) – Governs foreign investments in Albania, providing for protections and incentives for foreign investors.
Termination & Exit Clauses – We draft clear termination provisions, outlining the conditions under which either party can terminate the agreement, the process for termination, and the consequences of a breach.

With the country’s alignment with EU regulations and its ongoing EU integration process, Albania’s M&A market has become increasingly transparent and predictable, offering a secure environment for international investors.

2. Why Invest in Albania? Key Benefits for M&A Transactions

Albania offers several compelling advantages for foreign investors and businesses interested in M&A transactions. These include:

a. Strategic Geographic Location

Albania’s position at the crossroads of East and West gives foreign investors direct access to the European Union, Middle East, and North Africa markets. The country’s strategic location makes it an ideal gateway for businesses looking to expand within the Balkans or access broader regional markets.

b. Favorable Economic Environment

Albania’s economy has experienced robust growth, particularly in sectors such as tourism, energy, manufacturing, and technology. This economic expansion, coupled with low operational costs, makes the country highly attractive for international investors pursuing acquisitions, joint ventures, or mergers.

c. Business-Friendly Regulatory Environment

Albania’s legal system has undergone significant reforms to improve the ease of doing business. The government offers a flat corporate tax rate of 15%, which is one of the most competitive tax regimes in the region. Additionally, Albania provides incentives for foreign investors, including tax exemptions for investments in certain economic zones.

d. Access to Skilled Workforce

Albania boasts a young, educated workforce proficient in languages like English, German, Italian, and Greek, making it an attractive destination for businesses seeking to hire skilled talent.

e. EU Integration Process

As an EU candidate country, Albania has been aligning its regulatory framework with EU standards, including corporate governance, data protection, and antitrust laws. This makes the M&A process in Albania increasingly compatible with the European Union’s legal standards, offering businesses a stable legal framework for investment.

3. Key Considerations in M&A Transactions in Albania

M&A transactions are inherently complex, involving multiple legal, financial, and operational considerations. Below are the primary aspects to keep in mind when engaging in an M&A deal in Albania:

a. Regulatory Approval & Antitrust Considerations

Under Albanian competition law, certain M&A transactions may require approval from the Albanian Competition Authority (ACA) if the merger or acquisition could affect competition in the market. The ACA assesses whether the transaction will lead to the creation or strengthening of a dominant market position that could harm competition.

Key thresholds for the review of M&A transactions in Albania are based on the turnover of the entities involved. Transactions exceeding certain financial thresholds must be reported to the ACA for evaluation.

b. Due Diligence

Due diligence is the cornerstone of any M&A transaction. It involves a comprehensive examination of the target company’s financial records, legal obligations, contracts, employee matters, intellectual property, and other critical aspects. Conducting thorough due diligence ensures that potential risks are identified and mitigated before finalizing the deal.

At Oracle Solicitors Albania, we provide due diligence services, ensuring that our clients have a clear understanding of the target company’s legal, financial, and operational standing.

c. Tax Considerations

Tax planning is a vital component of the M&A process. Albania offers a flat corporate tax rate of 15%, but tax implications can vary depending on the structure of the deal (asset purchase vs. share purchase).

Capital Gains Tax: A capital gains tax is applied to profits from the sale of shares or assets. Tax exemptions or reductions may apply depending on the type of transaction and whether the seller is a resident or non-resident.
VAT Considerations: While VAT (Value Added Tax) generally applies to transactions in Albania, transactions involving the sale of shares are typically exempt. Cross-border VAT rules may apply in certain cases, and these should be carefully considered in structuring the transaction.

d. Corporate and Shareholder Agreements

Negotiating and drafting shareholder agreements, merger agreements, and purchase agreements is essential to ensure the transaction proceeds smoothly. These agreements must accurately reflect the terms of the deal, including price, payment terms, warranties, representations, and post-transaction obligations.

At Oracle Solicitors Albania, our team of legal experts provides specialized services in drafting and negotiating complex M&A contracts, ensuring that your interests are fully protected.

4. Oracle Solicitors Albania’s M&A Legal Services

At Oracle Solicitors Albania, we offer a full spectrum of legal services tailored to the needs of foreign investors and businesses involved in mergers and acquisitions in Albania. Our team of experienced legal professionals brings deep local knowledge and international expertise to support our clients in all aspects of their M&A transactions.

a. M&A Transaction Structuring

We assist clients in determining the most tax-efficient and legally compliant structure for the transaction. Whether you are pursuing an asset purchase, share purchase, or merger, our team will ensure the optimal approach for your business objectives.

b. Due Diligence & Risk Management

Our team conducts comprehensive due diligence to identify potential risks in the target company’s operations, including legal, financial, and operational assessments. We provide clear and actionable insights to ensure that all risks are mitigated and that the transaction proceeds smoothly.

c. Regulatory Compliance & Approvals

We manage the regulatory approval process, including filing notifications with the Albanian Competition Authority when required. We also ensure compliance with all relevant local laws, as well as any applicable EU regulations, in order to facilitate a seamless transaction.

d. Drafting & Negotiating Contracts

Our legal experts draft and negotiate all necessary agreements, such as share purchase agreements (SPAs), asset purchase agreements (APAs), merger agreements, and confidentiality agreements (NDAs), ensuring that all terms are favorable and fully aligned with your objectives.

e. Post-Transaction Integration

We provide post-deal support, helping you navigate the integration process, including employee transfer, contractual obligations, and asset management. Our goal is to ensure a smooth transition, minimizing disruption and maximizing the value of your investment.

f. Tax & Financial Structuring

We offer tailored advice on the tax implications of the deal, assisting with capital gains tax considerations, VAT issues, and other potential tax consequences. We work with your financial advisors to ensure the deal is structured efficiently from a tax perspective.

5. Why Choose Oracle Solicitors Albania for Your M&A Transaction?

Expertise in Local & International M&A: Our team brings together international legal expertise and deep knowledge of the Albanian business environment, ensuring that all legal aspects of your M&A deal are handled seamlessly.
Tailored Solutions: We understand that every M&A transaction is unique. Our services are customized to meet your specific needs and business goals, offering you practical and effective solutions.
Cross-Border M&A Expertise: We have extensive experience in managing cross-border M&A transactions, ensuring compliance with both Albanian and EU laws and facilitating smooth coordination between multiple jurisdictions.
Comprehensive Legal Support: From due diligence and transaction structuring to post-transaction integration, we provide full-spectrum legal services, ensuring that your M&A transaction is a success from start to finish.

Contact Oracle Solicitors Albania Today

If you are considering an M&A transaction in Albania, Oracle Solicitors Albania is here to provide you with expert legal guidance and support. Our experienced team is dedicated to helping you navigate the complexities of mergers and acquisitions, ensuring that your investment in Albania is both profitable and legally sound.

Contact us to discuss your M&A needs, and let us assist you in achieving your business goals in the Albanian market.

Kristi Vako

Partner | Head of Legal and Operations Albania

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