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Domestic Adoption Document Requirements

By DMLO in Collaboration with Adoption Advocates Organization(AAO)

Domestic adoption is one way of helping vulnerable children. Domestic adoption document requirements is set out under Foster Family and Domestic Adoption Services Directive No 48/2020. The document requirements are the following:

Registration

Interested prospective adoptive families need to register at the institution. The ‘institution’ is a government or charity organization which have the authority and licence from the Federal government to perform domestic adoption and foster care service. The institution will normally include government or licensed private orphanages. The prospective adoptive family should clearly indicate on the registration form the age, gender, health status and other circumstances of the child they want to adopt.

Evidences Compiled for the Child
The evidence compiled for the child include birth certificate, medical certificate, short profile of the child containing the picture of the child as well as the pictures of the guardian or custodian of the child.

Documents Compiled for the Adoptive Parents
The adoptive family shall come up with documents including medical certificate, birth certificates, marriage certificate, income statements, police clearance letter, home study, passport size photographs and id cards or passport copies. Manner of organizing these documents has certain requirements indicated in the Directive.

Adoption Agreement
Adoption agreement signed by the guardian of the child and the adoptive parents or their legal agents. The adoption agreement should show the date of execution of the adoption agreement, the parties to the agreement, the full name, age, sex of the child, clear provisions that contain consent for giving and receiving the adoption, signed by the parties, witnessed by at least two witnesses and stamped with the passport size picture of the child.

For more information you may contact us at info@dmethiolawyers.com

Major Aspects of the New Foster Family Law: the Case of Ethiopia

By Dagnachew Tesfaye, Founder and Partner at DMLO

Email: dagnachew@dmethiolawyers.com

Introduction

The Ministry of Women, Children and Youth Affairs (MoWCYA) has come out with a registered directive Directive No 48/2020 namely Directive on Foster Family and Domestic Adoption Services. In this brief article, an attempt shall be made to see what foster care child support looks like only. Domestic adoption process and procedure shall be dealt in another article.

General Provisions

The preamble says foster care is introduced in this directive to fulfill the promise of the government. The government promised to support vulnerable children locally. Foster care is one of the local support programs. The directive declares that it generates its powers from the ratified Child Right Convention and African Charter on the Rights and Welfare of the Child. Thus, before indulging into the details of the Directive, it is important to see the definitions given to foster family care, who a vulnerable child is and who are the institutions to implement the foster care directives.

The scope of the Directive is to apply on appropriate Federal Government institutions and charity organizations authorize to perform foster and adoption services as per the Federal Government. Based on this directive, regions and city administration may prepare their own directive taking in to account their context.


Definitions

‘Foster family Care’ is one of alternative to providing support and care to children lost their family or vulnerable children. It is a ‘temporary alternative program’. Foster family care can be either for short or long period. The responsibility of the foster family shall be to properly raise the foster child by fulfilling the basic necessity. The support and care cover the psychological and physical health of the child. These responsibility must be completed until the child is re-unified with their biological parents or placed to other permanent alternative program.

‘Vulnerable Child’ is a child whose survival and development is jeopardize by certain circumstances and therefore in need of alternative care services. Those includes: a. Abandoned Children; b. Single or double orphan; c. Non-orphan whose parents are unable to support the child due to illness, physical disability and mental impairment; d. Street children; e. Children living in orphanage; f. Abandon children due to their biological parents displacement; g. Children who are not getting support from their biological parents due to economical deprivation; and h. Children neglected by their biological parents.

‘Institution’ means a government or charity organizations which have an authority and license from federal government to perform domestic adoption and foster care service.


Registration and Eligibility


The first thing to do is registration. Registration at the institution as an interested foster family. The institutions shall have responsibility to prepare registration form to be filled by potential families. The registration must also include the foster family needs, including age, gender, health status and other conditions of the child.

The registered foster care family should fulfill eligibility requirements. The registered foster family must have Ethiopian nationality and solely reside in Ethiopia permanently. They should be above 25 years of age. Unless and otherwise there is no option, the child must only be given to married persons. Priority shall be given to a family who reside in the area where the foster child resides. Family must duly approve their willingness by written consent to foster the child. Family shall have sufficient economical capacity to raise the child. Foster family should be a person who has not convicted by a court of competent jurisdiction for offenses related children. Family must have medical certificate that enables them to raises the child.

Home Study


After making sure that the eligibility requirements are fulfilled, before the concerned authority placed the child to foster family, a home study shall be done. The concerned organ shall assess the foster family by attending home visits to acknowledge their psycho-social and economic conditions in accordance with the check list.

Evidences Concerning the Foster Family

The foster family should produce Ethiopian nationality identification card, birth certificate, medical certificate, police clearance certificate, marriage certificate and income evidences. Medical certificate should confirms they are completely free from transferable or uncured deceased so as to confirm their health capability to properly raise child.

Evidences Concerning the Child

Once the status of the foster family is assessed and completed, then the status of the child shall follow. General information of the child namely gender, age, language, religion (for a child capable of expressing himself/herself), place of birth and other related information, residential address of the child, birth certificate of the child, family status of the child (abandon, single or double orphan) and other related status shall be organized. The child physical, mental, psychological and health status, educational status of a child, economical status of a child, (for example acquiring property through inherits or grant) shall also be identified. If the child is found abandoned, name and address of the person who found the child, date, place and other related information’s must be organized.

Training

Training to the foster family shall be given by the government organ or the institution. Such training mainly consists of proper upbringing and securing children right and other related subjects.

Matching, Attachment and Bonding

The next step is matching. After organizing the evidences of both the foster family and the child, the INSTITUTION shall made matching the child with suitable family.

Then creating attachment and bonding shall follow. Matching and bonding involves introducing physically the child with the foster family, the biological children of the foster family with the child, taking the child to the village of the foster family so as to allow him to be adapt with the community shall be done.

Foster Care Agreement

Once the bonding activity is carried out, legally binding agreement shall be made between the institution and the foster family. If an agreement is signed between the charity institution and the foster family, the concerned governmental institution shall also sign as a witness. After the agreement is concluded, in order to protect economic and social rights of the child, the foster family may present its petition of guardianship to the competent court of law.


Support and Follow up


After the placement is done, the concerned institution shall provide continuous support and follow up to ensure the right and welfare of the child is reasonably maintained.

Transition

Transition of foster care service to other alternatives may be implemented. If the biological parents exist while the child is given to the foster family and if the biological parents are capable of raising their child, reunification with biological parents shall be performed by foster care institution.

Termination of Agreement
If the foster family commit child labor, physical or psychological violence, sexual harassment, or any exploitation has been committed by a family member or by others, then if such incidents confirmed by the concerned institution, without the prejudice of legal liability, the contract will be terminated.

Conclusion

To sum up, the MoWCYA has come out for the first time with binding details of foster care implementation procedure. From the registration of interested foster family to required assessments and documents, to signing a foster care contract agreement has been stated under Directive 48/2020. It is a commendable act in the right direction. Publicly announcing of the Directive and effectively implementing the Directive for the benefit of the vulnerable children are equally important steps.

For further information you may contact us at info@dmethiolawyers.com

7 Major Highlights on Civil Society Organizations Registration Proclamation

By Dagnachew Tesfaye

Email: dagnachew@dmethiolawyers.com


Civil Society Organizations are administered by the Organizations of Civil Societies Proclamation No.1113/2019 (hereafter the Proclamation) done on March 12/2019 to be effective from the date of publication in the Federal Negarit Gazette. This brief article attempts to show major highlights of the Civil Society Organization Registration Proclamation. The article is divided into seven parts. Part one shall deal with definitions. Part two shall look upon types of local organization, with emphasis on two of those types. Part three and four shall deal with the requirements for registration of local and foreign civil society organizations. And part five to seven shall state the effects in terms of rights, responsibilities and income generation benefits to such registered civil organizations. A brief conclusion shall follow.


Local and Foreign Organizations

The Proclamation defines local and foreign organizations. “Local Organization” are defined as a civil society organization formed under the laws of Ethiopia by Ethiopians, foreigners resident in Ethiopia or both. Here foreigners resident in Ethiopia are granted the right to establish local organizations. On the other hand “Foreign Organization” is defined as a non-governmental organization formed under the laws of foreign countries and registered to operate in Ethiopia.

Types of Local Organizations

Two or more persons may establish Local Organization. Here on the Article 17 of the Proclamation there is a reference to ‘Indigenous Organization’. There is no definition of Indigenous Organization in the Proclamation. However, the Amharic version of Article 17, which is the prevailing one in terms of interpretation, refers indigenous organizations as ‘Local Organizations’.


There are five types of Local Organizations. These are a/ An Association b/ A Board-led Organization c/ A charitable Endowment d/ A charitable Trust and e/ A Charitable Committee. For the purpose of this article, a focus shall be made on the first two i.e. on an association and a board-led organizations.

An Association and Board-Led Organization

An Association is an organization formed by five or more members and governed by a General Assembly as the supreme decision-making body. For the purpose of this Proclamation, association shall include professional associations. The organizational chart of an association will have a General Assembly at the top and then in hierarchy Executive Committee, Manager, Auditor and other departments as may be necessary. Details regarding the structure and governance of an Association will be determined by the associations internal rules.

One the other hand a board-led organization can be formed by two or more founders. The board is the supreme organ. The Board shall have a minimum of five and a maximum of thirteen members. The first board members shall be designated by the founders. The term of service and appointment procedures for subsequent board members shall be prescribed by the rules of the organization. Here the unique nature of Board-led organization is that persons who are related by consanguinity or affinity with the officers of the organization may not be board members. The organizational chart of a board-led organization shall have a manager accountable to the Board and necessary staff as may be necessary. The particulars shall be determined by the rules of the organization.

Documents Required for Registration of Local and Foreign Organization

An application for registration by Local Organization shall be signed by the founders and should contain the following particulars: a) the minutes of the formative meeting indicating the names, addresses and citizenship of the founders; b) copy of the identity card or passport of the founders; c) the name of the organization and its logo, if it has one; d) the objectives of the organization and its intended sector of operation; e) the Region where it intends to operate; f) the rules of the organization approved by the founders; and g) the organization’s address.

On the other hand an application for registration of a foreign organization shall, in addition to the conditions mentioned from a-g above, be accompanied with the following documents: a) duly authenticated certificate of registration showing its establishment from its country of origin; b) duly authenticated resolution of its competent organ to operate in Ethiopia; c) duly authenticated power of delegation of the country representative; e) letter of recommendation from the embassy in which the charity is incorporated or in the absence of such by a competent authority in the country of origin from Ministry of Foreign Affairs of Federal Democratic Republic of Ethiopia and; f) a work plan for a minimum period of two years.

Effects in Terms of Rights

The Proclamation provides that any organization which registered upon fulfillment the registration requirements provided in the Proclamation : a/ shall have legal personality; b/ can sue, be sued and enter into contracts; c/ without prejudice to laws that require special license, can operate in the sector of its choice; d/ to own, administer and transfer movable and immovable property. However, the proceeds from the disposal of the property may not be transferred as donation for the benefit of members or to another activity which is not its mission; and the Organization which transfer property shall inform to the Agency within 15 days; e/shall have the right to engage in any lawful activity to accomplish its objectives; f/ local organizations shall have the right to operate in Ethiopia or abroad, or implement objectives having global, regional or sub regional nature; g/ can implement project activities on its own or to provide financial and technical support to other organizations; h/ may propose recommendations for the change or amendment of existing laws, policies or practices, or issuance of new laws and policies of those which have relationship with the activities they are performing. However, unless it is permitted with an other law Foreign Organizations and Local Organizations which are established by foreign citizens which are residents of Ethiopia may not engage in lobbying political parties, engage in voters education or election observations; i/ foreign organizations may implement project activities or work in partnership with Local Organizations by providing financial, technical or in kind support; j/ to the extent possible, Foreign Organizations by working in partnership with local and Governmental Organizations, can give support to build the capacity of Local Organizations; o) shall have the right to move its properties from one region to another region or city administration, unless the Project Agreement states that such properties may not be transferred because they are necessary for the sustainability of a specific project it is implementing; p) have the right to engage in any lawful business and investment activity in accordance with the relevant trade and investment laws in order to raise funds for the fulfillment its objectives. However, the profit to be obtained from such activities may not be transferred for the benefit of members; q) shall have the right to solicit, receive and utilize funds from any legal source to attain its objective; r/shall get a written approval of the Agency to open a bank account. The Agency shall respond to requests for such approval within five days from receipt of the request; s/ all financial transactions shall be performed through a bank account opened by an Organization in its name; t/ all banks have the obligation to provide the bank statement of accounts held by any Organization to the Agency when requested. w/ the Bank Account transaction can be done in the context of the Organization rules; x/ no organization may employ a foreign national who is not given work permit under the relevant laws. Notwithstanding the stipulation above, a foreign organization shall not be barred from appointing a foreign national as its country representative; y/ foreign nationals other than the country representative may only be hired if the office granting work permit verifies that the work cannot be performed by Ethiopians. z/ some provisions of the law will not apply to foreign nationals who are not salaried employees but come to Ethiopia to professionally contribute by working as volunteers for a period not exceeding one year.

The Responsibilities

As there are rights and benefits, corresponding responsibilities are laid down on the Proclamation. The responsibilities include a/ an organization shall make the necessary efforts to ensure that its activities help to bring about sustainable development, contribute to the democratization process, promote the rights and interests of its members or enhance the profession they are engaged in; b/ an organization which is established for the benefit of the general public or third parties shall ensure that its activities take into account the interests of women, Children, persons with disabilities, the elderly and others exposed to threat or vulnerable groups of the society; c/ an organization cannot engage in sectors which require additional permit by law without getting the necessary permit from the relevant government bodies; d/ in performing their duties all members, officers and employees of the Organization have the responsibility to give primacy to the Organization’s interest and take the necessary precaution to avoid conflict of interest; e/the Administrative cost of an Organization established for the benefit of the general public or that of third Parties may not exceed twenty percent of its total income. For the purpose of this provision, “Administrative Expense” shall mean expenses which are not related to the project activities of an organization but are necessary to ensure the continuity of an Organization and related to administrative activities, and shall include: salaries and benefits of administrative employees; purchase of consumables and fixed assets and repair and maintenance expenses related to administrative matters; office rent, parking fees, audit fees, advertisement expenses, bank service fees, fees for electricity, fax, water and internet services; postal and printing expenses; tax, purchase and repair of vehicles for administrative purposes, and procurement of oil and lubricants for the same; insurance costs, penalties and attorney fees. However the Agency may issue Directives regarding organizations exempted from the application of 20% administrative expense rule.

Income Generation Related Benefits

Though civil organizations are established for non-profit making endeavor, in exceptional circumstances such organizations are granted the right to generate income. The income generating activities are granted and operated in the following situations: a/ an organization which engages in income generating activities in may do so by establishing a separate business organization (company), acquiring shares in an existing company, collect public collections or operating its business as a sole proprietorship; b/shall open a separate bank account and keep separate books of account for its business in accordance with the relevant commercial and tax laws; c/ the relevant tax, commercial registration and business licensing, and investment laws shall be applicable to income generation activities under this provision; e/ the income that is generated from income generating activities will be used to cover administrative and program costs of the organization; f/ the income and resources that are acquired from income generating activities shall not be transferred or shared for the benefit of members or workers of the organization; g/ when the organizations collect public collections, they shall inform to the Agency; and h/ an organizations engaged in income generating activities based on this Article shall inform to the Agency within fifteen days.

Conclusion

The Civil Society Proclamation has made registration of civil society organizations easier. The Proclamation incorporated several benefits of registration. Income generation benefit is one of the major benefits. Employment of foreigners shall follow work permit procedures. However foreign citizens are allowed to occupy the position of country representatives. Other foreign nationals can serve up to one year non-salaried professional volunteer position. The Proclamation is a game changer for civil society organisations in a positive way.

Key and New Additions on the Investment Regulation of Ethiopia

By Dagnachew Tesfaye

The Investment Regulation No.474/2020 (hereafter the Regulation) was enacted following the Investment Proclamation No 1180/2020. It was done on the 2nd day of September 2020, to be effective on the date of publication in the Federal Negarit Gazette.

The Regulation is divided into eight parts that cover investment areas, investment permit, acquisition of existing enterprise and transfer of investment projects under implementation, procedure for suspension and revocation of investment permits, registration of technology transfer and collaboration agreements, condition for owning a dwelling house, provision of one-stop service, training and transfer of knowledge and skill to Ethiopian employees and repealed and inapplicable laws.

Any foreign investor can investment in investment areas that are not listed and reserved for a) joint investment with the Government, b)investment areas reserved for domestic investors, and c) investment areas reserved for joint investment with domestic and foreign investors.

This approach is a major shift from the previous investment regulation. The previous investment regulation lists down exhaustively areas of investment open for foreign investors. Foreign investors could not invest outside the listed investment areas. Now foreign investors can invest in all other areas of investment except those reserved for the joint investment with government and joint investment with domestic investors or areas of investment reserved for domestic investors.

“Domestic Investor” has been defined under the Investment Proclamation No 1180/2020 as an Ethiopian National; or an Enterprise incorporated Ethiopia and wholly owned by Ethiopian National; or the Government; or a Public Enterprise; or a cooperative society established as per the relevant law; or a Foreign National or Foreign Enterprise treated as domestic investor as per the relevant law or international treaty ratified by Ethiopia; pr an Enterprise incorporated in Ethiopia jointly between any of the investors specified above; or a Foreign National or Foreign Enterprise accorded a domestic investor investment permit as per laws which were in effect when the permit was issued and continues to operate in Ethiopia, provided that this applies only in respect of investments that are operational at the time of enactment of this Proclamation; or descendant of a foreign national that is accorded investment permit provided that this applies only in respect of investments specified in the same Sub-article;

On the other hand, on the same Investment Proclamation a ''Foreign Investor” has been defined as a Foreign National; or an Enterprise in which a Foreign National has an ownership stake; or an Enterprise incorporated outside of Ethiopia by any investor; or an Enterprise established jointly by any of the investors mentioned above ; or an Ethiopian permanently residing abroad and preferring treatment as a Foreign investor;

Areas of investment open for any investor to invest JOINTLY with the Government are: manufacturing of weapons, ammunition and explosives used as weapons or to make weapons, import and export of electrical energy, international air transport services, bus rapid transit services and postal services excluding courier services.

Investment areas RESERVED for DOMESTIC investors include banking, insurance, microfinance excluding capital goods finance business, transmission and distribution of electrical energy through integrated national grid system, primary and middle level health services, wholesale trade, petroleum, petroleum products, wholesale of own products produced in Ethiopia, excluding wholesale of electronic commerce; retail trade excluding retail of own products produced in Ethiopia, import trade excluding liqudified petroleum gas and bitumen, export trade of raw coffee, khat, oil seeds, pulses, minerals, hides and skins, products of natural forest, chicken and livestock including pack animals brought on the market; construction and drilling services below Grade 1, hotel, lodge, resort, motel, guesthouse, pension services excluding those that are star-designated, restaurant, tearoom, coffee shops, bars, nightclubs and catering services excluding star designated national cuisine restaurant services, travel agency, travel ticket sales and trade auxiliary services, tour operation, operating lease of equipment, machinery and vehicles, excluding industry specific heavy equipment, machinery and specialized vehicles; transport services excluding railway transport, cable-car transport, cold-chain transport, freight transport having a capacity of more than 25 tons and transport services reserved for joint investment with the government or domestic investors; making indigenous traditional medicines, producing bakery products and pastries for domestic market, grinding mills, barbershops and beauty salon services, smithery and tailoring except by garment factories, maintenance and repair services including aircraft maintenance repair and overhaul(MRO), but excluding repair and maintenance of heavy industry machinery and medical equipment, aircraft ground handling and other related services, saw milling, timber manufacturing and assembling of semi-finished wood products; medical services, customs clearance service, brick and block manufacturing, quarrying, lottery and sports betting, laundry services excluding those provided on industrial scale, translation and secretarial services, security services, brokerage services, attorney and legal consultancy services, and private employment agency services excluding such services for employment of seafarers and other similar professionals that require high expertise and international experience and network.

Lastly investment areas reserved for JOINT investment with domestic and foreign investors are feight forwarding and shipping agency services, domestic air transport services, cross country public transport services using buses with a seating capacity of more than 45 passengers, urban mass transport service with large carrying capacity, advertisement and promotion services, audiovisual services such as motion picture and video recording, production and distribution and finally accounting and auditing servises.

However a foreign investor jointly investing with a domestic investor on the above listed businesses cannot own more than 49% of the share capital of the newly formed joint investment company.

Therefore, except areas of investment reserved for joint investment with the Government, or investment areas reserved for domestic investors, or investment areas reserved for joint investment with domestic and foreign investors, the rest are open to foreign investors to invest.

Major Contents of the New Investment Law in Ethiopia

By Dagnachew Tesfaye

Ethiopia has adopted a new investment law. The Proclamation is called the Investment Proclamation No.1180/2020(hereafter the Proclamation). It was done on April 2,2020 to be effective on the date of publication in the Federal Negarit Gazettee.
Purposes of the Proclamation: The major purposes of the proclamation are to increase the role of private sector investment in all sectors of the economy, to create fast track economic framework, to increase export performance, expand employment opportunity, to increase and diversify foreign investment inflow and transfer technology, skill and knowledge, to link foreign and domestic investments in broader areas, to promote equitable distribution of investments among the regions of Ethiopia, to leverage foreign capital to promote the competitiveness of domestic investors, to put in place an efficient system to implement the National Investment Objectives and such system to be transparent, predictable, and efficient for investment attraction, retention and expansion.

In the Proclamation, 'Investment' has been defined as expenditure of capital in cash or in kind or in both by an investor to establish a new enterprise or to acquire in part or in all, to expand or upgrade an existing enterprise. 'Capital' is also defined as local or foreign currency, negotiable instrument, machinery or equipment, building, working capital, property right, intellectual property right or other tangible or intangible business assets. 'Investor' is defined as a domestic or foreign investor who has invested capital in Ethiopia. 'Domestic investors' are defined to include among others a foreign national or foreign enterprise treated as domestic investor as pr the Ethiopian law or international treaty Ethiopia has ratified or a foreign national or foreign enterprise accorded a domestic investor investment permit earlier and continues to operate in Ethiopia and descendants of a foreign nationals. 'Export- oriented non-equity based foreign enterprise collaboration' is defined as a collaboration formed by a contractual agreement between a domestic investor and foreign enterprise in which the foreign enterprise provides among others guaranteed external market access, know-how of production of products for export, export business management know-how, export marketing know how and strategies for the supply of raw materials and intermediate inputs needed for export products.
Scope of the Investment Proclamation: The scope of application of the investment proclamation is in all investment sectors in Ethiopia except prospecting, exploration and development of minerals and petroleum.
Powers of EIC: The Ethiopian Investment Commission(here after Commission) is assigned the power to issue, renew, amendment, substitution, replacement and cancellation of investment permits, the issuance of investment permits and the expansion or upgrading permits for wholly foreign owned investments or joint investments by domestic and foreign investors, foreign nationals who are treated as domestic investors and investment areas that are eligible for incentives by a domestic investor. Sectors of investment in air transport services, the generation or transmission or distribution of electric power and the provision of communication services shall be carried out by the Ethiopian Civil Aviation Authority, the Ethiopian Energy Authority and the Ethiopian Communication Authority respectively representing the Commission. These later Authorities shall submit to the Ethiopian Investment Commission a quarterly report regarding services they rendered through delegated powers, and further study potential sector specific investment strategies and engage in investment promotion works. Regional investment organs shall administer investments, that are outside the scope of the Commission or Authorities mentioned above.
Areas of Investment: Areas of investment open to an investor as a principle are any area of investment that are not contrary to law, moral, public health or security. Except areas of investment reserved for joint investment with the government or domestic investors and for joint investment with domestic investors, all other areas of investment shall be open to foreign investors. The list of areas of investments by joint investment with the government or domestic investors, or joint investment with domestic investors or areas of investment open for foreign investors may be revised from time to time by the EIC Board.
Joint Investment with the Government or PPP: The government body assigned to receive interested private investors proposals in areas of joint investment with the government, as public-private partnership, shall be the Public Enterprises Holding Administration. The Agency shall follow procedures under the law and upon approval, designate a public enterprise or establish a new project company to invest as partner in the joint investment.
Forms of Enterprises: Investments may be carried out in the form of sole proprietorship, enterprises established in Ethiopia or abroad, public enterprises established with the relevant law and cooperative societies formed in accordance withe the relevant law. Any investment enterprise established abroad and registered in Ethiopia and all other enterprises registered in Ethiopia shall be governed by the Commercial Code of Ethiopia.
Minimum Capital Requirement: A foreign investor to be allowed to invest shall be required to allocate a minimum capital of USD 200,000.00(Two Hundred Thousand USD) for a single investment project. Where the foreign investor jointly invests with a domestic investor, the minimum capital requirement shall be USD 150,000.00(One Hundred Fifty Thousand). However, if the investment areas is in architectural or engineering works or related technical consultancy services, technical testing and analysis or in publishing works, the minimum capital investment shall be USD 100,000.00(One Hundred Thousand) or USD 50,000.00(Fifty Thousand) if the investment is made jointly with a domestic investor. The minimum capital requirement shall not apply to foreign investors re-investing his profits or dividends generated from his existing enterprise in any investment area open for foreign investors or persons elected as members of board of directors following the change of a private limited company to share company or a foreign investor buying the entirety of an existing enterprise owned by a foreign investor or the shares therein. Any foreign investor bringing investment capital into Ethiopia, need to registered it within one year and the obtain a certificate of registration. Such copy of certificate shall be sent to the National Bank of Ethiopia by the appropriate investment organ.
Investment Permit: foreign investors, domestic and foreign investors investing jointly, investors investing as domestic investors, domestic investors who invest in areas eligible for incentives and who seek to be beneficiary of such incentive and an investor seeking to expand or upgrade an existing investment which is eligible for incentives and the investor seeks to be beneficiary of such incentive shall obtain investment permit. However, a foreign national of Ethiopian origin treated as a domestic investor shall have the right to invest without acquiring investment permit in areas not eligible for incentives or in areas eligible for incentives by waiving his right to claim incentives. Also a foreign investor seeking to buy an existing enterprise in order to operate it in its current state or to buy shares of an existing enterprise shall obtain prior approval from the EIC. The Commission shall not deny or delay the approval without sufficient cause. Nevertheless, no investor is allowed to hold domestic and foreign investor permits simultaneously.
An investment permit is subject for renewal annually until the investor commences marketing his products or services. Once a business licence is acquired, the shall be no need to renew investment permit. The renewal request should be sough within one month after the end of a period of one year for which the permit was valid. Unless the investment organ is convinced of a sufficient cause for delay in commencing or completion of the investment project, the investment permit will be revoked within two years.
Transfer of investment project in the implementation phase: an investor wishing to transfer to another investor a project which is under implementation shall submit his request to the investment organ and obtain approval. The investment organ shall not deny or delay the approval without sufficient cause.
Any investor who is issued an investment permit shall submit a quarterly progress report and provide information concerning his investment whenever requested.
Technology Transfer Agreement: Any investor concluding a technology transfer agreement shall register such agreement with the EIC. Unregistered technology transfer agreement shall have no legal recognition with the EIC.
Collaboration Agreement: Any domestic investor who concludes, in respect of export, a collaboration agreement with a foreign enterprise who does not contribute capital shall have the agreement registered with EIC. A collaboration agreement that is not registered shall have no legal recognition with the EIC.
Investment Incentives: areas of investments, types and amount of investment incentives shall be determined by regulation.
Immovable Property Ownership: a foreign investor or a foreign national treated as domestic investor shall have the right to own immovable property necessary for his investment. Whereas, if such an investor who owns large investment may be allowed to own one dwelling house. The details of the later part shall be decided by a regulation. Immovable property as used in this provisions does not include land and the ownership of immovable property shall apply to investors who invested prior to the adoption of this proclamation.
Expropriation: the government may expropriate any investment for public interest, in conformity with requirements of the law, on a non-discriminatory basis, with adequate compensation corresponding to the prevailing market value paid in advance.
Remittance of Funds: a foreign investor shall have the right in respect of his investment to remit in convertible currency at the prevailing exchange rate on the date of transfer profits and dividends, principal and interest payments on external loans, payments related to technology transfer agreements, payments related to collaboration agreements, proceeds from the transfer of shares or conferral of partial or total ownership of an enterprise to another investor, proceeds from sale, capital reduction or liquidation of an enterprise and compensation paid on expropriation. Expats employed for investments carried out pursuant to this Proclamation whose permanent residence is outside of Ethiopia may remit their salaries accruing from their employment. However, a domestic investor investing jointly with foreign investor shall not be allowed to remit funds earned from the investment out of Ethiopia.
External Loan: An investor may acquires a loan from outside of Ethiopia for his investment and operate a foreign currency account in a bank in Ethiopia for the purpose of its investment following the directives of the National Bank of Ethiopia (NBE).
Expat employment : an investor may employ duly qualified foreigners for his investment in positions of higher management positions including chief executive officer, chief operation officer and chief finance officers as necessary, supervision, trainers and other technical professions. However, foreigners may be employed only when it can be ascertained that Ethiopians possessing similar qualification or experience required by the sector are not available.
Work Permits of Expats: The work permit of top management foreign workers shall be renewed without being required to comply with the conditions specified in this article in respect of other foreign workers. A work permit may be issued for a cohabiting spouse of any investor and a foreign worker employed. A work permit for employment in certain positions may be issued for up to three years and renewed every year. However an investor who employs foreigners shall be responsible for replacing within a limited period of time such foreign workers by Ethiopians by arranging and providing the necessary training. Renewal of work permit shall be done after ascertaining the non-availability of Ethiopian workers with similar qualification and of the concrete measure taken by the investor to train Ethiopian replacements. Where it is ascertained that a foreign worker is no longer required for the position he is employed, the EIC may decide not to renew or to cancel the work permit.
Visa Services: EIC or a delegated investment organ may facilitate the processing of visa application of foreigners coming into Ethiopia for investment purposes and that of the families (spouses, children and parents) of investors undertaking investments in Ethiopia. Visa may be issued to an investor intending to enter into Ethiopia, from a country that is not his home country, for investment purposes based on a support letter the EIC may offer. An owner or shareholder of an investment under this proclamation may be issued a five-year multiple visa based on the confirmation by the EIC. The general manager, board member or top management of an investment enterprise in Ethiopia and the Parent or holding company of the Enterprise may be issued a three year multiple entry visa based on confirmation by EIC. No single stay of any foreigner entering Ethiopia using multiple entry visa may exceed 90(Ninety) days.
One Stop Service: EIC or regional investment organs shall provide one-stop services to investors by coordinating relevant agencies and synchronize their daily functions.
Complaint Procedure in EIC: Any grievance shall be resolved using speedy, equitable and efficient procedure. Any investor who has grievance shall have the right to submit it to the appropriate investment organ. Such grievance shall follow the administrative chain and get final administrative decision. A written copy of the administrative decision shall be given to investor within 7(Seven) working days from the date from the date of the decision. If the investor has a grievance against the final administrative decision of EIC, then he can submit a complaint to EIC Board within 30(thirty) working days from the date the investor becomes aware of such decision. Then the Board shall give its decision within 90(Ninety) working days from the date of submission of the Complaint and a written Board decision will be given to the investor within 7(seven) working day.
Complaint procedure against Executive Bodies: An investor shall have the right to submit a complaint to the EIC against final administrative decision of any federal government executive body where such decision significantly affects the investment. The Federal executive body shall give to investor within 7(seven) working days a written copy of the final decision. The investor then has 30(thirty) working days to submit the final administrative decision to EIC. EIC shall engage with the government body and propose a recommended solution in writing within 30(thirty) days from the submission of the complaint. A written copy of the proposed solution shall be given to the investor within 7(seven) working days from the date the recommended solution is tabled. Still the investor may file a complaint to EIC Board against the EIC's recommended solution, or the the solution is not accepted by the government body. The complaint to the Board should be presented within 30(thirty) working days from the date the investor is notified of the recommended solution or learns that the government body rejected the recommended solution. The Board shall then give its decision within 90(Ninety) working days. Any Federal government body has a duty to comply with and execute in accordance with the decision of the Board.
Dispute Settlement: without prejudice to the right of access to justice through a competent body with judicial power, any dispute between an investor and the Government involving investments effected pursuant to this Proclamation will be resolved through consultation or negotiation. The Federal government may agree to resolve investment disputes involving foreign investments through arbitration. Where a foreign investor chooses to submit an investment dispute to a competent body with judicial powers or arbitration, the choice shall be deemed final to the exclusion of the other.
Investment Administration Organs: The investment administration organs include the Ethiopian Investment Board, the Ethiopian Investment Commission, the Federal Government and Regional sState Administrations Investment Councils and the Investment Administration organs established pursuant to Regional laws.
Members of the Ethiopian Investment Board are 13(thirteen) including the Prime Minister as chairperson, a government official designated by the Prime Minister as Vice Chair person, EIC Commissioner and Secretary, Eight core or investment related government officials, two private sector representatives.
Council: a council for the cooperation and coordinated administration of investment between the Federal government and Regional state administrations is established by this Proclamation. Members of the Council include the Prime Minister or in his absence the Deputy Prime Minister as chairpersons, Presidents of all regions and Mayors of the Addis Ababa and Dire Dawa City Administrations, EIC Commissioner and heads of investment organs of all Regions and Addis Ababa and Dire Dawa City Administrations and other members designated by the Prime Minister as necessary.
Coordination with Regional States: the Commission shall work in close cooperation with Regional Stat Investment Administration organs and other stakeholders with a view to creating a uniform, coordinated and efficient national investment administration system. Standing regional state investment Desks shall be established.
Provision of Land: Regions shall handle land requests for investments in the manufacturing, agriculture and other sectors in an efficient manner and shall establish a transparent and predictable system for the handling of such requests. Regions shall identify and classify land to be used for investment projects, organize such land centrally under one Regional State Administration body and transfer the information to the appropriate investment organs. The EIC shall coordinate the Regional State Administration and appropriate investment organs to facilitate and follow through the efficient handling of such requests. Regions shall respond to land allocation request of an investor for manufacturing within 60(Sixty) days and 90(Ninety) days where the investment is in other sectors.

Transitory Provisions: rights and entitlements bestowed pursuant to Investment Proclamation no 769/2012 as amended and Regulations and Directives issued there under shall remain applicable in respect of investments approved prior to the coming into force of this Proclamation.

Duty to Observe: all investors have a duty to observe laws of the country and shall give due regard to social and environmental values.

18 New Labor Proclamation 1156/2019 Additions

1. Definitions

“Sexual harassment” means to persuade or convince another through utterances, signs or any other manner, to submit for sexual favor without his/her consent.
“Sexual violence” means sexual harassment accompanied by force or an attempt thereof.

2. Scope of Application
3(1). Without prejudice to Sub-Article (2) of this Article, this Proclamation shall be applicable to employment relations based on a contract of employment that exist between a worker and an employer including recruitment process.
3. Probation
11(3). When the parties agree to have a probation period, the agreement shall be made in writing; in such a case, the probation period shall not exceed 60 working days beginning from the first date of employment.
4. Prohibited Acts
14(2)g). Conduct meeting during working hours in disregard to the time assigned by the collective agreement or without obtaining the permission of the employer; h) Commit sexual harassment or sexual violence at workplace;
i) Physically abuse anyone in a work place.
5. Tardiness
27. 1/ Unless otherwise determined by a collective agreement, a contract of employment shall be terminated without prior notice only on the following grounds :
a) Unless the reason for being late is justified by the collective agreement, work rule or contract of employment, being late for duty eight times in six months period while being warned in writing of such a problem;
6. Absence
27/1/b) Absence from duty for a total five days in six months period while being warned in writing of such a problem; and where the absence cannot be classified in any of the leaves provided under the Proclamation;
7. Performance test
28(2) Any loss of capacity of work referred to in SubArticle (1) (a) of this Article shall, unless otherwise provided by a collective agreement, be verified by a periodical job performance evaluation.
8. Termination without prior notice by Employee
32(1) (b) Where the workers has been a victim of sexual harassment or sexual violence by the employer or a managerial employee;
9. Severance payment
39(1)d. Where the worker resigned due to sexual harassment or sexual violence by the employer or managerial employee; or where such act was committed by a coworker and the incident was reported to the employer but the latter failed to take appropriate measure in due time;
10. Compensation
41(2) However, where the termination is based on Article 32 (1) (b) the worker shall, in addition to severance pay, be entitled to compensation of his daily wage multiplied by ninety. This provision shall also apply to a worker covered by the relevant pension law.
11. Employee to pay compensation to Employer
45. 1/ A worker who terminates his contract of employment in disregard of the provisions of Article 31 or 35(2) of this Proclamation shall be liable to pay compensation to the employer.
2/ However, the compensation payable by the worker in accordance with Sub-Article (1) of this Article shall not exceed 30 days’ wages of the worker and be payable from the remaining payment due to the worker.
12. Deduction from Salary more than 1/3
59. 1/ The employer shall not deduct from, attach or set off the wages of the worker except where it is provided otherwise by law or collective agreement or work rules or in accordance with a court order or a written agreement of the worker concerned.
2/ Unless the worker expresses his consent in writing, the amount that may be deducted at any one time, from the worker’s wage shall in no case exceed one-third of his monthly wage.
13. Overtime Payment
68/ 1/ In addition to his normal wage, a worker who works over-time shall be entitled at least on the following rate of payments:

a) In the case of work done between 6:00 a.m. in the morning and l0:00 p.m. in the evening, at the rate of 1.5 multiplied by the ordinary hourly rate;

b) In the case of night time work between 10 p.m. in the evening and 6 a.m. in the morning, at the rate of 1.75 (one and three fourth) multiplied by the ordinary hourly rate;
14. Weekly Rest
69/4/ Notwithstanding the provisions of Sub Article (1) of this Article, where the nature of his task did not enable the worker to make use of his weekly rest day, the employer shall grant 4 working days of rest in a month.
15. Annual Leave
77(1) A worker pursuant to this Article shall be entitled to uninterrupted annual leave with pay. Such leave shall in no case be less than:
a) Sixteen (16) working days for the first year of service;
b) Sixteen (16) working days plus one working day for every additional two years’ service.
16. Paternity Leave
81/2/ A male employee shall be entitled to three consecutive days paternity leave with full pay
17. Leave for events
81/3/ A worker shall be entitled to leave without pay for up to five consecutive days in the case of exceptional and serious events. However, such leave may be granted only twice in a budget year.
18. Maternity Leave
88/3/ A pregnant worker shall be granted a period of 30 consecutive days of leave with pay of pre-natal leave and a period of 90 consecutive days of leave post- natal.

Incentives on Mining, Petroleum, Geothermal and Biofuel Investments in Ethiopia

 Mahlet Mesganaw, Partner at DMLF

The Council of Ministers Investment Incentive Regulation No 517/2022 done on July 12,2022 provides investment incentives for mining, petroleum, geothermal and biofuel works.

In the case of mining, the Regulation states that any holder of exploration license, small scale or large scale mining license or their contractors are allowed to import into Ethiopia equipment, machineries and consumables that are required for their operation or expansion thereof with the work program approved by the Ministry of Mines free from custom duties. In addition  to this, the holder of a mining license may import free from custom duties aircraft, helicopter, drones or other exploration equipment for the purpose of collecting relevant information for the mining activities after securing recommendation from the Ministry of Mines. The holder of a mining license who is unable to import equipment and machinery at pre-development stage may import such goods within 5 years from the commencement of production free of custom duties. Here the holder of artisanal mining license or the holder of any construction mineral mining license issued for the mining of sand or selected materials shall not be entitled to exemptions from custom duties and taxes. The holder of handicraft license or a refinery license who is engaged in the export of minerals may import equipment and machinery that are needed for its operation free from customs duties for 3 years from the date of issuance of such license.

Regarding petroleum and Geothermal works, any holder of petroleum or geothermal license or their contractors are entitled to import into Ethiopia all drilling , geological, Geo physical, production, treating, processing, transportation and other machinery and equipment necessary in petroleum and geothermal operations including aircraft, vessels and other transportation equipment and parts thereof, fuels, chemicals, lubricants, films, seismic tapes, house trailers, disassembled prefabricated structures and other materials necessary for petroleum and geothermal operations free of customs duties of any kind. Expatriate employees of a petroleum license holder or her contractor shall be entitled to import into Ethiopia household goods and personal effects free of customs duties of any kind in accordance with prevailing laws.

Consumables mentioned under mining, petroleum and geothermal operations include chemicals, dynamite and other materials to be used for mining, petroleum and geothermal activities to be specified in a directive to be issued by the Ministry of Finance.

Last but not least, the holder of a biofuel license is entitled to import  equipment and machinery free of customs duties for 5 years from the date of issuance of the license based on the work program approved by the regulatory agency.

Concerning transfer of such freely imported items, transfer cannot be made to third parties without having obtained permission from the Ministry of Finance and pay the required duties. However such items may be re-exported free from customs duties or transferred to persons with similar duty privileges upon permission of the regulatory institution.

For any inquiries on your investment in mining and related activities you may contact us at info@dmethiolawyers.com

Income Tax and Customs Duty  Incentives for Investors in Ethiopia

Mahlet Mesganaw, Partner at DMLF

The investment objective of Ethiopia is to improve the living standards of the people of Ethiopia by realizing a rapid, inclusive and sustainable economic and social development. To achieve such an objective, the Ethiopian government has put in place investment incentives on income tax exemptions and custom duty incentives by Council of Ministers Investment Incentive Regulation No 517/2022 done as of July 12,2022.

Income Tax Exemption Incentives

Any investor who formed a new company or any existing investor expanding or upgrading her investment shall be entitled to income tax exemptions, as provided in the schedule attached to the Regulation. Those investors who have invested outside of the industrial park and who engage in export or supplies to an exporter as production or service input, at least 60% of their products and services shall be entitled to additional years of income tax exemption in addition to those provided in the schedule. The commencement period of income tax exemption is as of the date the investor obtained a business license or from the date the investor obtained expansion permit. However, the investor who has incurred loss within the period of income tax exemption period shall be allowed to carry forward such loss for half of the income tax exemption period after expiry of such period.

Custom Duty Incentives

New investor or an investor expanding or upgrading existing investment engaged in one of the investment areas specified in the Schedule, may import duty free capital goods and construction materials necessary for the establishment of a new investment or the expansion or upgrading of an existing investment. Total or partial exemption of motor vehicles from customs duty shall be determined by Directive to be issued by the Ministry of Finance. Such imported capital goods or construction materials imported free of customs duty may be transferred to persons with similar duty free privileges. Otherwise custom duty has to be paid to transfer to those persons who have no similar duty free privileges. The investor may re-export the duty free imported capital goods or construction materials.

Regulatory Institutions

The Ethiopian Investment Commission, Ministry of Finance, Ministry of Mines, Regional Governments, Addis Ababa and Dire Dawa City Administrations Investment Organs, Ministry of Trade and Regional Integration, Ministry of Revenue and Customs Commission are assigned common and specific duties and responsibilities to implement and follow up the implementation of investment incentives.

Revocation of Tax Incentives

Any investor whose investment license is revoked shall return all investment incentives acquired. The Ministry of Finance shall determine the manner of return of investment incentives improperly acquired.

Conclusion

To encourage investment in Ethiopia, the Ethiopian government has provided for its investors income tax exemptions and custom duty exemption privileges. The regulatory institutions duties and follow ups are defined so as to enable smooth implementation of the investment incentives to new investors or those investors expanding or upgrading their investment.

For further information, please contact Mahlet at info@dmethiolawyers.com

https://chilot.me/wp-content/uploads/2022/08/Investment-Incentives-Regulation-No.-517-2022.pdf

Adoption of an Ethiopian Child by a Foreigner Spouse 

By Dagnachew Tesfaye, Partner at DMLF

Email: info@dmethiolawyers.com

Introduction 

This article summarizes the Federal Supreme Court Cassation Decision on File No 215383 on 30/05/2022. The adoption case is filed by the 1st and 2nd applicants, namely Wro Arsema and Mr.Yergen. There is no respondent on the case. The case is about whether or not a foreigner husband can adopt his step daughter who is the child of his Ethiopian wife?

Federal First Instance Court

The Applicants filed in the Federal First Instance Court for an approval of their adoption agreement. The child involved in the adoption is the child of the 1st applicant born prior to her marriage with the 2nd applicant. The second applicant who is the adopter of such stepchild is a Dutch nationality. The court said that due to Revised Family Code (Amendment) Proclamation No 1070/2018, adoption of an Ethiopian child by a foreigner is prohibited. Thus the applicants request of approval of their adoption is dismissed by the court.

Federal High Court Appeal

The Applicants submitted an appeal to the Federal High Court. However, the Federal High Court upheld the decsion of the Federal First Instance Court.

Review by the Federal Supreme Court Cassation Bench

The Applicants presented their application for basic error of law to the Cassation Bench. The Applicants stated that the applicants are married in Ethiopia, have a son together and living in Ethiopia. The child to whom the adoption is requested is the daughter of the 1st applicant and not that of the 2nd applicant. Nowadays, this daughter lives together with her step father, who is the 2nd applicant and even uses his name as father’s name as well. The Applicants argued, to enable such a daughter with equal status to her brother, who is born from both the applicants, the adoption by the step father is necessary. The Applicants said, rejecting our request for approval of such an adoption by the lower courts is not in the best interest of our daughter. Thus the Applicants demanded for the dismissal of the lower court’s decision.

The Cassation bench accepted the request of the Applicants for review. The Cassation Bench identified the issue of whether  Proclamation 1070/2018 is meant to prohibit adoption occurring between spouses or not?

The Cassation Bench raised the issue of the appropriate law to govern the case: is it Revised Family Code Proclamation 213/2000 or Proclamation No 1070/2018? The provisions of Proclamation No 213/2000 Article 187 provide the fact that married couples can adopt a child together or when the child to be adopted is one of the spouses only, the adoption by the other spouse is possible. This provision of the Revised Family Code does not stipulate nationality of the spouses as a precondition for an adoption. This provision doesn’t state the adoption of a child of one spouse by the other spouse is allowed only for Ethiopian married couples.

On the other hand, Proclamation No 1070/2018 contains provisions that order the cancellation of provisions of the Family Code Proclamation No 213/2000 Articles 193, 194(3)(d) and (4) that contain the word ‘the adopter being a foreigner’. The Cassation court argued that the provision of Article 187 of the Revised Family Code is not deleted or amended by Proclamation No 1070/2018. Thus, the request of adoption of a child of the Ethiopian spouse born prior to the marriage to a foreigner spouse cannot be rejected mentioning Proclamation No 1070/2018. Specially given the fact that the spouses are married in Ethiopia and residing in Ethiopia as a couple. Therefore, the Cassation Bench concluded that the lower court’s decision rejecting the adoption approval request of the Applicants is dismissed for basic error of law. The Cassation Court ordered the Federal First Instance Court to look into the matter from this perspective and pass a decision on the adoption approval request of the Applicants.

Conclusion

A foreign national spouse who is married to an Ethiopian national can adopt an Ethiopian child of his Ethiopian spouses and the  Revised Family Code(Amendment) Proclamation No 1070/2018 is not intended to stop such an adoption request.

For further request on the subject, you may contact us at info@dmethiolawyers.com

PEACE AGREEMENT SIGNED

The Federal Government of Ethiopia and the Tigray Peoples’ Liberation Front (TPLF) has signed a peace agreement to end the two year war in the northern part of Ethiopia in an African Union mediated talks in Pretoria South Africa on 2nd of November, 2022. The agreement signed signals the permanent cessation of hostilities for a lasting peace and the agreement incorporates 15 provisions in addition to its preamble. The effective date of the agreement is the 3rd of November,2022.

Can a Foreign Investor Allowed to Open a Bank Account in Ethiopia?

By DMLF Team

One of the investment incentives in Ethiopia for foreign investors is the privilege of opening bank accounts and operating the same. The Investment Proclamation No 1180/2020 allows foreign investors to open and operate foreign currency accounts in any private bank in Ethiopia for the purpose of their investments. Foreign Investors are defined as an individual or company who has invested foreign capital in Ethiopia. The manner of operation of foreign currency account is determined by the directives of the National Bank of Ethiopia. The National Bank of Ethiopia has issued a directive that is effective as of November 9,2020 namely “Establishment and Operation of Foreign Currency Saving Account for Residents of Ethiopia, Non-Resident Ethiopian and Non-Resident Ethiopian Origin” Directives No. EX1V 68 /2020″ that allows foreign investors who are residents of Ethiopia to open and operate foreign currency accounts in addition to that of local savings or current accounts of their choice.

For your investment inquires you may contact us at info@dmethiolawyers.com

The Procedure of Registration of Transfer of Technology Agreement

By Dagnachew Tesfaye, Partner at DMLF

The Ethiopian Investment Proclamation No 1180/2020 and the Investment Regulation No 474/2020 incorporate technology transfer agreement as part of an investment transaction. Technology transfer has been included in the investment objectives of the country in that the government shall strive to advance the transfer of knowledge, skills and technology required for the development of the country. We shall see what is included in the technology transfer agreement, the procedure involved in registration of such an agreement, the difference between technology transfer agreement and collaboration agreement and a brief summary shall follow.

What is a technology transfer agreement?

The definition of a technology transfer is given in the Investment Proclamation. The Proclamation defines transfer of technology as ‘’the transfer of systematic knowledge for the manufacture of a product, the application or improvement of a process or for rendering service, including management and technical know-how as well as marketing technologies, but may not extend to transactions involving mere sale or lease of goods.’’ Hence technology transfer agreement is a contractual agreement entered between a technology provider and technology recipient in which the technology provider agrees to transfer the technology as defined above.

What is the procedure involved in registering such an agreement?

Any investor concluding a technology transfer agreement in relation to his investment must have the agreement registered with Ethiopian Investment Commission(EIC). The reason is because a technology transfer agreement that is not registered shall have no legal recognition in Ethiopia. In order to register the technology transfer agreement in EIC, the following procedures must be adhered to. The technology provider needs to come up with commercial registration or business license or document ascertaining ownership of technology. If such documents originate outside of Ethiopia, the documents should be authenticated by foreign and domestic authorized bodies to authenticate documents. Then the technology recipient and the technology provider shall enter into an agreement in front of notary public namely the Federal Document Authentication and Registration Agency. The signed technology transfer agreement with the relevant documents and a signed application form shall be presented for registration with EIC. EIC shall render a decision to approve or reject within 30(thirty) working days having conducted the necessary review.

If EIC accepts the technology transfer agreement, then EIC shall register the agreement and issue a certificate of registration for the applicant.  EIC will notify the relevant Federal Executive Organs and copy the National Bank of Ethiopia the registration of a technology transfer agreement. Where EIC rejects the application, EIC shall notify the decision in writing to the applicant.

Differences with Collaboration Agreement

Here, unlike Collaboration Agreement, which restricts the parties to the agreement as domestic investor on the one hand and foreign enterprise on the other, Transfer of Technology Agreement can be concluded among ‘any investor’. The requirement of fulfilling minimum investment capital if one of the parties to the Technology Transfer Agreement is a foreign enterprise is passed silently. In the case of Collaboration Agreement, the law clearly provides the existence of no requirement of injecting minimum capital for foreign enterprises when it comes to Collaboration Agreement. However the law is silent on contribution of capital when entering to Technology Transfer Agreement when one of the parties to the agreement is a foreign enterprise.

To sum up, the  Investment Proclamation and the Investment Regulation provide the concept of technology transfer and provide in detail the procedures as to how technology transfer agreements are reviewed and registered. However the requirement of capital contribution is left unspecified in the case of foreign enterprise agrees with a domestic or foreign investor for technology transfer.

For any investment related inquires you may contact us at info@dmethiolawyers.com

Website-Obligation to Construct for Share Companies

By Dagnachew Tesfaye, Partner at DMLF

The Commercial Code of Ethiopia Proclamation No 1243/2021 introduces the mandatory task for share companies to create and maintain a website. Such an obligation was not known in the previous Commercial Code of Ethiopia. Construction of a website is made mandatory for a share company only.

The contents of the website should include all necessary information for shareholders, creditors and stakeholders.  The basic contents of the website must include a) the memorandum of association, and amendments thereto, if any; b) notices regarding general meetings and related information; c) approved audit reports; d) report on transactions involving conflict of interest prepared pursuant to Sub-Article (5) of Article 395; e) annual reports and information submitted to the Ministry of Trade and Industry pursuant to this Code or other laws; and f) information that should be publicized according to the memorandum of association. 

The Commercial Code has put the period of time required to maintain certain information on the website. For example notices calling meetings and related information have to remain in the website till the end of the meeting. Moreover, the accounts of the company should remain on the website for five years. Other information of the company has to remain in the website at least six months.

The website has to be accessible to any person. The company must take all necessary measures to protect the security of the website.

The share company has to update and post its contents promptly as well. Moreover to the extent possible the website should accommodate features to conduct electronic meetings and enable voting through electronic means. Such features shall support modernization of the meeting and voting process. For members of the share company, it provides an alternative space to participate in a meeting other than in person or through an agent’s physical presence. The law has given such forms of online meeting and voting legal relevance.

Therefore share companies are obliged to construct and maintain a website that disseminates information about the company’s affairs to its members, stakeholders and to the public. Furthermore the website shall serve as a legal platform that enables participation of its members in meetings and voting.

For any legal inquiries you may contact us at info@dmethiolawyers.com

Five Investment Options that Minimum Capital Requirement doesn’t Apply for Foreign Investors

By Mahlet Mesganaw, Partner at DMLF

The Investment Proclamation No 1180/2020 has allowed minimum capital requirement NOT to apply for the following investment transactions. 

1. Where a foreign investor  buys a share of a foreign investor in an existing company in full or in part;

2. Where a foreign investor  acquires the entirety of an existing enterprise owned by a foreign investor;

3. Where a foreign investor re-investing his profits or dividends generated from his existing enterprise in any investment area open for foreign investor and

4. Where a foreign investor is elected as member of board of directors following the change of a private limited company to share company.

5. Where a foreign enterprise concludes export oriented non-equity based collaboration agreement with a domestic investor.

Therefore the requirement of minimum capital injection to the above areas of businesses are not required for foreign investors. Those foreign investors and domestic investors operating in Ethiopia can use these options. More so foreign investors who wish to see the opportunities existing on the ground, can use one of the above options to invest in Ethiopia.

For your investment area inquires you may contact us at info@dmethiolawyers.com

How much is paid for informants of illegal money transfer in cash, foreign currency or gold and for informants of forged cash notes?

The National Bank of Ethiopia has issued a directive namely Directive No 931/2022 effective as of October 6, 2022 that provide reimbursements to informants of crimes, maintaining their confidentiality, involving illegal money transfer in cash, gold and foreign currencies. The informant shall be handsomely be compensated 15% of cut seized cash or gold or foreign currency. When it comes to seized forged cash notes, depending on the amount seized, the compensation to the informant ranges from ETB 20,000 to ETB 200,000.