ETHIOPIA Law and Practice Contributed by: Sisay Habte, Tibebe Zewdu, Michael Mengistu and Helina Bezabih, TBeST Law LLP
2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance In recent years, corporate governance in Ethio - pia has been influenced by a range of factors including economic reforms, international busi - ness practices, and changes in the legal and regulatory environment. The following are some hot topics in corporate governance in Ethiopia. Corporate Governance Frameworks and Best Practices Efforts to develop and implement corporate governance frameworks and codes of conduct that align with international best practices are ongoing. This is particularly the case for State Enterprises. This includes strengthening trans - parency, accountability, and ethical conduct within corporations. Transparency and Disclosure Enhancing transparency in financial reporting and corporate disclosures is a key focus. This includes ensuring timely and accurate financial statements, as well as clear communication with shareholders and other stakeholders. Minority Shareholder Rights Strengthening the rights of shareholders, par - ticularly minority shareholders, and encourag - ing greater engagement in corporate decision- making are important topics particularly after the passing of the New Commercial Code. Digital Transformation and Cybersecurity With the rise of digital transformation, compa - nies are focusing on cybersecurity and data pro - tection to safeguard against cyber threats and data breaches. The newly passed Data Protec - tion Proclamation No 1321/2024 will also con - tribute significantly to the handling and storage of data by companies.
Privatisation and Foreign Investment As Ethiopia continues to open up its economy to foreign investment and privatisation, there is an increased emphasis on establishing robust corporate governance standards to attract and retain investors. Legislative Reform With a number of legislative changes tak - ing place, companies are working overtime to ensure they are up to date and compliant with laws that have been passed. Ethiopia has seen extensive legislative reform in the past years including a revision of the Commercial Code, investment laws, and the passing of new legis - lation such as the Data Protection Proclamation. The country has also opened up a number of sectors, including banking, telecoms and other parts of trading sectors. In addition to the above, the Council of Ministers has introduced a draft proclamation that seeks to regulate the ownership and use of immovable property by foreign nationals in Ethiopia. This development represents a potential turning point in the country’s long-standing legal framework governing land and property ownership which prohibited foreigners from owning immovable property including land, as well as residential and commercial buildings, in Ethiopia – except in special circumstances provided under invest - ment laws. The draft proclamation has been submitted to the House of People’s Representatives (HoPR) for review and potential enactment. If adopted by Parliament, the proposed legislation would signal a major policy shift, potentially opening new avenues for foreign investment in the real estate and broader corporate sectors. This leg - islative reform may affect corporate governance by necessitating more robust compliance and
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