Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom

Alemu Balcha Adugna

doi:doi:10.11648/j.jpsir.20190203.11

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Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom

Alemu Balcha Adugna

Published in Journal of Political Science and International Relations (Volume 2, Issue 3)

Received: 5 September 2019 Accepted: 25 September 2019 Published: 15 October 2019

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Abstract

Business people tie themselves under certain form of business organization’s chain and tackle commercial hurdles through collective efforts. In Ethiopia, present day witnessed proliferation of tremendous business organizations in all corners of the country. The structure of business organization chosen may, however, have an impact on how simple it is to obtain finances, how taxes are paid, how accounting records are kept, whether liability of members is limited or unlimited and the ways of. Like other forms of business organizations, Private limited company was introduced in Ethiopia in 1960 when the empire of Ethiopia adopted a comprehensive commercial code for the first time. The 1960 Commercial Code of Ethiopia has recognized six forms of business organization from which private limited company is the most popular and prevalent forms of business organization. Per Article 510/2 of the commercial code of Ethiopia, private limited company is a company whose members are liable only to the extent of their contribution. Yet, commercial code have not sufficiently address the issues of capital maintenance, valuation of in kind contribution, administration of paid up capital, shareholders general meeting, liquidation, founders, and expulsion and/or withdrawal of shareholders. Besides, absence of cross reference to provision of law of Share Company is another worst weakness of law of private limited company. This article has unveiled whether filling the gaps via contract, custom or law is possible. Accordingly, contract can solve the conundrums underlying it by inculcating to articles and memorandum of association, and corporate code of conduct. But, since custom on corporate governance is at an infancy stage, it is tricky to recommend customs as a way out. so the best option is to amend laws on private limited companies in a way that address the existing practical problems associated with such companies so as to make the Ethiopian law compatible with the current global affairs.

Published in	Journal of Political Science and International Relations (Volume 2, Issue 3)
DOI	10.11648/j.jpsir.20190203.11
Page(s)	60-67
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Private Limited Company, Contract, Custom, Law

References

[1]	Alameyewu Yismawu, “Merits and demerits of introducing non-shareholder directors in the governance of Ethiopian share companies”, 2014, unpublished.
[2]	Endalewu lijalem, “The doctrine of piercing the corporate veil: its legal significance and practical application in Ethiopia”, 2011, unpublished.
[3]	Brayan A. Garner, Black’s Law Dictionary, West publishing Co, U.S.A, 9th ed, 2009.
[4]	Angela Schneeman, The Law of Corporations and Other Business Organizations, USA, 5th ed, 2010.
[5]	Charles Wild and Stuart Weinstein, Smith and Keenan’s Company Law, Pearson Education Limited, England, 14th ed, 2009.
[6]	Dejene Alamerewu, “Assessing corporate governance of Ethiopian private limited companies: with particular emphasis on making board of directors compulsory to such companies”, 2013.
[7]	Niguse Tadese, “Major problems associated with private limited companies in Ethiopia: the law and the practice”, 2009.
[8]	Fekadu Petros, Ethiopian Company Law, Far East Trading, Addis Ababa, 2012.
[9]	Commercial Code of the Empire of Ethiopia of 1960, Fed. Neg. Gaz, Extraordinary Issue 19th year, No. 3.
[10]	Banking Business Proclamation, No. 592/2008, Fed. Neg. Gaz. 14th Year, No. 57.
[11]	Insurance business Proclamation No. 746/2012, Fed. Neg. Gaz, 18th Year, No. 57.
[12]	Federal Micro Finance Institutions Proclamation No. 626/2009, Fed. Neg. Gaz, 15th Year No. 33.
[13]	Public enterprise proclamations no 25/92, Fed. Neg. Gaz. 22nd Year, No. 20.
[14]	Labour proclamation No. 377/2003 of Ethiopia, Fed. Neg. Gaz, 10th year no. 12.
[15]	Trade Competition and Consumers Protection Proclamation No. 813/2013, Fed. Neg. Gaz 20thYear No. 28.
[16]	Yared Haile-Mekel, “Revising the Ethiopian Commercial Code”, January 2018, available https://www.thereporterethiopia.com/article/revising-ethiopian-commercial-code (accessed on 28/07/2019).
[17]	Mulugeta M. Ayalewu, “commentaries on Ethiopian law of contracts’’, 2010.
[18]	Civil Code of the Empire of Ethiopia, Proclamation No 165/1960, Fed. Neg. Gaz, 19th Year No. 2.
[19]	Professor Nicholas Bourne, Essential company law, Cavendish publishing limited, London, third edition, 2000.
[20]	Paul Merchant; definition of memorandum of association, Updated February2019, available at https://smallbusiness.chron.com/definition-memorandum-association-17475.html (accessed on September 23, 2019).
[21]	Almineh shinashawu, “The nature and scope of private limited company in Ethiopia; the law and practice; focus on bankruptcy”, 2008.
[22]	Simon Golding, company law, Cavendish publishing limited, second edition, 1999.
[23]	Addis fortune news, “Ethiopian institute of corporate governance establish corporate code of conduct for share companies”, April 20, 2019, available at https://addisfortune.news/institute-establish-code-of-conduct/(accessed on august, 2019).
[24]	Merry man, John Henry (2007). The Civil Law Tradition: An Introduction to the Legal Systems of Europe and Latin America (3rd ed.).
[25]	Jury globe, university of Ottawa, world legal system research group, available at http://www.juriglobe.ca/eng/(accessed on August 2019).
[26]	Dolores A. Donovan and Getachew Assefa (2003). Homicide in Ethiopia: Human Rights, Federalism, and Legal Pluralism, American Journal of Comparative Law.
[27]	Constitution of federal democratic republic of Ethiopia, 1st year no 1, August 1995.

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APA Style

Alemu Balcha Adugna. (2019). Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom. Journal of Political Science and International Relations, 2(3), 60-67. https://doi.org/10.11648/j.jpsir.20190203.11

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Alemu Balcha Adugna. Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom. J. Polit. Sci. Int. Relat. 2019, 2(3), 60-67. doi: 10.11648/j.jpsir.20190203.11

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AMA Style

Alemu Balcha Adugna. Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom. J Polit Sci Int Relat. 2019;2(3):60-67. doi: 10.11648/j.jpsir.20190203.11

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@article{10.11648/j.jpsir.20190203.11,
  author = {Alemu Balcha Adugna},
  title = {Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom},
  journal = {Journal of Political Science and International Relations},
  volume = {2},
  number = {3},
  pages = {60-67},
  doi = {10.11648/j.jpsir.20190203.11},
  url = {https://doi.org/10.11648/j.jpsir.20190203.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jpsir.20190203.11},
  abstract = {Business people tie themselves under certain form of business organization’s chain and tackle commercial hurdles through collective efforts. In Ethiopia, present day witnessed proliferation of tremendous business organizations in all corners of the country. The structure of business organization chosen may, however, have an impact on how simple it is to obtain finances, how taxes are paid, how accounting records are kept, whether liability of members is limited or unlimited and the ways of. Like other forms of business organizations, Private limited company was introduced in Ethiopia in 1960 when the empire of Ethiopia adopted a comprehensive commercial code for the first time. The 1960 Commercial Code of Ethiopia has recognized six forms of business organization from which private limited company is the most popular and prevalent forms of business organization. Per Article 510/2 of the commercial code of Ethiopia, private limited company is a company whose members are liable only to the extent of their contribution. Yet, commercial code have not sufficiently address the issues of capital maintenance, valuation of in kind contribution, administration of paid up capital, shareholders general meeting, liquidation, founders, and expulsion and/or withdrawal of shareholders. Besides, absence of cross reference to provision of law of Share Company is another worst weakness of law of private limited company. This article has unveiled whether filling the gaps via contract, custom or law is possible. Accordingly, contract can solve the conundrums underlying it by inculcating to articles and memorandum of association, and corporate code of conduct. But, since custom on corporate governance is at an infancy stage, it is tricky to recommend customs as a way out. so the best option is to amend laws on private limited companies in a way that address the existing practical problems associated with such companies so as to make the Ethiopian law compatible with the current global affairs.},
 year = {2019}
}

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TY  - JOUR
T1  - Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom
AU  - Alemu Balcha Adugna
Y1  - 2019/10/15
PY  - 2019
N1  - https://doi.org/10.11648/j.jpsir.20190203.11
DO  - 10.11648/j.jpsir.20190203.11
T2  - Journal of Political Science and International Relations
JF  - Journal of Political Science and International Relations
JO  - Journal of Political Science and International Relations
SP  - 60
EP  - 67
PB  - Science Publishing Group
SN  - 2640-2785
UR  - https://doi.org/10.11648/j.jpsir.20190203.11
AB  - Business people tie themselves under certain form of business organization’s chain and tackle commercial hurdles through collective efforts. In Ethiopia, present day witnessed proliferation of tremendous business organizations in all corners of the country. The structure of business organization chosen may, however, have an impact on how simple it is to obtain finances, how taxes are paid, how accounting records are kept, whether liability of members is limited or unlimited and the ways of. Like other forms of business organizations, Private limited company was introduced in Ethiopia in 1960 when the empire of Ethiopia adopted a comprehensive commercial code for the first time. The 1960 Commercial Code of Ethiopia has recognized six forms of business organization from which private limited company is the most popular and prevalent forms of business organization. Per Article 510/2 of the commercial code of Ethiopia, private limited company is a company whose members are liable only to the extent of their contribution. Yet, commercial code have not sufficiently address the issues of capital maintenance, valuation of in kind contribution, administration of paid up capital, shareholders general meeting, liquidation, founders, and expulsion and/or withdrawal of shareholders. Besides, absence of cross reference to provision of law of Share Company is another worst weakness of law of private limited company. This article has unveiled whether filling the gaps via contract, custom or law is possible. Accordingly, contract can solve the conundrums underlying it by inculcating to articles and memorandum of association, and corporate code of conduct. But, since custom on corporate governance is at an infancy stage, it is tricky to recommend customs as a way out. so the best option is to amend laws on private limited companies in a way that address the existing practical problems associated with such companies so as to make the Ethiopian law compatible with the current global affairs.
VL  - 2
IS  - 3
ER  -

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Author Information

Alemu Balcha Adugna

School of Law, Madda Walabu University, Robe, Ethiopia

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APA Style

Alemu Balcha Adugna. (2019). Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom. Journal of Political Science and International Relations, 2(3), 60-67. https://doi.org/10.11648/j.jpsir.20190203.11

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ACS Style

Alemu Balcha Adugna. Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom. J. Polit. Sci. Int. Relat. 2019, 2(3), 60-67. doi: 10.11648/j.jpsir.20190203.11

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AMA Style

Alemu Balcha Adugna. Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom. J Polit Sci Int Relat. 2019;2(3):60-67. doi: 10.11648/j.jpsir.20190203.11

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@article{10.11648/j.jpsir.20190203.11,
  author = {Alemu Balcha Adugna},
  title = {Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom},
  journal = {Journal of Political Science and International Relations},
  volume = {2},
  number = {3},
  pages = {60-67},
  doi = {10.11648/j.jpsir.20190203.11},
  url = {https://doi.org/10.11648/j.jpsir.20190203.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jpsir.20190203.11},
  abstract = {Business people tie themselves under certain form of business organization’s chain and tackle commercial hurdles through collective efforts. In Ethiopia, present day witnessed proliferation of tremendous business organizations in all corners of the country. The structure of business organization chosen may, however, have an impact on how simple it is to obtain finances, how taxes are paid, how accounting records are kept, whether liability of members is limited or unlimited and the ways of. Like other forms of business organizations, Private limited company was introduced in Ethiopia in 1960 when the empire of Ethiopia adopted a comprehensive commercial code for the first time. The 1960 Commercial Code of Ethiopia has recognized six forms of business organization from which private limited company is the most popular and prevalent forms of business organization. Per Article 510/2 of the commercial code of Ethiopia, private limited company is a company whose members are liable only to the extent of their contribution. Yet, commercial code have not sufficiently address the issues of capital maintenance, valuation of in kind contribution, administration of paid up capital, shareholders general meeting, liquidation, founders, and expulsion and/or withdrawal of shareholders. Besides, absence of cross reference to provision of law of Share Company is another worst weakness of law of private limited company. This article has unveiled whether filling the gaps via contract, custom or law is possible. Accordingly, contract can solve the conundrums underlying it by inculcating to articles and memorandum of association, and corporate code of conduct. But, since custom on corporate governance is at an infancy stage, it is tricky to recommend customs as a way out. so the best option is to amend laws on private limited companies in a way that address the existing practical problems associated with such companies so as to make the Ethiopian law compatible with the current global affairs.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom
AU  - Alemu Balcha Adugna
Y1  - 2019/10/15
PY  - 2019
N1  - https://doi.org/10.11648/j.jpsir.20190203.11
DO  - 10.11648/j.jpsir.20190203.11
T2  - Journal of Political Science and International Relations
JF  - Journal of Political Science and International Relations
JO  - Journal of Political Science and International Relations
SP  - 60
EP  - 67
PB  - Science Publishing Group
SN  - 2640-2785
UR  - https://doi.org/10.11648/j.jpsir.20190203.11
AB  - Business people tie themselves under certain form of business organization’s chain and tackle commercial hurdles through collective efforts. In Ethiopia, present day witnessed proliferation of tremendous business organizations in all corners of the country. The structure of business organization chosen may, however, have an impact on how simple it is to obtain finances, how taxes are paid, how accounting records are kept, whether liability of members is limited or unlimited and the ways of. Like other forms of business organizations, Private limited company was introduced in Ethiopia in 1960 when the empire of Ethiopia adopted a comprehensive commercial code for the first time. The 1960 Commercial Code of Ethiopia has recognized six forms of business organization from which private limited company is the most popular and prevalent forms of business organization. Per Article 510/2 of the commercial code of Ethiopia, private limited company is a company whose members are liable only to the extent of their contribution. Yet, commercial code have not sufficiently address the issues of capital maintenance, valuation of in kind contribution, administration of paid up capital, shareholders general meeting, liquidation, founders, and expulsion and/or withdrawal of shareholders. Besides, absence of cross reference to provision of law of Share Company is another worst weakness of law of private limited company. This article has unveiled whether filling the gaps via contract, custom or law is possible. Accordingly, contract can solve the conundrums underlying it by inculcating to articles and memorandum of association, and corporate code of conduct. But, since custom on corporate governance is at an infancy stage, it is tricky to recommend customs as a way out. so the best option is to amend laws on private limited companies in a way that address the existing practical problems associated with such companies so as to make the Ethiopian law compatible with the current global affairs.
VL  - 2
IS  - 3
ER  -

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