ETHIOPIA Law and Practice Contributed by: Getu Shiferaw, Awoke Mitku, Gutema Kajela Ejeta and Debora Belachew, Mehrteab & Getu Advocates LLP
1. Trends 1.1 M&A Market
• by subscription for new shares in a business organisation; • by directly or indirectly acquiring assets of a business organisation; • through a merger by acquisition; and • through the privatisation of public enterprises. A person may acquire shares in a business organisation by purchasing them from existing shareholders, or by subscribing to new shares that have been issued by the business organisa - tion. Both modalities are practiced in Ethiopia. Merger by acquisition is another means of acqui - sition, in which entities resolve to merge and with one of the acquiring entities surviving the merger. In this type of acquisition, all the rights, respon - sibilities, assets and liabilities of the entity that is acquired will transfer to the surviving entity in accordance with the merger agreement, which details all the arrangements of the entities. In recent times, there has been a move towards privatising some of the large public enterprises that are fully owned by the Ethiopian govern - ment. The privatisation of public enterprises involves the sale of the assets or share capital of a public enterprise, in full or in part, to private ownership. The legally recognised modalities for this are: • competitive tender; • public auction; • initial public offering; and • sales over time. A recent development is the introduction of the stock market in Ethiopia, following which public listing and acquisitions by initial public offering are more likely. 2.2 Primary Regulators The primary regulators of M&A activity are:
The M&A market in Ethiopia seems promising given recent legal and policy developments. However, in comparison with 12 months ago, the actual market does not seem to have sig -
nificantly changed. 1.2 Key Trends
There has been significant attention on the finan - cial sector following the introduction of statu - tory mergers in the recently approved Banking Business Proclamation (the “Proclamation” ). The Proclamation has empowered the National Bank of Ethiopia (NBE) to establish statutory mergers to rescue problem banks and create more viable and stronger institutions. The Proclamation, in addition to permitting for - eign banks to join the Ethiopian market, has pro - vided that the NBE may approve the acquisition of one bank by another, including foreign banks, to ensure the stability of the financial system. This has led to significant attention on M&A in this sector. 1.3 Key Industries Industries experiencing significant M&A activity in the past 12 months include the manufacturing and crypto-mining sectors. 2. Overview of Regulatory Field 2.1 Acquiring a Company In Ethiopia, the primary techniques/legal means for acquiring a company are: • by directly or indirectly acquiring existing shares of a business organisation;
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