Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom
Journal of Political Science and International Relations
Volume 2, Issue 3, September 2019, Pages: 60-67
Received: Sep. 5, 2019;
Accepted: Sep. 25, 2019;
Published: Oct. 15, 2019
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Alemu Balcha Adugna, School of Law, Madda Walabu University, Robe, Ethiopia
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.
Alemu Balcha Adugna,
Filling the Gaps in the Law of Private Limited Companies in Ethiopia: Law, Contract and or Custom, Journal of Political Science and International Relations.
Vol. 2, No. 3,
2019, pp. 60-67.
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