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FEDERAL NEGARIT GAZETTEOF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

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l9*Year No. 60ADDIS ABABA 26* July, 2013

CONTENTS

Proclamation No. 807/2013

/"&• (""ffiffi.?) Capital Goods Leasing Business (Amendment)gt8rf5 j Proclamation Page 6985

PROCLAMATION No. 807/2013

A PROCLAMATION TO AMEND THE CAPITALGO/ PS LEASING BUSINESS PROCLAMATION

WHEREAS, it has became necessary to amend theCapital Goods Leasing Business Proclamation No.103/1998;

NOW, THEREFORE, in accordance with Article55(1) of the Constitution of the Federal DemocraticRepublic of Ethiopia, it is hereby proclaimed as follows:

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1. Short Title

This Proclamation may be cited as the "CapitalGoods Leasing Business (Amendment)Proclamation No. 807/2013".

2. Amendment

The Capital Goods Leasing Business ProclamationNo. 103/1998 is hereby amended as follows:

I/ sub-article (8), (10) and (13) of Article 2 ofthe Proclamation are deleted and replaced bythe following new sub-article (8), (10) and(13):

"8/ 'capital goods' means any equipment ormachine that may be used to produceproducts or to provide services andincludes accessories;

•10/ 'investment law' means the Investment

Proclamation No. 769/2012 or theInvestment—Incentives and InvestmentAreas Reserved for Domestic InvestorsCouncil of Ministers Regulation No.

k270/2012orboth;

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13/ 'Ministry' means the Ministry of Trade;

21 The following new sub-article (14), (15) and(16) are added under Article 2 of theProclamation:

"14/ 'capital goods finance' includes financiallease and hire-purchase;

15/ 'chief executive officer' means anyperson, by whatever title that person maybe referred to, who is primarilyresponsible for the day-to-daymanagement of the affairs of a lessor;

167 'director' means any member of theboard of directors of a lessor bywhatever title he may be referred to."

3/ Article 3 of the Proclamation is deleted andreplaced by the following new Article 3 and 4:

•"3. Operating Lease Business License

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I/ Operating lease business shall beconducted by a lessor licensed by the.Ministry.

21 Any person licensed to engage inoperating lease business may notundertake capital goods financebusiness.

3/ The Ministry may issue directive onthe requirements to be fulfilled toobtain operating lease businesslicense.

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4. Capital Goods Finance BusinessLicense

]/ Capital goods finance business shallbe undertaken by a lessor licensed bythe National Bank of Ethiopia.

21 Notwithstanding sub-article (1) ofthis Article a micro-financinginstitution licensed by the NationalBank of Ethiopia may engage incapital goods finance businesswithout the need to obtain anyadditional license.

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3/ Any person licensed to engage incapital goods finance business maynot undertake operating leasebusiness.

.4/ The National Bank of Ethiopia may

issue directive on:

,a) criteria to be fulfilled to obtaincapital goods finance businesslicense;

b) fitness and qualification criteriato be fulfilled by directors and achief executive officer of acompany engaged in capita)goods finance business;

c) the amount of capital andreserves to be maintained by acompany engaged in capitalgoods finance business; and

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d) provisioning for doubtfulaccounts and depreciation offixed assets.

5/ To ensure adequacy of riskmanagement, safety and soundness ofcapital goods finance businesscompany licensed in accordance withsub-article (1) of this Article, theNational Bank of Ethiopia may:

a) instruct the company to submitperiodic reports;

b) examine or cause theexamination of the company on-site with or without prior notice;

c) suspend or dismiss one or moredirectors or the chief executiveofficer of the company; and

d) take any other appropriatecorrective measure.

7* SlM'jfJ? AJU5-A W--1- .m"! ?: .WA, .(if +*> S'rt.A- *}.?" Federal Negant Ca/etle No.60 26"' July 2013 ............. page 6988

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6/ Any person engaged in capital goodsfinance business with a license issued bya competent government body before theeffective date of this Proclamation shallobtain capital goods finance businesslicense from the National Bank ofEthiopia pursuant to this Proclamationw i t h i n 12 months from the effective dateof th i s Proclamation."

4/ Articles 4 to 19 of the Proclamation arerenumbered as Articles 5 to 20, respectively.

5/ The existing provision of Article 16 (as re-numbered pursuant to sub-article (4) of thisArticle) is numbered as sub-article (I) and thefollowing new sub-article (2) and (3) areadded:

"2/ Without prejudice to the provision of sub-article (1) of this Article, a supplier shallbe exempted from customs duties andtaxes on capital goods imported inaccordance with the relevant laws.

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3/ Payments made to a lessor under capita!goods finance shall be exempted fromValue Added Tax."

6/ Article 18 of the Proclamation (as re-numbered pursuant to sub-article (4) of th i sArticle) is deleted and replaced by thefol lowing new Article 18:

"18. Duties and Responsibilities of the Councilof Ministers, the Ministry and theNational Dank of Ethiopia

I / The Council of Ministers may issue:

a) regulation on registration , andsupervision of capital goods; and

b) other regulations necessary forthe implementation of thisProclamation.

21 The Ministry shall register capitalgoods agreements, and amendments,modifications and terminations of theagreements.

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3/ The Ministry shall take appropriatemeasures in order to ensure the returnof the leased capital goods to thelessor, where the lessee has theobligation to return the leased capitalgoods to the lessor but fails to returnit, and may order the police tofacilitate the execution.

4/ The National Bank of Ethiopia mayissue directives that enables it toregulate and supervise the businessof capital goods finance inaccordance with this Proclamation.

51 Without prejudice to the provisionof sub article (4) of this Article, theMinistry may issue other directivesnecessary 'for the implementationof this Proclamation."

4. Effective Date

This Proclamation shall enter into force on the dateof publication in the Federal Negarit Gazette.

Done at Addis Ababa, this 26"' day of July, 2013.

GIRMA WOLDEGIORGISPRESIDENT OF THE FEDERAL

DEMOCRATIC REPUBLIC OF ETHIOPIA