ETHIOPIA Law and Practice Contributed by: Getu Shiferaw, Mehrteab Leul, Michael Sebsibe and Debora Belachew, Mehrteab & Getu Advocates LLP (MLA)
A person may acquire shares in a business organi - sation by purchasing them from existing sharehold - ers, or by subscribing to new shares that have been issued by the business organisation. Both modali - ties are practiced in Ethiopia. Merger by acquisition is another means of acquisition, in which entities resolve to merge and with one of the acquiring enti - ties surviving the merger. In this type of acquisition, all the rights, responsibilities, assets and liabilities of the entity that is acquired will transfer to the surviv - ing entity in accordance with the merger agreement, which details all the arrangements of the entities. In recent times, there has been a move towards priva - tising some of the large public enterprises that are fully owned by the Ethiopian government. The privatisation of public enterprises involves the sale of the assets or share capital thereof, in full or in part, to private ownership. The legally recognised modalities for this are: • competitive tender; • public auction; • initial public offering; and • sales over time. Previously, all share companies were permitted to issue and sell shares to the public directly. After the introduction of Public Offering and Trading of Securi - ties Directive No 1030/2024, all companies that issued, are in the process of issuing or wish to begin issuing securities to the public must register their securities with the Ethiopian Capital Market Authority (ECMA). Publicly held companies are share companies with more than 50 security holders. Following this, the ECMA issued a notice for all share companies in Ethiopia to register existing securities by 25 November 2025. This has created a shift in the modality of acquisition of shares in publicly held share companies. 2.2 Primary Regulators The primary regulators of M&A activity are: • the Ministry of Trade and Regional Integration (MoTRI);
• the Document Authentication and Registration Service (DARS); • the Ministry of Revenues (MoR); • the Ethiopian Investment Commission (EIC); • the ECMA; • the COMESA Competition Commission (CCC); • the NBE; • the Ethiopian Communications Authority (ECA); • the Ministry of Mines (MoM); • the Authority for Civil Society Organizations (ACSO) and • the Petroleum & Energy Authority (PEA). Depending on the sector in which a target is engaged, the primary regulator for M&A activity in Ethiopia may vary. The EIC has the mandate of investment promo - tion and regulation. Foreign investors execute the resolution with regard to M&A before this organ. The merger agreement is signed before DARS, which is a government-run public notary. The MoR must be noti - fied of a merger, and the entity is expected to secure tax clearance in order to proceed therewith. MoTRI also requires that merger filing and approv - al be secured. This is a requirement for those who meet the minimum threshold for approval provided by Ethiopia’s anti-competition law, namely a minimum of ETB30 million with respect to the combined annual turnover, assets or registered capital of the parties. Following the application, MoTRI will conduct a study and review the merger agreement and merger report prepared by the parties. MoTRI will then issue a public notice of the merger in a widely circulated newspaper for a period of 15 days, inviting third parties to submit any objection they may have. If there is no objection, then MoTRI will issue a merger approval. If the merger involves entities that are subject to sec - tor-specific regulation by the ECA (for telecoms and data centres), the NBE (financial services), the MoM (mining, oil and gas, other natural resources), the PEA (petroleum and energy), the ACSO (for civil societies) or the ECMA (secondary market), then merger noti - fication and approval may also be requested by the regulators of the sectors prior to proceeding. For states that are members of the Common Mar - ket for Eastern and Southern Africa (COMESA), the
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