ETHIOPIA Law and Practice Contributed by: Getu Shiferaw, Awoke Mitku, Gutema Kajela Ejeta and Debora Belachew, Mehrteab & Getu Advocates LLP
not stipulate that a shareholder must have a min - imum shareholding of 6% for disclosure to the relevant authorities. This is because the report - ing threshold set under the Commercial Code is a minimum standard of compliance below which derogation is not allowed, where the aim is to provide transparency for the public and ensure the protection of the investor’s interest. 4.4 Dealings in Derivatives The recent Ethiopian Capital Market Proclama - tion considers derivatives as a form of security. Under the Proclamation, derivatives are finan - cial instruments that derive their value from rel - evant assets or rates, such as shares, bonds, commodities and currencies. The Proclamation allows trading in derivatives through a securi - ties exchange, derivative exchange or over- the-counter exchange. Derivatives exchanges are securities exchanges that are specifically licensed to list exchange-traded derivatives. Directive No 1009/2024 on Licensing, Operation, and Supervision of Securities Exchanges, Deriv - atives Exchanges, and the Over-The-Counter Market governs the manner in which derivatives may be traded. It lists relevant requirements for the licensing of derivate exchanges, securi - ties exchanges and over-the-counter markets. However, even though dealings in derivatives are legally allowed, such dealings do not take place in practice in Ethiopia. 4.5 Filing/Reporting Obligations Under Ethiopian law, there is no specific require - ment for filing or reporting derivatives, but the general requirements for securities apply. Accordingly, when a security is issued, the issu - er must provide certain information about the underlying security. The information required includes the financial position, members of the board of directors and
managers of the company. Such information must be announced in a register designated for the purpose of disclosure. Licensing law also imposes listing requirements on an exchange, allowing for fair trading of securities, and its list - ing requirements must be met by the exchange. As a strategy to prevent distorted trading, a licensed exchange must formulate policies to meet reporting and transparency obligations. 4.6 Transparency Ethiopian law does not require shareholders to make the purpose of the acquisition and their intentions regarding control of the company known. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal In Ethiopia, private M&A do not have public disclosure obligations. However, transactions must be disclosed by MoTRI in a newspaper of wide circulation prior to the issuance of merg - er approval. When the deal is completed, the details and name of the acquiring company must be registered in the commercial registry, which is publicly available. In contrast, the recently enacted Capital Mar - kets Law provides that listed companies must disclose all material changes that may occur. Further, listed companies and the acquirer com - pany shall notify the ECMA, security exchanges and the issuer of the securities – within five days from acquiring the interest – of any person who acquires 5% or more of the capital of a company (indirectly, directly or in alliance with others). In addition, an interested person and a share company listed on an exchange shall report to the ECMA, and to the securities exchange on
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