ETHIOPIA Law and Practice Contributed by: Getu Shiferaw, Awoke Mitku, Gutema Kajela Ejeta and Debora Belachew, Mehrteab & Getu Advocates LLP
a comprehensive framework for M&A and own - ership transfers in the banking sector. This law mandates that banks have to obtain pri - or written approval from the NBE before entering into a voluntary merger or acquisition. Addition - ally, it grants the NBE mandate to facilitate statu - tory mergers for struggling banks and approve acquisitions by foreign banks under exceptional circumstances to ensure financial stability. The law also sets clear restrictions to prevent M&A that may harm financial system stability, consumer rights or market competition. Further - more, it introduces strict oversight on significant ownership transfers and asset disposals, ena - bling the NBE to nullify unapproved transactions and ensure compliance with banking regulations. Additionally, the Ethiopian Investment Board issued Directive No 1001/2024 to Regulate For - eign Investors’ Participation in Restricted Export, Import, Wholesale and Retail Trade Investments. This Directive lists investment areas in the export, import, wholesale and retail trade sec - tors previously reserved for domestic investors in which foreign investors may now participate. 3.2 Significant Changes to Takeover Law The ECMA has issued Directive No 1030/2024 on Public Offering and Trading of Securities, which includes sections related to takeover with a primary focus on increasing transparency and disclosure requirements for takeover bids and the regulatory process for M&A. This Directive requires listed companies to disclose any public takeover bids that have occurred in both the last financial year and the current financial year. Such disclosure must include the price or exchange terms of the takeover offers. Additionally, issu - ers must report the outcome of these takeover offers, ensuring that stakeholders are aware
of whether the transactions were completed, rejected or modified.
4. Stakebuilding 4.1 Principal Stakebuilding Strategies In Ethiopia, it is not customary to build a stake in the target as a strategy to increase influence before a formal takeover. 4.2 Material Shareholding Disclosure Threshold The Ethiopian Commercial Code provides a material shareholding disclosure, and the dis - closure obligation is imposed on a company rather than the shareholders. In the event that a certain company’s shares are open to the public, the company must disclose shareholders having a shareholding of 5% or more to MoTRI or any other relevant authority, as the case may be. In the report, the company shall include both the names of the shareholders and the number of shares they hold. Similarly, capital markets law obliges interested persons and share companies that are listed publicly to disclose the names of interested persons to the ECMA. An “interested person” is a person having a shareholding of 5% or more. When there is a change in the shareholding of persons having a share of more than 5%, such change must be disclosed. 4.3 Hurdles to Stakebuilding Under Ethiopian law, a company’s by-laws may introduce a lower threshold for shareholding dis - closure than the one required by law – ie, it may stipulate that if a shareholder has a 3% stake, it must be disclosed to the relevant authorities. However, a company’s by-laws may not intro - duce a higher reporting threshold – ie, they may
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