ETHIOPIA Law and Practice Contributed by: Sisay Habte, Tibebe Zewdu, Michael Mengistu and Helina Bezabih, TBeST Law LLP
TBeST Law LLP Bitweded Bahru Building 4th floor Office No 402 Addis Ababa Ethiopia Tel: +251 115 525 253 Email: sisay@tbestlaw.com Web: www.tbestlaw.com
1. Introductory 1.1 Forms of Corporate/Business Organisations
A share company is an entity that is closest to a public company, formed by either founders or public subscription. A private limited company is established usu - ally by family or closely-related persons, but it is also a preferred form of business for foreign companies seeking to establish subsidiaries in Ethiopia. A private limited company may be used to undertake most types of businesses except financial services of banking and insurance, for which a share company is a requirement. The shares of private limited companies are not open for public subscription. A one-person private limited company (OPC) is the newest form of business organisation intro - duced by the new Commercial Code of Ethio - pia. The OPC is incorporated by one person and operates like a private limited company. Although the OPC operates similarly to a limited liability company, the member of a one-person private limited company, or any other person who directly or indirectly controls the company, is jointly and severally liable with the company if found to have committed any of the following acts:
Eight different forms of business organisations are recognised under the Ethiopian Commercial Code of 2021: • sole proprietorship;
• general partnership (GP); • limited partnership (LP); • joint venture (JV);
• limited liability partnership (LLP); • private limited company (PLC); • one-person company (OPC); and • share company (SC).
Foreign businesses can also operate business via “branches” or “commercial representative offices” (CROs). Foreign companies that win international competitive bids operate in Ethio - pia by opening “Project Offices” or “Contract Offices” . The primary vehicles for doing business with limited liability are the private limited company (PLC) and share company (SC).
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