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 …
Ethiopia has been accepted to join the BRICS family starting from January 1/2024. Together with Ethiopia, Saudi Arabia, Argentina, Egypt, Iran and UAE have also joined the BRICS family. This is part of the BRICS expansion process, said Cyril Ramaphosa, South Africa President. PM Dr.Abiy stated on the announcement that Ethiopia joined the BRICS family due to the fact that Ethiopia’s multi faceted ancient history, huge population with the majority being young and potential for fast economic growth. Green legacy and wheat production were the quintessentials of such potential economic growth. The support of China has been praised together with India and Russia. China even took the step to render a one year grace period for 2023-2024, on all debts Ethiopia has to discharge to China. Science, Military, Trade and Investment deals were also signed with India.
BRICS is an intergovernmental organization that has the core purpose of enhancing political and economic ties among member states. Bilateral relations among BRICS are treated in majority of the cases with the aim of non-interference, equality and mutual benefit. The colonial and unequal world order has been blamed by many to slow down economic development of the developing nations.
BRICS encompasses the New Development Bank(NBD), which assists public and private projects through loans, guarantees, equity participation and other financial instruments. Ethiopia, being a member of BRICS, shall benefit through NBD for its public projects on the pipeline.
In addition to NBD, BRICS has initiatives namely BRICS Contingent Reserve Arrangement (CRA) which is an arrangement for rendering support through liquidity and precautionary instruments in response to actual or potential short term balance of payments pressures. The CRA is considered as a version of the International Monetary Fund (IMF). Moreover BRICS has initiatives of the BRICS Payment System, the BRICS Joint Statistical Publication System and BRICS basket reserve currency.
The latest expansion of BRICS from 5 countries to 11 is aimed at strengthening South-South Cooperation and building a multi polar order that is treated on the basis of non-interference, equality and mutual benefit.
The Ethiopian government has applied, done the diplomacy and met the requirements for being a member of the BRICS. The House of People’s Representatives is expected to ratify the BRICS accession.
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The National Bank of Ethiopia issued Foreign Exchange Surrender Requirements of Banks(as amended) Directive No FXD/83/2023 effective from August 11,2023. The Directive requires a bank to surrender 50% of the receipts from export of goods and services, 70% from private transfer (remittances) and NGO’s transfer to National Bank of Ethiopia. Such surrender has to occur every month within the first five working days of the next month. NBE shall credit the payment and settlement amount of the bank with equivalent amount in Birr at the prevailing buying and selling rate of the day(mid exchange rate).
This latest Directive repealed Directive No FXD/78/2022, effective from January 6,2022, which requires a flat rate surrender of 70% of receipt from export of goods and services, private transfer( remittance) and NGO’s transfer to NBE.
The 2022 Directive repealed Directive No FXD/72/2021 that was effective as of September 01,2021, that requires a bank to surrender 50% receipt from export of goods and services, private transfer (remittance) and NGO’s transfer to the NBE every month.
On the other hand the Retention and Utilization of Export Earnings and Inward Remittance Directive No FXD/84/2023 effective from August 11,2023 allows exporters of goods and services to retain 40% of their exports earnings; recipients of inward remittance 20% in retention accounts. 10% of the foreign currency shall be surrendered to the client bank.
The retention account holder shall have the right to utilize the foreign currency for import of goods and services payments without restriction provided that the account holder has the required business license to do so.
In addition, the account holder is free to sell all or part of the foreign currency held in the retention account at any time at a freely negotiating rate not exceeding the selling exchange rate of the day to their respective clients bank.
To sum up, the latest measure taken on surrender of foreign currencies returned the 2021 rate of 50% surrender for exporters but reaffirmed 70% for NGO’s and private transfer(remittance) of the 2022 Directives. The exporters and private remittances receivers are allowed to utilize their 40% and 20% retention respectively. Utilization rights don’t extend to NGO’s.
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The Commercial Code of Ethiopia Proclamation No 1243/2021 provides the definition of good will on Article 112. The definition connotes good will as a result from the creation and operation of a business and is of a value which arises from relations between a trader and third parties who may require from him goods or services. To understand good will more, it is better to look into the definition given under Black’s Law Dictionary:
A business’s reputation, patronage, and other intangible assets that are considered when appraising the business, esp. for purchase; the ability to earn income in excess of the income that would be expected from the business viewed as a mere collection of assets. • Because an established business’s trademark or servicemark is a symbol of goodwill, trademark infringement is a form of theft of goodwill. By the same token, when a trademark is assigned, the goodwill that it carries is also assigned…. “
[Goodwill] is only another name for reputation, credit, honesty, fair name, reliability.” … “Good will is to be distinguished from that element of value referred to variously as going-concern value, going value, or going business. Although some courts have stated that the difference is merely technical and that it is unimportant to attempt to separate these intangibles, it is generally held that going-concern value is that which inheres in a plant of an established business.
Such good will has to be protected from unfair competition. Instances of unfair competition include trademark infringement, dilution of goodwill and trademarks, use of similar trade or firm names, simulation of product packaging or configuration, false advertising, passing off goods for those of another, and theft of trade secrets.
Hence good will has to be protected. A trader may preserve his goodwill by instituting proceedings for unfair competition or by setting up the legal or contractual prohibitions provided in Article 29,39,53,118,130,131,166, and 167 of the Commercial Code.
A trader may claim damages under Article 2057 of the Civil Code from any person who commits an act of competition which amounts to a fault. Details on unfair commercial competition and its effects are prescribed by Trade Competition and Consumer Protection Proclamation 813/2013(TCCPP). No business person may, in the course of trade, carry out any act which is dishonest, misleading or deceptive, and harms or is likely to harm the business interest of a competitor. Article 8 of the TCCPP lists what it calls acts of unfair competition. These are: a) any act that causes or is likely to cause confusion with respect to another business person or its activities, in particular, the goods or services offered by such business person; b) any act of disclosure, possession or use of information of another business person, without the consent of the rightful owner, in a manner contrary to honest commercial practice; c) any false or unjustifiable allegation that discredits, or is likely to discredit another business person or its activities, in particular the goods or services offered by such business person; d) comparing goods or services falsely or equivocally in the course of commercial advertisement;e) disseminating to consumers or users, false or equivocal information including information the source of which is not known, in connection with the price or nature or system of manufacturing or manufa cturing place or content or suitableness for use or quality of goods or services; f) obtaining or attempting to obtain confidential business information of another business person through his current or former employees or obtaining the information to pirate his customers or to use for purposes that minimizehis competitiveness; g) other similar acts specified by regulation to be issued for the implementation of this Proclamation. Hence, a violation of any of the provisions under Article 8 of the TCCPP is a fault and gives rise to an extra-contractual liability
In any event, where an act of unfair competition has been committed, there are civil, administrative and criminal liabilities. The Commercial Code on Article 113-114 cross connects the remedies to itself, the Civil Code of Ethiopia and TCCPP. A trader may preserve his goodwill by instituting proceedings by setting up the legal or contractual prohibitions provided in Article 29,39,53,118,130,131,166, and 167 of the Commercial Code. Furthermore, a trader may claim damages under Article 2057 of the Civil Code from any person who commits an act of competition which amounts to a fault
Under the TCCPP, the Trade Competition and Consumer Protection Authority Adjudicative Benches has for example judicial power on Article 32 to : c)to order payment of compensation in accordance with the relevant laws to business persons victimized by acts of unfair competition committed in violation of the provisions of Part Two of this Proclamation.
The administrative measures within the TCCPP include ordering: a) the discontinuation of the act pronounced unfair; b) the taking of any other appropriate measure that enables to reinstate the victims competitive position; or c) the suspension or revocation of the business license of the offender. Any business person who has sustained damages arising from an act of unfair competition and claims payment of compensation may institute an action before the adjudicative bench of the Authority.
On the other hand, the Administrative Penalties are also provided in the TCCPP. Any business person who violates the provisions of Article 8 of this Proclamation(unfair competition article) shall be punished with a fine from 5% up to 10% of his annual turnover.
In conclusion, goodwill is protected by the relevant provisions of the Commercial Code, Civil Code and special laws including but not limited to trade name, trade mark and intellectual property laws, and trade competition and consumer protection laws. A business may consist of other corporeal or incorporeal elements but a business’s main element is its goodwill. The protection accorded to goodwill in the Commercial Code is a major indicative of the significance of the matter.
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The FDRE Council of Ministers has issued a state of emergency Proclamation as per Article 93(1)(a) of the FDRE Constitution. The Proclamation is intended for safeguarding peace and security of people of Amhara Regional State. The Proclamation shall be effective from the date of promulgation by the Council of Ministers which is as of August 4,2023 and shall be effective for six months. The HoPR may order the cessation time of the Proclamations ahead of the six month as the case may be. As a result, any judicial organ shall have no authority with regards to items covered on the Proclamation until the expiry of the Proclamation. Substantive and procedural laws inconsistent with the Proclamation shall remain suspended during the implementation of the Proclamation save diplomatic immunities indicated under the Vienna Convention on Diplomatic Relations. The Proclamation covers 11 provisions divided into four parts.
As per Federal Courts Proclamation No. 1234/2021, Article 38, Federal Courts shall be closed from August 7 to October 11 every year(Amharic version). Consequently, this year the courts shall be partially closed from August 7 to October 11, 2023. However, emergency cases shall be tried in courts by judges. Judges will also work on cases on an over-time voluntarily basis. The judgments or decrees or orders made during the partial closure time shall be revealed to the parties when the court re-opens after October 11/2023.
The Proclamation gives the Federal Supreme Court the power to issue directives to determine what type of cases are emergency cases that are entitled to be seen while the courts are in partial closure.
In the Commercial Code of Ethiopia 1960, there was no requirement by law to have a company secretary even for share companies. As of April 2021, in the new Commercial Code of Ethiopia, Proclamation No 1243/2021, company secretary appointment became a legal requirement for share companies. The manner of hiring and firing, power and duties and liabilities of the secretary were included. We shall look into the appointment, powers and duties and liabilities of the secretary here below.
The New Commercial Code on Article 340 provides about the legal requirement of hiring a secretary for a share company. The article states in a mandatory manner, ‘a share company shall have a secretary’. Such a legal requirement is non-existent or optional for private limited company or one member private limited company.
The position of secretary is under the general manager. Thus the secretary is accountable to the general manager. Consequently when hiring of secretary, the general manager will nominate the secretary and present his nomination for the approval of the board of directors. It is the board of directors who decide who will be the company secretary, and make the appointment. This has to be decided at a board meeting. Just as the directors can appoint the company secretary, the board can also remove the secretary by way of a board resolution after receiving the recommendations of the general manager. Company secretaries can be individuals or companies, as some organizations provide company secretarial services.
A company’s secretary has the general duty of organizing and keeping information and records of the company. The secretary shall provide reports and other necessary information promptly to the concerned body. Similarly the secretary is the one that provides information to shareholders and third parties. The most important role of the secretary is to organize meetings of shareholders and members of the board of directors. The secretary then shall prepare, organize and keep minutes. The secretary shall carry out other tasks assigned to him by the general manager and memorandum of association.
Despite the name, the role is not clerical or secretarial. A company secretary needs to be someone with a good knowledge of share companies and their legal obligations. As the capital markets start, for a public company, whose shares of stock are traded on a securities exchange or over-the-counter markets, then this needs to be someone with appropriate qualifications such as a lawyer, a chartered company secretary, an accountant or someone with previous experience in the role.
The secretary shall be liable to the company, shareholders or third parties for any breaches of his duties under the Commercial Code or the memorandum of association, notwithstanding an agreement to the contrary.
To sum up, Ethiopia has introduced the appointment of company secretary as a mandatory requirement for share companies in its legislation of the new Commercial Code. The power and duties of the secretary have also been included in non-exhaustive ways. Though the secretary is reporting to the manager, when firing and hiring occurs, with the recommendation of the manager, the approval of the board of directors is sought.
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Division is the operation whereby a business organization is wound up without liquidation by transferring all its assets and liabilities to more than one pre-existing organizations or organizations newly formed by it. The new Commercial Code of Ethiopia Proclamation No 1243/2021 on Article 566 provides what division of business organization is all about. The requirements to be met when division of business organizations occur are stated on Article 41 of Directive 935/2022 for Commercial Registration, Licensing and Post-licensing Inspection. We shall briefly look at what the two legislation incorporate in terms of division of business organization.
Division may take place into any type of business organization. The recognized business organizations on the commercial code include General Partnerships, Limited Partnership, Limited Liability Partnership, Joint Venture, Share Company, Private Limited Company, One Person Private Limited Company and Firms incorporated abroad having a form other than those recognized by the Commercial Code.
Division is the operation whereby a business organization is wound up without liquidation by transferring all its assets and liabilities to more than one pre-existing organizations or organizations newly formed by it. The shareholders or partners of the business organization that is divided are issued in exchange shares in the organizations to which the assets are divided. The shareholders may also be given, as the case may be, additional payment in cash.
Another form of division i.e. a division by acquisition is the operation whereby a business organization is wound up without liquidation by transferring all its assets and liabilities to more than one other pre-existing organization. The shareholders or partners of the business organization that is divided are issued in exchange shares in the organizations to which the assets are divided. The shareholders may also be given, as the case may be, additional payment in cash.
A division by the formation of new organization is the operation whereby a business organization is wound up without liquidation by transferring all its assets and liabilities to organizations formed by it. The shareholders or partners of the business organization that is divided are issued in exchange shares in the organizations to which the assets are divided. The shareholders may also be given, as the case may be, additional payment in cash.
Division is also applied on dividing part of the asset or functioning business unit and contributing the asset or business unit to an organization. Dividing a certain portion of assets means separating a business unit that can subsist independently or part of assets of an organization and transferring the same to a business organization that is under formation or to an existing organization by way of contribution.
The requirements to be fulfilled when division occurs is provided by the Directive. A business organization to be divided shall submit a tax clearance certificate and cause its books of account to be closed before the division is carried out. Where part of the business organization to be divided is to be taken over by another business organization, the divided business entity shall be incorporated under the trade name and business name of the latter business organization.
Where each divided entity of the business organization is to be established as an autonomous organ, a minute authenticated by a body authorized by law which shows that the entity who is allowed to use the trade and business names of the organization is adopted by a vote of members representing two third (2/3) of the shares the business organization that existed before the division, shall be submitted.
A copy of the newspaper or the link, if it is a digital newspaper, having nationwide circulation in which the division plan is notified to the public once in month shall be submitted as evidence within two months from the date the plan is adopted by the general meeting.
The commercial code, commercial registration and licensing proclamation and Regulation concerning business organizations shall be applicable to members, capital, business name, trade name and any other similar matters of the divided entities.
To summarize the Commercial Code and the Directive provide the principles in which business organizations undergo division and the requirements to be submitted to finalize the division.
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The Commercial Code of Ethiopia Proclamation No 1243/2021 lays the foundation for conduct of commercial activities in Ethiopia. Thus the Commercial Code shall therefore be applicable to sole traders and business organizations incorporated in Ethiopia. The following are types of business organizations where Commercial Code applies: 1/ General partnership; 2/ Limited partnership; 3/ Limited liability partnership;4/ Joint venture; 5/ Share company; 6/ Private limited company; 7/ One person private limited company.
In addition to the above, Ethiopian law applies to enterprises incorporated abroad having their head office in Ethiopia. Business organizations incorporated abroad or sole proprietorships established outside Ethiopia and whose head office or principal place of business is in Ethiopia shall be subject to the relevant provisions of the Commercial Code and other laws of Ethiopia. Furthermore when organizations or sole proprietorships are incorporated in Ethiopia but operating abroad, the provisions of the Commercial Code shall apply to them. Those foreign organizations that have a form other than those recognized by the Commercial Code, shall be subject to the provisions of the Commercial Code concerning share companies, as appropriate, regarding entry into the commercial register of resolutions of general meetings of shareholders and the liability of directors. Article 587 of the Commercial Code states that nothing in the Commercial Code shall affect the application of other Ethiopian laws prohibiting, or subjecting to special conditions, the exercise of certain activities by firms in which foreign interests are represented.
The Commercial Code provides certain institutions not to be governed by the Commercial Code. For instance, the provisions of the Commercial Code shall not apply to administrative organs that are bodies corporate under public law, religious institutions, civil society organizations and cooperative societies even where they carry on commercial activities. However, notwithstanding the above statement of non-applicability, where administrative bodies that are bodies corporate under public law, religious institutions, civil society organizations or cooperative societies happen to be shareholders or partners in a business organization established pursuant to the Commercial Code, the relevant provisions that are applicable to shareholders or partners, as the case may be, shall apply to them. Nevertheless, public enterprises are subject to the application of the Commercial Code without prejudice to the applicability of the relevant special laws.
The provisions of the Civil Code of Ethiopia shall also apply to persons and business organizations carrying on a trade, unless otherwise declared by the Commercial Code. Moreover, the relevant provisions of the Maritime Code shall apply to persons and business organizations carrying on maritime trade.
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The spouses of holders of foreign nationals of Ethiopian origin ID are granted a right to apply for foreign national of Ethiopian origin ID. This right is listed under Proclamation No 270/2002 Providing Foreign Nationals of EthiopianOrigin with certain Rights to be Exercised in their Country of Origin (hereafter the Proclamation) and Council of Ministers Regulation No 101/2004. Here below, we shall briefly see what the entitlement is about for the spouse, related rights and restrictions of having the ID, duration of the ID and the extension of the right to siblings. A brief conclusion shall end the article.
Entitlement
A spouse of a foreign national of Ethiopian origin who possesses foreign nationality shall be entitled to apply for an Identification Card specifying that he or she is the spouse of a person holding the Identification Card of a foreign national of Ethiopian Origin. The right to apply shall also extend to spouses possessing Eritrean nationality. The spouse with an Identification Card issued shall enjoy the rights and privileges and be subject to the restriction stipulated in the Proclamation.
Rights
The holder of the Identification Card of foreign national of Ethiopian origin, who is the spouse, shall enjoy the following rights and privileges:
He shall not be required to have an entry visa ,or residence permit to live in Ethiopia;
Subject to the restriction below, he shall have the right to be employed in Ethiopia without a work permit;
He shall have the right to own immovable property and the restrictions on foreigners owning of property under Articles 390-393 of the Civil Code shall not apply on him;
He shall have the right to be considered as domestic investor to invest in Ethiopia under Investment law;
In general restrictions imposed on foreign nationals regarding the utilization of economic, social, and administrative services shall not be applicable to foreign nationals of Ethiopian origin holding the Identification Card.
Restrictions
The holder of the Identification Card of foreign national of Ethiopian origin shall have the following restrictions:
He shall have no right to vote or be elected to any office at any level of government;
He shall have no right to be employed on a regular basis in the National Defence, Security, Foreign Affairs and other similar political establishments.
Duration
The Identification Card issued to the spouse of the yellow card holder shall only be valid until the Identification Card of the person of Ethiopian Origin is returned or canceled or upon dissolution of the marriage. However, in normal circumstances, the ID is valid for 5(five years) and it is renewable as per Article 4 of the Regulation.
Siblings
The children of the holder of the Identification Card of foreign nationals of Ethiopian origin who are under the age of 18 may not be required to have a separate Identification Card. They shall have the right to enjoy facilities granted in this Proclamation provided that they are specified as children in their parent (s) identification Card. However, the children under the age of 18 covered by the definition of “Foreign national of Ethiopian Origin” under this Proclamation, may have the right to be issued with a separate Identification Card upon application, taking into account the provisions of the Ethiopian Civil Code pertaining to minors.
Conclusion
The spouses of holders of the identification card of foreign nationals of Ethiopian origin are granted the right those Ethiopian origins have due to their connection to Ethiopia. For much of the rights, the holder of the ID enjoys what an ordinary Ethiopian enjoys. The trend has also been to lift restrictions in the participation of foreign nationals of Ethiopian origin ID holders for instance in the banking sector and adoption of Ethiopian children. As a comparison, for example, a foreigner marrying an Ethiopian national, shall have only the right to acquire residence permit. The spouses who marry Ethiopian nationals shall have NO right to own immovable property nor be considered as domestic investors. On the contrary, marrying an ID holder of Ethiopian Origin has many more privileges. Our immigration office needs to be robust and proactive in dealing with immigration issues of such type and make sure immigration rules are applied in uniformity having the policy perspective of the country in check.
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The Commercial Code of Ethiopia Proclamation No 1243/2021 lays the manner of conduct of commercial activities by married persons. The Code also lays down the procedure of objection of the trade of the other spouse and consequence of debt on common and private property of the spouses.
A trade carried on by a married person shall be regarded as a joint enterprise of the couple. However one spouse has the right to object to the fact that the trade is not a joint enterprise but a trade solely applying to that particular trading spouse. Such an objection, as between spouses, may be notified to the trading spouse in any manner. This means the objection can be verbal, written or by conduct. Nonetheless, such objection shall not affect third parties, other than those who are aware of its existence, unless notice of such objection has been entered in the commercial register.
The trading spouse is given the right to apply to arbitrators to set aside the objection. Where the trading spouse is of the opinion that the objection affects the interest of the family, she may apply to arbitrators to set aside the objection. If successfully set-aside, the spouse for whom the objection was set aside shall enter a notice to this effect in the commercial register.
Debts contracted by the trading spouse shall be deemed to be debts of the marriage and may be recovered on the personal estate of each spouse and on common property. However, where an objection has been entered in the commercial register or the existence of the objection is known, debts contracted by the trading spouse may be recovered on her personal estate only. The common property or the personal property of the non-trading spouse will not be affected.
Where spouses carry on a trade in cooperation, the debt incurred by the trader spouse shall be deemed to be a matrimonial debt that is recoverable from the common property of the spouses and the private property of each spouse unless it is shown that one of them is the employee of the other.
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