An insightful whitepaper on the economic scenario of Ethiopia.

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 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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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 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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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 Shah
Hedge-Square Consultancy Services Pvt. Ltd.
111A, Impress, Currimji Compound, Fort, Mumbai – 400 001.
Contact: +91 - 9870551611
Email: hemant@hedge-square.com
Website: www.hedge.square.com
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© 2011 Hedge-Square Consultancy Services Pvt. Ltd.
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