ETHIOPIA Law and Practice Contributed by: Sisay Habte, Tibebe Zewdu, Michael Mengistu and Helina Bezabih, TBeST Law LLP
4. Directors and Officers 4.1 Board Structure
• minimum age specified by the memorandum of association or law, if any; • being of good moral character; • no record of conviction of breach of trust, theft, robbery or other similar criminal offenc - es while serving as a promoter, director, man - ager, member of supervisory board or auditor or holding any other managerial position or under any other circumstance; and • compliance with other requirements set by the memorandum of association or another law, if any. Where there are different classes of shares in a company, each class of share is required to appoint at least one representative a member of the board. 4.4 Appointment and Removal of Directors/Officers Members of the board of directors may be appointed for the first time by the memoran - dum of association and subsequently the gen - eral meeting of shareholders. Directors may be removed at any time by the general meeting of the shareholders. It is important to note that a director who is removed without good cause cannot be reinstated but can only claim dam - ages for the wrongful dismissal. 4.5 Rules/Requirements Concerning Independence of Directors As indicated below, one of the legal duties of directors is the legal duty to exercise independ - ent judgement and avoid conflict of interest. Ethiopian law restricts directors from partner - ing or taking part either directly or indirectly in a rival business or competing with the company. Directors are also required to avoid situations that may lead to a conflict of interest with the company. This includes the exploitation of the company’s property, information or opportunity
The board of directors in a private limited com - pany is composed of between three and seven members, while the board of a share company is composed of between three and 13 direc - tors. The members of the board are elected by the shareholders. The board members may be either shareholders or non-shareholders. The law provides that two- thirds of the members of the board may not play a role in the day-to-day management of the company. Additionally, the law provides that non-member directors may not exceed one third of the total membership of the board. The board may elect a chairperson or a deputy chairperson among its members. The law pro - vides that it is only a member who is a share- holder that may be appointed as a chairperson. The board is also permitted to grant any one or more of its members a special mandate, includ - ing the mandate to represent the company in a specific transaction. 4.2 Roles of Board Members The general meeting of the shareholders or the memorandum of association may provide details as to the mandate of the chairperson, as well as board committees. The Commercial Code, however, provides only for the roles of the chair - person or the directors in general. Please see 3.2 Decisions Made by Particular Bodies for details of the duties of the directors. 4.3 Board Composition Requirements/ Recommendations Board members are required to meet the follow - ing criteria to qualify as such:
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