introduction of the business organization under new commercial code of ethiopia
Under the new commercial code of Ethiopia, business organizations have undergone significant changes and reforms. The new commercial code aims to create a more conducive business environment, promote transparency, and attract foreign investment. This code governs various types of business organizations, including sole proprietorships, partnerships, companies, and cooperatives.
Sole proprietorships are the simplest form of business organization, where an individual owns and operates the business. The new commercial code provides regulations and procedures to formalize and register sole proprietorships.
Partnerships are formed by two or more individuals who contribute capital, skills, or both to carry out business activities and share profits or losses. The new commercial code introduces provisions for limited partnerships and general partnerships, defining the rights and obligations of partners, profit distribution, and dissolution procedures.
Companies, which include both private and public limited companies, are regulated under the new commercial code. Companies must be registered with the Ethiopian Investment Commission and fulfill certain requirements, such as having a minimum number of shareholders, a minimum share capital, and adopting proper governance structures. The new code introduces modern corporate governance practices, enhancing transparency and accountability.
Cooperatives, which are typically formed to promote the economic interests of their members, are also governed by the new commercial code. The code outlines rules for creating and operating cooperatives, including membership requirements, management structures, and profit sharing.
The new commercial code of Ethiopia provides a clear legal framework for business organizations, granting them a more predictable and stable environment to operate. These reforms aim to stimulate economic growth, promote foreign investment, and encourage entrepreneurship in Ethiopia.