ethiopia legal entities

HEDGE-SQUARE CONSULTANCY SERVICES PRIVATE LIMITED

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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 legal

document called Commercial Code introduced to govern the business entities. As explained in

Commercial Code a business organisation means any association arising out of a partnership

agreement".

Ethiopian Law recognizes eight types of business entities viz. Sole Proprietor, General

Partnerships, Ordinary Partnerships, Limited Partnerships, Private Limited Companies, Public

Limited Companies, Co-operatives and Joint Ventures.

As per Commercial Code any Ethiopian or foreign person or business organization carrying out

commercial activities within the Ethiopia shall be registered. Private Limited Companies are

mostly used form by the investors outside Ethiopia. Following are the features of the Private and

Public Limited Companies in Ethiopia.

I. Private Limited Company

1.1 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.


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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 nature

1.4 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 Company

2.1 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.


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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 Shah Hedge-Square Consultancy Services Pvt. Ltd. 111A, Impress, Currimji Compound, Fort, Mumbai – 400 001. Contact: +91 - 9870551611 Email: [email protected] Website: www.hedge.square.com

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ethiopia legal entities

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