Corporate & Finance

• Co-led by Principal Mehrteab Leul and Getu Shiferaw, MLA’s Corporate and Finance Practice Group provides strategic advice on a full range of corporate, financial and commercial matters, general corporate counseling and regulatory assistance for international and domestic businesses in all stages of development. Our clients span the full gamut from start-ups to some of the largest global corporations in the world.
  
  
• MLA’s Corporate and Finance practice represents both buyers and sellers in complex, multi-million-dollar transactions.We also regularly assist in the assessment, negotiation and closing of business transactions.
  
  
• The bulk of MLA’s Corporate and Finance Practice Group’s work in 2018-2019 included incorporation and registration of foreign and local companies and business names, investment transactions, joint venture agreements, mergers and acquisitions, preparation and filing Board of Directors and Shareholder Resolutions, preparation of commercial agreements, and responding to violations of competition law and taxes.
  
  
• For legal advice on all matters related to corporate and commercial law in Ethiopia, please contact Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Practice Group.

Mehrteab and Getu Advocates LLP’ Quick Guide Related to Corporate and Finance in Ethiopia

MLA Quick Guide on Corporate Governance in Ethiopia

• The Ethiopian Commercial Code of 1960, the Banking Business Proclamation No. 592/2009, Bank Corporate Governance Directives No. SBB/62/2015, the Insurance Business Proclamation No. 746/2012 and the Commercial Registration and Business Licensing Proclamation of 2016 are the principal sources on corporate governance.
  
  
• Only shareholders can be appointed as a member of a board of directors. The minimum number of directors is three and the maximum is twelve.

MLA Quick Guide on Mergers & Acquisitions in Ethiopia

• Members of MLA’s Corporate & Finance Practice Group represent acquirers and potential acquirers in all aspects of corporate strategy and processes, ranging from conducting due diligence investigations, assessing strategic financial position and fit, to negotiating definitive agreements.
  
  
• For legal advice on all matters related to mergers and acquisitions in Ethiopia, please contact Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Law Practice Group.

MLA Quick Guide on Green field Investments in Ethiopia

• A green field investment is a form of foreign direct investment where a parent company builds its operations in a foreign country from the ground up. MLA’s Corporate & Finance Practice Group has provided legal advisory services to international clients on Ethiopian investment law, commercial registration, business licensing, tax laws, processed and obtained investment permits, commercial registration certificates, business licenses and tax registrations for several foreign companies.
  
  
• Our members have also opened blocked bank accounts on behalf of investors and registered capital of foreign investors, provided investment-related legal services, such as acquiring land, access to utilities and processing special investment approvals for foreign investors investing in restricted areas of investment.

MLA Quick Guide on Project Finance & Sovereign Debt

• MLA’s Corporate & Finance Practice Group also provides advisory services related to project finance, sovereign debt and sovereign debt guarantees.
  
  
• Some of the legal services our members have provided in this regard include advising on the validity and enforceability of sovereign debt guarantees and loan credit facilities under Ethiopian law, reviewing sovereign debt guarantee documents and loan credit facilities, writing confirmation letters in relation to buyer credit loan agreements, reviewing and revising escrow account agreements from the perspective of Ethiopian laws, writing legal opinions on the validity and enforceability of sovereign debt guarantees and loan credit facilities under Ethiopian law and reviewing and commenting loan repayment agreements and escrow account agreements in connection with the financing of public and private projects in Ethiopia.
  
  
• For legal advice on all matters related to project finance and sovereign debt issues in Ethiopia, please contact Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Practice Group.

MLA Quick Guide on Vehicles/Structures for Doing Business

• Business can be set up in the form of sole proprietorship, business organizations incorporated in Ethiopia (a private limited company, a share company or partnerships), branch of a foreign company, public enterprises, and cooperative societies. Partnerships are associations of persons whose liability is unlimited (except limited partners in limited partnerships). Limited liability companies could take the form of a share company or a private limited company.
  
  
• The laws that regulate formation of business entities in Ethiopia are the Ethiopian Commercial Code of 1960, Ethiopian Civil Code of 1960, Investment Proclamation of 2012 (as amended in 2014), Investment Regulation of 2012(as amended in 2014), Public Enterprises Proclamation of 1992, Cooperative Societies Proclamation of 2003, Commercial Registration and Business Licensing Proclamation of No.980/2016, and the Commercial Registration and Business Licensing Regulation of 2016.
  
  
• For legal advice related to setting up a business in the form of sole proprietorship and business organizations incorporated in Ethiopia, please contact Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Law Practice Group.

MLA Quick Guide on the Presence of Foreign Entities

• Incorporating a subsidiary company and opening a branch of a foreign company are the main vehicles for foreign entities to trade in Ethiopia. Foreign companies may also promote their business in Ethiopia by opening a commercial representative office. A branch of a foreign company is treated as an extension of its parent foreign company. In contrast, a subsidiary of a foreign company is treated as separate from its parent company.
  
  
• Foreign investors that come to operate in Ethiopia by winning international bids can also set up a project office to perform a specific contract. There is no minimum capital requirement for a project office. It can be used for the life of the contract engaged. The disadvantage of project office is that it will only be limited for a registered contract and cannot be used for multiple contracts.
  
  
• The Commercial Registration and Business Licensing Proclamation of 2016 also recognizes the formation of holding companies. This law provides that two or more private limited companies can establish a holding company. The holder company is jointly and severally liable with its member companies to the claim of third parties.
  
  
• The Investment Proclamation of 2012 (as amended), the Commercial Registration and Business Licensing Proclamation of 2016, the Commercial Registration and Business Licensing Regulation of 2016, and the Ethiopian Commercial Code of 1960 regulate the requirements for incorporation of a subsidiary or registration of a branch, a commercial representative office, a project office and a holding company in Ethiopia.
  
  
• Foreign entities needing legal advice related to the Ethiopian Commercial Registration and Business Licensing Proclamation and/or project/representative offices in Ethiopia may contact Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Practice Group.

MLA Quick Guide on Companies and Company Formation in Ethiopia

• A share company and a private limited company are associations of capital formally established by the signing of a memorandum of association and articles of association.
  
  
• A private limited company and a share company require a minimum of two and five shareholders respectively. The maximum number of shareholders in a private limited company cannot exceed fifty (50).
  
  
• Once shareholders have signed the memorandum and articles of association before a public notary and the same are deposited in the commercial register, the company becomes a legal person. After registration, obtaining a business license is necessary to start business operations.
  
  
• Companies are legal persons whose liabilities are met by their assets only. Shareholders of companies are liable only to the extent of their contributions.
  
  
• Both legal and physical persons can be shareholders of either a share company or a private limited company. Foreign nationals are not permitted to invest in certain areas of investment reserved for either Ethiopian nationals or the Ethiopian Government. Foreign nationals may however be allowed to invest in reserved areas of investment with the approval of the Ethiopian Investment Board. Some areas of investments can only be carried on in joint venture with the Government of Ethiopia.
  
  
• Private limited companies are not subject to detailed regulations when compared to a share company, which the law regulates strictly. A private limited company is more of a family company while a share company is a public company. A share company is required to have a board of directors and auditor/s and it should also conduct a general meeting of shareholders at least once a year. A private limited company is not required to have an auditor unless the number of its shareholders exceeds twenty. A private limited company cannot issue transferable securities like bonds, debentures, while a share company can issue transferable securities.
  
  
• Two and more private limited companies can form a holding company that manages and supervises the businesses of these companies. Holding companies are recognized in August 2016 for the first in Ethiopia. The registration and operation of holding companies are not yet tested practically. However, the applicable states that holding companies are jointly and severally liable with their member companies to the claim of third parties.
  
  
• Legal advice related to business registration requirements, private limited companies, holding companies, and shareholder agreements in Ethiopia is available by contacting Mehrteab and Getu Advocates LLP, here or an appointment to speak with a member of the MLA Corporate and Finance Practice Group.
  
  
  

MLA Quick Guide on Establishing Branch Offices in Ethiopia (by Foreign Entities)

• Foreign incorporated companies can register a branch in Ethiopia to undertake business activities.
  
  
• The requirements for registering a branch of a foreign company include the submission of:
  
  
• notarized and authenticated minutes of a resolution passed by an authorized organ of a foreign business organization authorizing the opening of a branch in Ethiopia;
  
  
• Certificate of incorporation of a foreign parent company;
  
  
• Copies of memorandum and articles of association or similar documents of the business organization;
  
  
• Legal advice related to establishing branch offices in Ethiopia can be obtained by contacting Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Practice Group.
  
  
  

MLA Quick Guide on Partnerships in Ethiopia

• There are four types of partnerships recognized under Ethiopian law. These are ordinary partnerships, general partnerships, limited partnerships and joint ventures.
  
  
• Partnerships should be formed by a partnership agreement and registration is a prerequisite for a partnership to obtain legal personality. However, these requirements do not apply to joint ventures, which have no legal personality.
  
  
• Partners are liable jointly and severally for the activities of a partnership except for limited partners in a limited partnership. Partnerships are associations of persons and usually they are not recommended for foreign investors.
  
  
• Legal advice related to partnerships and partnership agreements in Ethiopia can be obtained by contacting Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Practice Group.
  
  

MLA Quick Guide on Sole Proprietorships in Ethiopia

• A sole proprietor is a person who conducts a business in his/her own name with unlimited liability.
  
  
• For a sole proprietor to operate a business, he/she has to obtain a commercial registration certificate and a business license.
  
  

MLA Quick Guide on Trade Representative Office in Ethiopia

• Foreign investors who are not interested in trading activities can register a commercial representative (liaison) office and appoint a commercial representative to undertake pro – motional activities in Ethiopia.
  
  
• Before starting its operation, the commercial representative should be registered with the Ministry of Trade and get a certificate of commercial representative. To secure the certificate, among other things, a minimum of 100,000.00 USD has to be brought into Ethiopia, which is expected to cover salaries and operational expenditures of the office for a year. After the issuance of a valid certificate, a commercial representative can promote the products and services of the principal foreign company, study projects that will enable the principal to make investments in Ethiopia and to promote export products of Ethiopia in the country of origin of the principal company.
  
  
• The commercial representative certificate should be renewed annually. Renewal requires the transfer of a minimum of 100,000.00 USD every year to a bank account of the commercial representative office in Ethiopia.
  
  

MLA Quick Guide on Registration requirements in Ethiopia

• Registration is a requirement for companies to do businesses in Ethiopia. Operating a business without obtaining a business license entails administrative and criminal liabilities.
  
  
• For legal advice related to business registration requirements, trade representative offices, sole proprietorship, and partnerships, please contact Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Practice Group.
  
  

MLA Quick Guide on Banking and Finance in Ethiopia

• The Commercial Code of 1960, the Banking Business Proclamation No. 592/2009, the Insurance Business Proclamation No. 746/2012, the Capital Goods Leasing Business (Amendment) Proclamation No. 807/2013, the Registration and Supervision of Capital Goods and Capital Goods Leasing Agreement Regulation No. 309/2014, the Micro-Financing Business Proclamation No. 626/2009, and different directives of the National Bank of Ethiopia regulate the financial services sector in Ethiopia.
  
  
• Financial services are reserved for Ethiopian nationals. Foreign financial institutions are not allowed to operate in Ethiopia and foreign nationals and companies are prohibited from owning shares of local financial institutions.
  
  
• A foreign company may open a local bank account through its subsidiary or branch or representative offices duly registered in Ethiopia.
  
  
• For legal advice on all matters related to corporate governance, banking, and finance issues in Ethiopia, please contact Mehrteab and Getu Advocates LLP, here for an appointment to speak with a member of the MLA Corporate and Finance Practice Group.