ETHIOPIA Law and Practice Contributed by: Sisay Habte, Tibebe Zewdu, Michael Mengistu and Helina Bezabih, TBeST Law LLP
meeting can proceed irrespective of the number of voting shares represented. In contrast, EGMs have more stringent quorum requirements, with at least half of voting shares needed for the first meeting, 1/3rd for the second meeting, and 1/10th for the third meeting. Majority The majority required for passing resolutions also differs between OGMs and EGMs. OGM decisions are taken by a simple majority, disre - garding abstentions, and blank ballots. In com - parison, EGMs require at least a 2/3rd major - ity for a resolution to be adopted, with specific agenda items, such as changing the nationality of the company, requiring unanimity. 5.4 Shareholder Claims Under the Ethiopian Commercial Code, share - holders have various avenues for claims against the company or directors. Shareholders become creditors of the company for dividends due to them from the date fixed for payment. In addi - tion, the provisions of the Code outline the legal duties of directors and describe potential viola - tions that may result in liabilities for the com - pany. These include: • requirements for good moral character and compliance with the memorandum of asso - ciation; • obtaining necessary approvals and disclo - sures in related-party transactions; • approval and independent auditor reports for fund transfers involving directors; • ensuring adequacy of capital, liquidity, and proper governance arrangements; • consistently acting in the best interests of shareholders and the company’s long-term sustainability; and • avoiding personal interest entanglement with company affairs, and ensuring requisite care,
skill, and diligence in managing the compa - ny’s affairs, among others. The Commercial Code also specifies the pro - cedures for enforcing the liability of directors, including the necessity of a resolution of a gen - eral meeting of shareholders to institute pro - ceedings against directors. If the company fails to institute proceedings within three months, shareholders representing at least 10% of the capital have the right to institute proceedings in the name of the company. Shareholders also have the right to bring legal action for damages if they have been directly injured by the fault or fraud of the directors. Claims for damages against directors and mem - bers of the supervisory board are subject to a limitation period of two years from the date when the aggrieved party knew of the damage and the perpetrator, with an absolute limitation after ten years from the date when the act in question occurred. 5.5 Disclosure by Shareholders in Publicly Traded Companies There are disclosure obligations on sharehold - ers in publicly traded companies as provided under the Ethiopian Capital Market Proclama - tion. According to the applicable legal provi - sions, an “Interested Person” is defined as any person who has an interest representing 5% or more in the capital of a company listed on an exchange, whether directly, indirectly, or in alli - ance with others. Such Interested Persons are required to submit an authenticated and signed statement to the Capital Markets Authority (the “Authority” ), the Exchange where the securities are traded, and to the issuer of those securities within five days of acquiring the interest. According to the Pub -
251 CHAMBERS.COM
Powered by FlippingBook