ETHIOPIA Law and Practice Contributed by: Sisay Habte, Tibebe Zewdu, Michael Mengistu and Helina Bezabih, TBeST Law LLP
7. Audit, Risk and Internal Controls 7.1 Appointment of External Auditors All share companies are required to have inde - pendent and impartial external auditors and assistant auditors that are appointed by the general meeting of shareholders. All private lim - ited companies with members of more than ten, or private limited companies with total assets exceeding ETB10 million are also required to have independent and impartial external audi - tors appointed by the general meeting of share - holders. Auditors appointed as external auditors must possess professional licence from the Auditing and Accounting Board of Ethiopia, and must be of good moral character. Auditors may not be a shareholder or an employee of the company, and many not in any event be affiliated with the company as directors, managers, or secretar - ies. Auditors have the duty to discharge their duties following generally accepted accounting principles, provide accurate information, treat shareholders equally, keep professional secrets, annually verify the correctness and accuracy of financial statements and certify that the report submitted by the board of directors reflects the correct state of the company. Auditors also have the duty to compile complete information on conflicts of interest and submit information together with their recommendations to the gen - eral meeting of shareholders. For more detail on the powers and duties of the auditor, please see 3.2 Decisions Made by Par- ticular Bodies .
• the balance sheet, along with the relevant part of the minute of approval by the meeting; and • any changes in the particulars of the share register which contains particulars of mem - bers, transfers of shares, and any amend- ments to these particulars. The Commercial Code and the Commercial Registration and Licensing Proclamation (as amended) both provide that the commercial reg - ister and trade name register must be open and accessible to the public at large. Third parties are entitled to look into the register or demand from the appropriate registering office the issu - ance of a copy of any extract from the register or, where an entry has not been made into the register, a certificate to the effect that no such entry has been made. In addition, members have the right to con - sult the share register kept by companies free of charge, and any third party may do so upon payment of a prescribed fee. If inaccuracies are found in the register, the Ministry of Trade and Regional Integration or relevant government authority may cause rectification, and the com - pany’s directors or managers are liable for any losses resulting from such inaccuracies. Failure to make these filings and comply with the disclosure requirements results in legal conse - quences. For instance, failure to notify changes of business address and other changes warrant - ing amendment of the commercial register are punishable with fine and imprisonment. This is in addition to the potential liability for any losses due to inaccuracies in filings or failure to disclose the required information.
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