Ethiopia Legal Entities


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An insightful whitepaper on the economic scenario of Ethiopia.

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Ethiopia Legal Entities

  1. 1. HEDGE-SQUARE CONSULTANCY SERVICES PRIVATE LIMITED  16.02.2012 ETHIOPIA– LEGAL ENTITIES The economy of Ethiopia is based on agriculture, which accounts for maximum of the Gross Domestic Product (GDP), which was 7.5% as per figures of 2011. The Government of Ethiopia has introduced various reforms and schemes for improving macro economic stability and for pacing economic growth. As far as commercial laws are concerned they are simplifies with eased foreign exchange controls. In 1960 legaldocument called Commercial Code introduced to govern the business entities. As explained inCommercial Code a business organisation means any association arising out of a partnershipagreement".Ethiopian Law recognizes eight types of business entities viz. Sole Proprietor, GeneralPartnerships, Ordinary Partnerships, Limited Partnerships, Private Limited Companies, PublicLimited Companies, Co-operatives and Joint Ventures.As per Commercial Code any Ethiopian or foreign person or business organization carrying outcommercial activities within the Ethiopia shall be registered. Private Limited Companies aremostly used form by the investors outside Ethiopia. Following are the features of the Private andPublic Limited Companies in Ethiopia.I. Private Limited Company1.1 The Company can be started with minimum capital of 15,000 ETB. The amount of each share shall not be less than 10 ETB. All shares shall be of equal value and member may hold more than one share. 1  
  2. 2. HEDGE-SQUARE CONSULTANCY SERVICES PRIVATE LIMITED 1.2 The Company must have at least 2(two) shareholders and number of shareholders should not increase 50(Fifty). No nationality and residency required to be of Ethiopia. It can be formed by natural or legal persons.1.3 The Company shall not undertake banking, insurance or any business of such nature1.4 The Company should have at least one Manager. A Manager other than members may be appointed by the members or by Memorandum of Association (MOA)/ Article of Association (AOA) of the Company.1.5 Where the Company consists of more than twenty members, it shall appoint at least three auditors. There appointment shall be effected by the MOA.1.6 There is no requirement to appoint company secretary.1.7 Companies incorporated must have a registered office.1.8 Not required to file their annual financial statements with the Registrar of Companies.1.9 Shareholders of the Company shall have limited liability up to the extent of their contribution and right to transfer shares is restricted.1.10 The name of the private limited company may contain a disclosure of the nature of its activity and must include the words “Private Limited Company"II. Public Limited Company2.1 The Company can be started with minimum capital of 50,000 (Fifty Thousand) ETB. The amount of par value of the shares shall not be less than 10 (Ten) ETB. There are no restrictions on the transfer of their shares. 2  
  3. 3. HEDGE-SQUARE CONSULTANCY SERVICES PRIVATE LIMITED 2.2 Minimum 5 shareholders are required. No nationality and residency required to be of Ethiopia. It can be formed by natural or legal persons.2.3 At least 3 directors are required. Maximum number of the Directors should not exceed 12 (Twelve). Body Corporate can be a director but Chairman should be a natural person. First directors may be appointed under Memorandum or Article of Association of the Company.2.4 The Company should have a registered office.2.5 One or more Auditor and Assistant Auditor should be appointed in general meeting. A body corporate may act as an auditor.2.6 They need not be listed on the stock exchange for the public to hold an interest in the business.2.7 The Company shall file financials, within thirty days of the approval together with the relevant minute of approval by the meeting with the Ministry of Commerce and Industry for publication in the Official Commercial Gazette.   Hemant ShahHedge-Square Consultancy Services Pvt. Ltd.111A, Impress, Currimji Compound, Fort, Mumbai – 400 001.Contact: +91 - 9870551611Email: hemant@hedge-square.comWebsite: www.hedge.square.comThis material and the information contained herein prepared by Hedge-Square Consultancy Services Pvt. Ltd. (HSQ), is intended to provide general informationon a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of HSQ’s partners or their related entities is, by means of thismaterial, rendering professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you oryour business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professionaladviser. No entity in the HSQ Network shall be responsible for any loss whatsoever sustained by any person who relies on this material.© 2011 Hedge-Square Consultancy Services Pvt. Ltd.  3