ETHIOPIA Law and Practice Contributed by: Getu Shiferaw, Awoke Mitku, Gutema Kajela Ejeta and Debora Belachew, Mehrteab & Getu Advocates LLP
which securities are traded, changes in interest exceeding 0.5% of the issuer’s capital within a period of ten days from the date of the change. 5.2 Market Practice on Timing All M&A in Ethiopia are private and are under - taken confidentially without being announced to the public. Disclosure is made by MoTRI in a newspaper of wide circulation prior to the issu - ance of merger approval. There is no common market practice regarding the timing of disclo - sure of M&A transactions by the parties. The parties may agree to disclose at any time during the transaction process. There is no market practice regarding the dis - closure of public M&A since such business combinations have not yet been undertaken in Ethiopia. 5.3 Scope of Due Diligence Most business combinations undertake com - mercial and financial due diligence, which is con - ducted by audit firms, as well as compliance and legal due diligence, which is conducted by law firms. Legal due diligence covers general cor - porate; financial arrangements and borrowings; real property; health, safety and environment; employment, pension and security; intellectual property and information technology; litigations and disputes; insurance; anticorruption; and money laundering. Legal due diligence entails reviewing the docu - ments and information that the target compa - ny provides (as requested) and verifying them against information obtained through independ - ent searches by regulatory organs in order to confirm that the target company is compliant; if it is not, the risks of non-compliance should be highlighted, and solutions recommended.
Commercial and financial due diligence, which may be conducted by financial experts, may cover the market positions, accuracy of the fig - ures, assets, liabilities and financial stability of the target company. 5.4 Standstills or Exclusivity Standstills and exclusivity agreements are com - monly required by prospective buyers in the ini - tial stage of the transaction, in the form of term sheets, heads of terms or exclusivity agree - ments. 5.5 Definitive Agreements Documentation of tender offer terms and condi - tions in definitive agreements is not prohibited in Ethiopia, though it is not common. This is because public M&A are not yet undertaken, and tender offers are not common in private M&A. Therefore, definitive agreements do not include tender offer terms and conditions, but typi - cally cover transaction processes, conditions, warranties and some common deal-protective clauses. 6. Structuring 6.1 Length of Process for Acquisition/ Sale The timeline for acquiring/selling a business var - ies depending on the nature of the transactions, the complexity of the deal, the negotiation time and government approvals. Normally, private M&A transactions can be completed within six months if things go smoothly. However, it may take longer if the transaction is complex, the negotiations become hostile and/or government approval is delayed. In contrast, public M&A require prior approval from the ECMA and the preparation and dis -
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