By Dagnachew Tesfaye, Managing Partner
The Commercial Code of the Federal Democratic Republic of Ethiopia Proclamation No. 1243/2021, done In Addis Ababa On the 12th Day Of April, 2021 includes two options for the management of a private limited company. These are the board of directors or general manager. A brief look of both follows here below.
Board of Directors
The Memorandum of Association may provide for the management of a Private Limited Company by a board of directors. The board of directors shall consist of 3-7 members. The provisions of the Commercial Code on the board of directors of a share company concerning appointment, guarantees provided, removal, term of office, decision making, liability, remuneration, powers and duties and other relevant matters under shall apply as appropriate to the board of directors of a private limited company. Where the Memorandum of Association provides for a board of directors, the manager shall be appointed by the board. However, the manager shall not be the chairperson of the board of directors. Where the company is managed by a board of directors, the corresponding provisions on share companies of the Commercial Code shall apply as appropriate to the powers of the manager.
General Manager
Another form of management of a Private Limited Company is through a General Manager. A private limited company shall have a general manager appointed by a general meeting of shareholders. The manager may be a shareholder or an outsider. The manager is an employee of the company. The manager shall have full powers to act in the name of the company for the realization of the business purposes of such company. Provisions of the memorandum of association restricting the powers of the manager shall be of no effect except as between the company and members on the one hand and the manager on the other.
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