ETHIOPIA Law and Practice Contributed by: Sisay Habte, Tibebe Zewdu, Michael Mengistu and Helina Bezabih, TBeST Law LLP
• intentionally commits an unlawful act that jeopardises the interests of the company or its creditors; • intermingles the assets of the company with their personal assets; • fails to maintain a clear distinction between their personal identity and that of the com - pany; • deliberately provides misleading financial information about the company’s status to its creditors; • utilises the company’s assets for personal gain or the benefit of third parties without appropriate compensation to the company; • receives dividends exceeding the legally per - mitted maximum; or • commits other similar acts. 1.2 Sources of Corporate Governance Requirements The main legislative source for corporate gov - ernance is the Commercial Code of Ethiopia, issued in 2021 (Proclamation No 1243/2021). Additional and special corporate governance requirements are also provided for in the Com - mercial Registration and Licensing Proclama - tion No 980/2016 (as amended by Proclamation No 1150/2019) and regulations and directives issued thereunder. Special corporate governance requirements for banks and insurance companies are provided under sector-specific laws. For banks, these requirements are now primarily governed by Banking Business Proclamation No 1360/2025, which repealed the earlier Proclamation No 592/2002 (as amended by Proclamation No 1159/2019). This new proclamation marks a major shift, as it opens Ethiopia’s previously closed banking sector to foreign investment, allowing foreign banks to operate in the country
for the first time. This is a landmark move in the broader financial sector liberalisation agenda. For insurance companies, corporate governance requirements are set out in the Insurance Busi - ness Proclamation No 746/2013, as amended by Proclamation No 1163/2019, and the relevant directives and regulations issued thereunder. With the advent of capital markets in Ethiopia, corporate governance requirements concerning publicly listed companies are in the works. How - ever, ECMA has issued key directives, including the Capital Market Service Providers Licensing and Supervision Directive No 980/2024, which sets out corporate governance standards for capital market service providers. In addition to the laws mentioned above, com - panies provide for additional corporate govern - ance requirements in their memorandums of associations and by-laws. 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares The Ethiopian Capital Market Authority (ECMA) was established by Proclamation No 1248/2021 as the sector’s regulator. The Capital Markets Proclamation No 1248/2021 contemplates that notices and guidelines on corporate governance will be issued for pub - licly listed companies. A Directive on corporate governance for publicly listed companies, as a result, appears to be under development. Nev - ertheless, ECMA has issued the Public Offer and Trading of Securities Directive No 1030/2024, effective from 13 November 2024, which gov - erns public offerings and trading. ECMA has also required all publicly held companies to disclose detailed information on their share structures.
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