ETHIOPIA Law and Practice Contributed by: Sisay Habte, Tibebe Zewdu, Michael Mengistu and Helina Bezabih, TBeST Law LLP
transparency mechanisms to manage increased foreign ownership and ensure alignment with
With regards to corporate governance, the by- laws of business organisations must contain standard corporate governance rules that are provided for in the Commercial Code. The law commits the parties to higher standards of cor - porate governance. 3. Management of the Company 3.1 Bodies or Functions Involved in Governance and Management One-Member Company A one-member private limited company is a company formed through the membership of only one person or entity. The one member has the mandate to exercise the powers of the gen - eral meeting of shareholders of a private com - pany. Limited Company The rules governing a private limited company shall apply as appropriate to a one-member pri - vate limited company. Private Limited Company and Share Company Private limited companies and share companies are governed and managed by specific bodies or functions as defined under the Ethiopian Com - mercial Code. General Meeting of Shareholders The general meeting of shareholders is the high - est decision-making body. It consists of all the shareholders of the company and holds meet - ings at least annually. Board of Directors The board of directors is responsible for the overall governance and strategic direction of the company. The board is elected by the share -
local regulatory standards. 2.2 ESG Considerations
Companies and their directors are encouraged to take into consideration the environmental and social implications of their project. In this regard, Ethiopia has enacted a new proclamation on environmental impact assessment, Proclama - tion No 1371/2025, which states that an envi - ronmental social impact assessment certificate will be essential for projects which will be cat - egorised by directives to be enacted under the proclamation. Pursuant to the repealed Envi - ronmental Impact Assessment Proclamation No 299/2002, specific sectors, particularly manu - facturing, energy, and mining, were required to submit environmental impact assessment plans as a fundamental condition for obtaining busi - ness licenses. Waste management plans remain a prerequisite for obtaining business licenses in the manufacturing, energy, and mining sectors. A new introduction under the new Environmental Impact Assessment Proclamation is the require - ment for a social impact assessment. The Proc - lamation defines Social Impact as “the negative or positive impact of a development plan on peoples’ lifestyles, relationships and commu- nity organization” . The Environmental Impact Assessment Certificate (EIAC) that will be issued by the Environmental Protection Authority also encompasses permits for social impact assess - ment. Investment projects cannot be imple - mented without obtaining the EIAC. This devel - opment may compel companies to integrate broader environmental and social responsibility measures into their strategic decision making and risk management frameworks.
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