By Dagnachew Tesfaye, Partner at DMLF The Alternative Child Care and Support Directive Number 976/2023 by Ministry of Women and Social Affairs, October 2023, incorporates a section namely Responding to Child Abuse and Neglect. The State is given the responsibility to respond to child abuse and neglect. The procedure of …
A trust is defined in the 1960 Civil Code of Ethiopia Article 516 as ‘an institution by virtue of which specific property is constituted in an autonomous entity to be administered by a person, the trustee, in accordance with the instructions given by the person constituting the trust.’’ Thus there will arise the relationship of a trustee and beneficiary. The relationship between a trustee and beneficiary is like an arranged marriage. The grantor choses the trustee with the aim that successful working relationships will evolve in maintaining and growing the trust for the use and benefit of the beneficiaries and remaindermen. Private trust is created for private interests. Private trust is different from charitable trust in that charitable trust is a trust created for charitable endeavors of public nature. Charitable trust is governed under the Organization of Civil Society Proclamation 1113/2019. Whereas private trust is governed under the Civil Code Articles 516-544. When family wealth is created and the wealth has to evolve through successive generations, trust is one instrument that enables to achieve this purpose. A look at the distinction of trust law from others, trust administration,trust investment, trust distribution and termination of trust will be discussed in brief.
Difference between Trust, Agency, Bailment, Third Party in Contracts
A trustee is a kind of fiduciary who has been given something to hold by one party called the grantor for a stated period of time for the benefit of another party called the beneficiary. As a fiduciary, the trustee is bound to care for that thing with the highest duty of trust. This is different from the agency-principal relationship. Agency is a contract whereby a person, the agent, agrees with another person, the principal, to represent him and to perform on his behalf one or several legally binding acts. Whereas, trust an independent entity that administers something for the benefit of the beneficiary. The parties involved are the grantor, trustee and beneficiary. Similarly, private trust is different from bailment. A contract of bailment is a contract whereby one person, the bailee, undertakes to receive a chattel from another, the bailor. and to keep it on the latter’s behalf. Trust is also different from Promises and Stipulations of Third Parties in a contract. The beneficiaries in a promise or stipulation in a contract have the right to accept or reject the promise or stipulation. Beneficiaries have no such right other than accepting the grantor’s wish in the constitution of the trust document.
Formation
A trust can be formed by two types of instruments: donations ‘inter vivos’ or by a will. Donation ‘inter vivos’ is a donation carried out while alive or between living individuals as opposed to donation ‘mortis causa’ that comes into effect on the death of the donor. The donation ‘inter vivos’ or will should contain clear wording and intention of forming a trust. The constituting documents should have clear wording of the trustees and beneficiaries and the trusted property, action or idea. A trust is formed not only for the benefit of a person called a beneficiary, but also to initiate or advance an action or idea.Trustees are appointed by the person constituting the trust or by the person designated by the person constituting the trust or in default of such person, by the court.
The number of trustees in charitable trust for example has to either be three or five. For a private trust under the Civil Code, the trustees can be one or more but the maximum number may not exceed four. Among trustees whose number is more than one, decision or administration of the trust will be taken by an agreement between them. In case of failure to agree, the decision of the majority prevails. A trustee proves his appointment as a trustee by requesting a court document showing his capacity and powers. In case of a charitable trust, a certificate of registration will be issued for the trustees to prove their appointment by a government body.
Administration of Trust
A trustee is an owner-in-trust of the trust property. The Civil Code on Article 527 provides that the power of the trustee on the property which forms the object of the trust are those of the owner. However, being owner-in-trust does not include disposal of an immovable property or donation of a trusted property. For disposal of immovable property, the court has to grant the greenlight without prejudice to any contrary provision in the grantor’s wish. With this in mind, administration of a trust property means keeping the assets safe and sound. Administration might involve collecting income, keeping proper books and accounts, filing tax and reporting the financial conditions to the beneficiaries. The Civil Code on Article 525 also states that the trustee shall administer the trust like a prudent and cautious businessman. The trustee is obliged not to mix the trust with his personal property. The trustee shall represent the trust in court proceedings. Beneficiaries have no say in the administration of the trust property. The remuneration for the administration of the trust is the payment that is promised in the constituting document of the trust by the grantor.
Investment of Trust
Each trust has a specific goal that it is created to achieve. The grantor states the purpose through the terms he puts into the trust constituting document. A trustee is responsible to administer the trust like prudent and cautious businessmen. The trust’s aim might be to guarantee a steady and growing flow of income for the beneficiaries over a long period of time. Then passing of sufficient funds for the next generation. The trustee’s decision on how to invest the trust are the defining criteria in which he is selected as a trustee in the first place. The trustee’s investment has rewards as well as risks. The risks however have to be acceptable risks. The trustee has the responsibility to turn over the property in the trust to the remaindermen (future generation) in as good or better condition than when he acquired it.
Distribution of the Trust
The trustee has the responsibility to distribute the income earned by the trust in accordance with the trust constituting document. Similarly, the beneficiaries may claim from the trustee profits which according to the terms of the trust agreement, accrue in the beneficiaries favor. The trust constitution document may mention when and how the trustee makes income distribution. This is a contentious area between the trustee and beneficiary. Based on the contention in distribution of trust, there are two types of trusts: simple trusts and complex or discretionary trust. Those trusts that order the trustee to give all of the income received by the trust each year to beneficiaries are called simple trust. Whereas if the trustee is granted with discretionary power to decide whether to pay to beneficiaries all, some or none of the income received by the trust each year is known as complex or discretionary trust. The trustee therefore has to be fully aware of the grantor’s original purpose in creating the trust and the current purposes of the trust, if these have changed over time.
Termination of the Trust
A trust shall terminate on the expiry period fixed by the grantor of the trust. In addition to this, termination of trust may be requested by the beneficiaries to court. Given the circumstances of the case satisfies the court, the court may order termination of a trust. Upon termination of the trust, the property which formed the trust together with documents shall be handed over by the trustee to the persons who are entitled to it in terms of the act of the constitution of the trust.
Conclusion
Private trust law of Ethiopia provides clear rules on how the complex relationship between the grantor of the trust, the trustee and beneficiary are handled. The goal is to create a smooth functioning team between trustee and beneficiary for a common goal of long term family wealth preservation. The development in the private trust law will lead up to private trust company formations which are established to provide fiduciary services to single or multiple families.
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The Ministry of Justice has issued the first of its kind law firm registration certificate on April 06/2022 to Habesha Legal Advocates Limited Partnership (LP) under Law Firm Registration No 001/2014. The law firm licence is required to be renewed annually. The licence has been issued based on the Federal Advocacy Service Licencing and Administration Proclamation No 1249/2021.
The Ethiopian Public Health Institute has issued a Revised Directive to Provide for the Prevention and Control of the Covid-19 Pandemic Directive No 882/2022(this Directive hereafter). This Directive has repealed the previous directive on prohibited activities and imposed duties for the Prevention and Control of Covid-19 Pandemic No 803/2021. This Directive shall be effective as of April 1,2022. A brief overview of the contents of the Directive shall follow here below.
This Directive has established a task force. The task force shall function at the Federal level. The Directive requires formation of a similar task force at the regional level. The federal task force is chaired by the Deputy Prime Minister. The secretariat of the task force is the Ministry of Health. The task force is composed of 9 Ministries, two commissions, the Press Secretariat of the Prime Minister and the Ethiopian Public Health Institute. The main task of the task force includes providing directions on implementation of periodic guidelines on procedures of various preventive measures considering the prevalence of the disease. The task force also has the objective of promoting and implementing scientifically proven techniques for the prevention of spread of the Covid-19 pandemic. The task force is accountable to the Prime Minister.
The implementation of accustomed precautionary measures of wearing face masks, isolation and adequate ventilation and personal hygiene are still there. In addition to these, there are duties imposed on employers. Employers are duty bound to fully vaccinate their employees against Covid-19 where these institutions are service providers like banks, health facilities, hotels, transport providers, law enforcement agencies and other service providers whose employees are susceptible to Covid-19 pandemic.
Any international traveler above the age of 12 coming through international airports of the country and enter Ethiopia shall bring the certificate of negative RT-PCR (Laboratory diagnosis of Covide-19 through molecular techniques) test done 72 hours or three days before departure or Ag-RDT (Antigen based Rapid Diagnostic Test) negative test up to 24 hours before arriving to Ethiopia or a certificate of recovery from Covid-19 within 90 days or evidence that shows he is fully completed the Covid-19 vaccine.
A diplomat who fails to fulfill the requirement of a test or vaccination may enter Ethiopia by being tested at the airport. If the test result is positive or refuses to take the test, he shall isolate himself for 7 days.
For returnees, if they do not have test results or fully vaccinated evidence, then they can enter the country by taking Ag-RDT at the airport. If positive, the normal isolation process shall be implemented.
Meeting or conference organizers are duty bound to ensure that meeting attendees wear face masks, air ventilation is available, and hygienic materials are accessible. Similarly, organizers and competitors of sport events must undergo fully Covid-19 vaccination or obtain a certificate of Ag-RDT negative test result done no more than 24 hours or negative RT PCR test done no more than 72 hours or three days.
Conclusion
The Directive No 882/2022 is a revised version of the previous Directive No 803/2021. The aim of the new Directive is to decrease the economic, social and psychological impact on the community as a result of lessons gathered from the execution of the previous Directive.This Directive basis itself on the current situation of the pandemic given Covid-19 vaccination being available free by the Ethiopian government.
The Refugee Convention of July 28, 951 done at Geneva and the Protocol Relating to the Status of Refugees of 31st January 1967 done at New York are made integral parts of Ethiopia, with reservations on the Articles 8,9,17(2) and 22(1) of the Convention. Ethiopia is a member of the regional convention namely the OAU Refugee Convention of 10th September 1969 done at Addis Ababa. Based on these international and regional Conventions, the Refugee Proclamation No 1110/2019 was adopted by the Ethiopian parliament on February 27,2019 by replacing the previous Refugee Proclamation No 409/2004. A brief look into the 2019 Refugee Proclamation and Directives issued to implement the Proclamation shall be dealt in here below.
The Refugee Proclamation No 1110/2019(the Proclamation hereafter) is issued with the objective of creating a comprehensive legal framework that better protects refugees and promotes sustainable solutions. This Proclamation provides the procedure of determination of refugee status. The Proclamation incorporates rights and obligations of asylum seekers and recognized refugees. Some of the rights include the right to work, right to association, freedom of movement, right to acquire and transfer of property, right to access to justice, access to banking, finance, telecommunication services, vital event registration and naturalization upon fulfillment of the relevant Ethiopian nationality laws.
Following this Proclamation, the Agency for Refugees and Returnees Affair has issued several duly registered directives that enable the Agency to implement the Refugee Proclamation.
The Out of Camp Movement and Residence of Refugees Directive No 07/2019 and Directive No 430 and 431/2013 E.C can be mentioned. These Directives details the procedure in which a refugee applies for out of camp movement and residence. The Directives describe the rights and obligations related to out of camp movement and residence.
Refugees deserve to be treated with the standard the law has put in place. When such a standard is not met and treatment of refugees results in grievances, there should be a procedure for voicing such grievances. As a result Grievance and Complaint Procedure Directive No 9/2019, Directive No 432 and 433 of 2013 E.C were issued to address the complaint and grievances of refugees and returnees.
Determination of Conditions of Right to Work Directive No 429/2013(E.C) has been issued to implement the right to work of refugees enshrined in the Refugee Proclamation. The Directive provides how residence and work permits are requested and acquired. In addition to that the Directive grants the right for refugees to engage in employment in areas open to foreigners. See the link here to know more about the areas of investment reserved for domestic investors and the government and the rest is open for foreigners. https://dmethiolawyers.com/investment-businesses-open-for-foreign-investors-in-ethiopia/. Refugees can be self-employed and work in such areas of work open for foreigners. Another area of work for refugees are common projects designed by the international community and the government of Ethiopia.
Conclusion
Ethiopia has done its part in making the Refugee Conventions part of its law and enacting favorable proclamations that show the country’s commitment towards refugees and returnees. Furthermore Ethiopia has enacted implementation Directives to accommodate rights and obligations of refugees and returnees to Ethiopian society, economy and well being of the refugees themselves.
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This article is dedicated to Zena who initially posed the questions on Refugee laws of Ethiopia.
The FDRE Council of Ministers in its 5th session on March 19,2022, has endorsed the Organization of African, Caribbean and Pacific States (OACPS) Revised Georgetown Agreement. The Council of Ministers sent the document for ratification to the House of Peoples Representative.
The Organization of African, Caribbean and Pacific States(OACPS)
OACPS was previously named as Africa, Caribbean and Pacific (ACP) Group of States. The Georgetown Agreement formed the ACP Group of States in 1975. OACPS is composed of in total 79 countries. 48 of them from Sub-Saharan Africa, 16 from the Caribbean and 15 from the Pacific. Ethiopia is one of the members.
Revised Georgetown Agreementof the OACPS
The meeting of Heads of States in Nairobi, Kenya from 9-10th of December,2019 resolved to establish the OACPS as an international organization. The OACPS was originally formed with the purpose of formulating cooperation between its member states with the European Union(EU). Its priority was to reach a favorable agreement of development with the EU. As the years went by, the OACPS broadened its objectives. The objectives have gone beyond development cooperation with the EU to different fields of trade, economic, political, cultural integration among the OACPS countries vis-a-vis other international organs.
Objectives of OACPS
The major objectives of OACPS include:
promote the efforts of Member States of the OACPS to eradicate poverty, achieve sustainable development, and fully benefit from the advantages of trade, through their gradual and more effective participation in the world economy;
promote and strengthen unity and solidarity among the Member States of the OACPS as well as understanding among their peoples;
deepen and strengthen economic, political, social, and cultural relations among the Member States of the OACPS, through regional integration, strategic partnerships between OACPS regions, and inter-regional cooperation in the fields of trade, science and technology, industry, transport and communications, education, training and research, information and communication, the environment, demography, and human resources;
advocate for a multilateral system that is fair, equitable, and rules-based, and which contributes to economic growth and sustainable development of the Member States of the OACPS.
(Brazzaville) – Congo (Kinshasa) – Cook Islands – C ôte d’Ivoire – Cuba – Djibouti – Dominica – Dominican Republic – Eritrea – Eswatini – Ethiopia – Fiji – Gabon – Gambia – Ghana – Grenada – Republic of Guinea – Guinea-Bissau – Equatorial Guinea – Guyana – Haiti – Jamaica – Kenya – Kiribati – Lesotho – Liberia – Madagascar – Malawi – Mali – Marshall Islands – Mauritania – Mauritius – Micronesia – Mozambique – Namibia – Nauru – Niger – Nigeria – Niue – Palau – Papua New Guinea – Rwanda – St. Kitts and Nevis – St. Lucia – St. Vincent and the Grenadines – Solomon Islands – Samoa – São Tomé and Príncipe – Senegal – Seychelles – Sierra Leone – Somalia – South Africa – Sudan – Suriname – Tanzania – Timor Leste – Togo – Tonga – Trinidad and Tobago – Tuvalu – Uganda – Vanuatu – Zambia – Zimbabwe.
Organs
The organs that administer the OACPS are:
a) Summit of Heads of State and Government; b) Council of Ministers; c) Sectoral Ministerial Committees; d) Committee of Ambassadors; e) OACPS Parliamentary Assembly; f) OACPS Secretariat. A Troika shall be established for the above-mentioned organs, with the exception of the OACPS Secretariat The Secretariat is responsible for the administrative management of the OACPS. It assists the Organisation’s decision-making and advisory organs in carrying out their work.The Secretariat is responsible for the administrative management of the OACPS. It assists the Organisation’s decision-making and advisory organs in carrying out their work. The headquarters of the OACPS Secretariat is located in Brussels, Belgium. It is headed by an Executive Secretary-General who is responsible for implementing the OACPS’ international policy, as well as directing and coordinating its cooperation policy.
Dispute Settlement
Member States shall endeavor peacefully to resolve all disputes concerning the interpretation or application of this Agreement and other instruments set up under OACPS in a timely manner, through dialogue, consultation, and negotiation in keeping with Article 33(1) of the Charter of the United Nations. The OACPS shall maintain and establish dispute settlement mechanisms in all fields of cooperation
Conclusion
The Organization of African, Caribbean and Pacific States is determined to promote and develop greater and closer trade, economic, political, social, and cultural relations among the Member States. As a result, Ethiopia shall benefit greatly by ratifying the Revised Georgetown Agreement of the Organization of African, Caribbean and Pacific States.
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Capital Market has been defined as a market where securities such as shares or equities, bonds, derivatives or other related securities are bought and sold. Capital Market Proclamation No 1248/2021 (this Proclamation hereafter) has been issued to regulate the capital market as of July 2021. Overview of the main concepts of the capital market organs and objectives will be dealt briefly.
Ethiopian Capital Market Authority
The Ethiopian Capital Market Authority (ECMA hereafter) is established by this Proclamation as an autonomous Federal Regulatory authority. One of the major objectives of ECMA is to ensure the existence of a capital market environment in which securities can be issued and traded in an orderly, fair, efficient manner. ECMA, as a regulatory authority, grants licenses to any person to operate as a security exchange, derivative exchange, security depository and clearing company, capital market service provider, over-the-counter trading facility or any other activity deemed by ECMA as a regulated activity under its jurisdiction. ECMA shall take administrative measures for the breach of provisions of this Proclamation or regulations and directives issued hereunder. ECMA regulates and oversees trading in primary and secondary markets of securities, the use of electronic trading platforms that deal with securities and give recognition and oversee the activities of self-regulatory organizations. ECMA is accountable to the Prime Minister of Ethiopia.
Self Regulatory Organizations
Self Regulatory Organizations(SRO) are entities that are recognized under this Proclamation to regulate their own members through the adoption and enforcement of rules of conduct for fair, ethical and efficient practices in the capital market. SRO envisions conducting their business with a view to promoting and protecting investors and the public interest. SROs that intend to be recognized and allowed to operate need to apply to ECMA for recognition and operation. Upon acceptance, the SRO shall be declared as an SRO entity with delegated powers. The SRO shall submit its annual report to the ECMA.
The Ethiopian Security Exchange
The Ethiopian Security Exchange (ESE) is established as a share company by this Proclamation. The shareholders of the ESE shall be the Government of Ethiopia on one hand and on the other private investors including foregin investors. The total ownership of the Government or state-owned entities shall not exceed 25% of the ESE capital. ECMA shall grant an exchange license to the ESE upon meeting the minimum capital requirement and other requirements specified by ECMA. Security exchange has been defined in this Proclamation as a place which constitutes, maintains or provides a market or a facility by means of which offers to sell, purchase or exchange securities are regularly made or accepted.
Private Security Exchange Share Companies
ECMA will grant licenses for other security exchange and trading platforms that are established as share companies
Security Depository and Clearing Company
Security Depository and Clearing Company (SDCC) is defined as any legal entity that offers security depository, clearing and settlement and other related services. The SDCC license is granted to a share company that meets the minimum capital requirement and other requirements of the ECMA. The main obligation of SDCC is to arrange for fair and effective clearing and settlement in relation to any commercial transaction of securities including repo agreement(repurchase agreements) and securities lending. Public companies and other issuers of securities shall register the type of their securities and information on the owners of the securities at the Central Securities Depository.
Government Securities
The National Bank of Ethiopia(NBE) shall have autonomous power to establish, own, operate and participate and regulate central security depository for government securities. ECMA may authorize the NBE to provide securities depository and clearing services to private securities traded at the securities exchange.
Capital Market Service Providers Licencing
Capital market service providers are required to acquire a capital market services license. Licensed activities include securities broker, investment advisor, collective investment scheme operator, investment bank, securities dealer, custodian, market maker, credit rating agency, appointed representative of a capital service provider and any other person who conducts or participates in any activity in securities.
Public Offering and Trading of Securities
A publicly traded security is required to be registered by ECMA, prior to the offer or placement. The issuer of securities is required to prepare prospectus and approval of such prospectus is required by ECMA. Here the ‘issuer’ is defined in this Proclamation as a person who issues or proposes to issue any security. These include the government, company or other legal entity that offers securities to the public. Privately issued securities shall not be traded publicly. An offer of asset backed securities shall be made only if they are issued by a special purpose institution.
Collective Investment Schemes
Collective Investment Schime(CIS) is an arrangment formed for the purpose of providing facilities for persons to participate in or receive profits or income arising from the acquisition, holding management or disposal of securities or any other property or sum paid out of such profits or income. The scheme’s assets are managed by a person who is responsible for management of the scheme’s assets and client accounts. Investors who participate in the arrangement do not have day-to-day control over the management of the schim’s assets.
CIS may be established as investment companies such as mutual funds, limited partnerships or other forms under the Commercial Code. The CIS has to be registerd by ECMA. CIS can be managed by collective investment scheme Operator. The Operator is a legal entity that has the over all responsibility for management and performance of the functions of the CIS.
Prohibited Trading Practices
Insider trading, market manipulation, false trading, fraudulent transactions, front-running and similar other trading practices are some of the prohibited trading practices listed in the Proclamation.
Compensation Fund
Compensation fund is established by the Proclamation for the purpose of granting compensation to investors who suffer monetary loss resulting from the failure of a capital market service provider or securities exchange to meet his contractual obligations and paying beneficiaries from collected unclaimed dividends when they resurface.
Criminal Liability and Administrative Measures
The Proclamation incorporates different fines and imprisonment for violations of the Proclamation. ECMA aslo imposes administrative measures such as revoking or suspending licenses, senior personnel or board of directors.
Capital Market Tribunal
The Capital Market Tribunal is established by this Proclamation to hear appeals against decisions of ECMA. A party who is dissatisfied by the decisions of the tribunal may within 30(Thirty) days after being served with notice of the decision, file a notice of appeal on questions of law only, to the Federal High Court.
Settlement of Disputes
Disputes among parties involved in the capital market concerning any civil matter arising under this Proclamation shall be resolved by mediation first and then by arbitration. The decision of the arbitration panel shall be final and binding on the parties.
Conclusion
Capital markets are established to support the development of the national economy through mobilization of capital, promoting financial innovations and sharing investment risks. A legal framework that regulates and supervises capital markets is adopted by this Proclamation. The rules enshrined in the Capital Market proclamation are intended to ensure capital markets are operated fairly, with integrity and efficiency.
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Presence of foreign businesses in Ethiopia can be done by incorporating a subsidiary company or opening a branch of a foreign company. These are the main vehicles for foreign businesses to enter into the Ethiopian market. Foreign companies may also promote their business in Ethiopia by opening commercial representative offices. The new Commercial Code of Ethiopia Proclamation No 1243/2021 from Article 37-41 incorporates provisions regarding commercial representatives employment, termination and compensation. However the Code states that detailed rules applicable to commercial representatives of foreign traders will be determined by law. Thus detailed rules on commercial representatives of foreign traders can be found on the Commercial Registration and Licencing Proclamation 980/2016 and its amendment Proclamation No 1150/2019 and Commercial Registration and Licencing Council of Ministers Regulation No 392/2016 and its amendment Regulation No 461/2020.
Definition
The term “commercial representative” is defined in Proclamation 980/2016 as any person who is not domiciled in the country where the head office of the business organization or the business person he represents is situate, bound to such business organization or business person by a contract of employment and entrusted with the carrying out of any trade promotion activities on behalf and in the name of the business organization or the business person he represents, without being a business person himself.
Special Certificate of Commercial Representative
Any person interested to engage as a commercial representative shall get registered on the commercial register of the Ministry of Trade and Industry before commencing his business and obtain a special certificate. The commercial representative certificate should be renewed annually. Renewal requires the transfer of a minimum of US$100,000 every year to a bank account of the commercial representative office in Ethiopia.
Requirements to Obtain Special Certificate of Commercial Representative
Application for Special Certificate of Commercial Representative shall be submitted to the Ministry of Trade and Industry by attaching the following documents with the application form:
a) original and necessary copies of valid identity card or passport of the representative;
b) two passport size photographs taken within six months, which shows the clear identity of the representative;
c) where the application is submitted by an attorney; original and copy of power of attorney given by the principal business person, original and necessary copies of identity card or passport of the representative and the principal;
d) proof of registration and legal personality of the principal business organization in the country of its formation or in the country of operation;
e) a bank statement certifying deposit of a minimum of USD 100,000(One hundred thousand) earmarked for salary and administrative expenses is deposited in the name of the principal or in the name of his representative;
f) an authenticated proof of appointment of the representative by the principal business person as its commercial representative;
g) statement of the principal business address of the representative applicant and branch offices, if any and: i) the title deed, if the house used for business is owned by the applicant; or ii) a valid and authenticated lease agreement, if the house used for business is leased by the applicant from another lessor or lease agreement document issued by appropriate government body if the house used is owned by the Government; ii) written confirmation letter of address issued by the local administration, if one of the evidences stated under paragraph (i) or (ii) of this sub-article could not be produced;
h) where the principal is a business organization, in addition to requirements specified under paragraph (a) to (g), its original copies of memorandum and article of association or similar documents notarized by a legal authorized body in Ethiopia and
i) Certificate of Tax Identification Number (TIN).
Major Tasks of Commercial Representative
Any person issued with the special certificate of commercial representative shall be allowed to promote in Ethiopia the products and services of the company he represents, conduct market survey and trade expansion that could help the company in investing in Ethiopia in the future and promote Ethiopian export products in the country where the company he represents is stationed. A commercial representative shall, on behalf of the company he represents, not engage in supplying goods or services to customers and clients or shall not enter contracts with the customers. A commercial representative shall not work on behalf of other business persons, in any manner, other than the business person he represents.
Private Business
In no case may commercial representatives act on behalf of a trader selling goods or offering services similar to the goods sold or services offered by the trader to whom he is bound. Unless otherwise provided in the contract of employment, commercial representatives may not carry on similar private business for themselves and on behalf of third parties. Unless otherwise agreed, commercial representatives may not act on behalf of traders other than the trader to whom they are bound. Where they carry on private business, or act on behalf of other traders,they shall lose their right to fees or compensation.
Remuneration
The remuneration of the commercial representative shall be fixed by the contract of employment or, where not fixed, by custom. Commercial representatives may be paid in the form of salary or on commission or both.
Compensation in Case of Termination of Contract
Where a contract entered into for an undefined or defined period of time is terminated by the trader for no fault attributable to the commercial representative, the commercial representative shall receive fair compensation which shall be fixed having regard to expansion of the trader’s market or the customers introduced by him and the like. Where the principal terminates the contract without good cause, commercial representatives who are bound by a contract entered into for an undefined period of time shall be entitled to compensation fixed in accordance with the relevant labor law.
Conclusion
Foreign traders and businesses who are interested in trading activities in Ethiopia can register a commercial representative office and appoint a commercial representative to undertake promotional activities of their products and services. To secure the special certificate of commercial representative, among other things, a minimum of US$100,000 has to be brought into Ethiopia which is expected to cover salaries and operational expenditures of the office for a year. Therefore commercial representation is one vehicle among others in which a foreign business can enter into the Ethiopian market to promote its products and services.
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The House of Peoples Representative has lifted the state of emergency enacted under Proclamation 5/2021 as of November 2, 2021 for a six month period of time. It has been said that the treat the country has faced could be,now, averted by the normal law enforcement mechanism; thus making the lifting of the state of emergency necessary. The lifting of the state of emergency shall be effective as of February 15,2022.
The House of Peoples Representative of FDRE has enacted as law two draft proclamations concerning government and private employees pension schemes on February 15,2022. The fund collected from pension could be invested in sectors that assure profit return. Similarly, for private employees pension age is fixed to be 60 years of age but with a possibility of renewal for five years twice till the age of 70.
Ethiopian Investment Holding is a strategic development wealth fund which aims to maximize the value of state owned assets through professional management leveraging international best practice.
The Ethiopian Council of Ministers approved the creation of Ethiopian Investment Holding on December, 29, 2021. Accordingly the Council of Ministers issued Regulation no. 487/2022 in accordance with Article 103 of the Definition of Powers and Duties of the Executive Organ Proclamation no.1263/2021. The main point incorporated under the definition of objective and function of the Ethiopian Investment Holdings Council of Ministers Regulation will be discussed herein under.
Overview of the Ethiopian Investment Holding
The Ethiopian Investment Holding is accountable to the Office of Prime Minister. Regardless of the holding percentage of the government, Ethiopian Investment Holding as well as sub-funds and companies set up by Ethiopian Investment Holdings or participants in setting up thereof shall be considered private business organizations as per Article 3(3) of the Regulation. Its authorized capital is Birr Twenty-Five Billion of which Birr Twenty Five Billion is paid up in cash and in-kind with the possibility of increase or reduction by the board of directors. Head office of the Ethiopian Investment Holding will be Addis Ababa with branch offices in and outside the country.
Objective of the Ethiopian Investment Holdings
The main objective of Ethiopian Investment Holdings is to serve as a strategic investment arm of the government of Ethiopia. It will also contribute to sustainable economic development, through professional management of its funds and assets achieving the optimal use thereof in accordance with international best practice and corporate governance principles. It will also maximize the value for the benefit of current and future generations. In addition to that it will provide a strategic vehicle for foreign investment.
Duties and Responsibilities of the Ethiopian Investment Holding
The Ethiopian Investment Holdings shall have the following duties and responsibilities;
Operate and carry on a business of a holding company according to the Ethiopian Commercial Code;
Hold shares, debentures, bonds and securities which are in its ownership;
Invest in any business and investment opportunities as it sees profitable;
Take part in capital market, money market and similar other sectors through purchase sell or other investment undertakings;
Takeover and manage state-owned assets that may be assigned to it by the board of directors;
Transform property of state owned enterprises and other assets transferred to it into optimal income generating ventures through structure and system change;
Establish, control, manage and administer sub-funds;
Acquire share in existing entities or funds solely or in association with local or foreign entities;
Manage, supervise and exercise control of the subsidiaries under its pool;
Hire appropriate staff
Decide on matters of incorporation of any of its subsidiaries in any part of the world;
Undertake all preparatory works and decide on the dissolution, amalgamation, division, sale, privatization, spin-off of subsidiaries it calls into its pool.
Generally the Ethiopian Investment Holding will perform any other tasks that are necessary for the attainment of its objectives as it is stipulated under Article 9 of the Regulation.
Organization of the Ethiopian Investment Holdings
The Ethiopian investment holding shall have the following governance structure;
Board of directors
A chief executive officer and executive management
Necessary staff and
An independent international advisory board
According to the structure, the powers and responsibilities of each organ are also specified under the Regulation.
Tax Exemption
According to Article 16 of the Regulation, dividends of the Ethiopian Investment Holding from its organizations shall be exempted from all taxes and duties. Such exemptions shall not apply to the sub-funds and companies in which Ethiopian Investment Holdings is a shareholder without prejudice to any exemption stipulated in other law.
Conclusion
Generally Ethiopian Investment Holding aims to bring together government resources under one company so that the resource will be properly managed and contribute to the overall economy of Ethiopia. This allows the government to exert strong corporate governance principles to instill commercial and investment discipline in the management of state-owned assets and resources. Thus this enables the government to provide strategic oversight, attract sizable foreign investment and technology.
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