Ethiopia: Corporate and Company Law

Over the past decade, Ethiopia has undertaken significant economic reforms intended to liberalize and modernize its financial sector. Among the most critical steps has been the promulgation of new capital market legislation, culminating in the Capital Market Proclamation No.1248/2021 (CMP).

Ethiopia stands out as one of Africa's fastest-growing economies and a key gateway for investment in East Africa. In recent years, the Ethiopian government has modernized its business laws - notably with the Commercial Code Proclamation No. 1243/2021 - to make registering a company more transparent and investor-friendly. For foreign investors, this means clearer rules and a defined process for entering the market.

Under Ethiopian company law, the company is a separate legal person—but that separation does not immunize directors and senior managers from liability for their own wrongdoing, or for breaches of statutory duties imposed on them as fiduciaries and gatekeepers.

In this edition, we present a concise overview of key legislative developments from May and June 2025 that may be of relevance or may have an impact on your business

Ethiopia has of late taken measures that liberalize the financial sector. The issuance of the new Banking Business Proclamation No. 1360/2025 (Banking Business Proclamation) and Capital Markets Proclamation No. 1248/2021 (Capital Market Proclamation) are salient examples.

People who control a company, be they directors, managers or controlling shareholders, may use their power to divert the company's wealth to unfairly enrich themselves or others.