Commercial Code
Of the Federal Democratic Republic of Ethiopia
2021
FEDERAL NEGARIT GAZETTE EXTRA ORDINARY ISSUE
PROCLAMATION NO. 1243/2021.
Content
Proclamation No. 1243/2021
Proclamation No.1243/2021
The Commercial Code of the Federal Democratic Republic of Ethiopia
PREFACE
Laying a firm legal foundation for the conduct of commercial activities is a prerequisite for ensuring economic development and public benefit; The Commercial Code issued in 1952 was fit for purpose at the time of its issuance. In fact, it was way ahead of the stage of development in Ethiopia during that era.
Many things have, however, changed in the six decades since its issuance; commerce and the flow of capital have not only grown significantly but have also taken increasingly transnational nature; this has put the law to the test, particularly, since Ethiopia started to pursue market-led economic system. Gaps and insufficiencies have, thus, surfaced. Besides, it transpired that the Code contains several provisions that are difficult to implement and open to various
interpretations; In short, it has proved to be inadequate for the level of economic activity in Ethiopia today, much less the requirements of the decades ahead.
Revising the law to strike the right balance between the interests of investors, traders and other stakeholders that are directly affected by it has been found to be necessary in order to bolster commerce and improve the standard of living of citizens; Ensuring the global competitiveness of Ethiopia too requires modernizing the Commercial Code.
It has, therefore, been promulgated pursuant to Article 55(4) of the Constitution of the Federal Democratic Republic of Ethiopia as follows:-
- Short Title
This law may be cited as the «Commercial Code of Ethiopia Proclamation No. 1243/2021″ . - Repealed and Inapplicable Laws
1/ Books one, two and three of the Commercial Code Proclamation No. 166/1960 are hereby repealed.
2/ No proclamation, regulation, directive or customary practice that is inconsistant with this Proclamation shall
have any effect with respect to matters covered by this Proclamation.
- Transitory Provisions
1/ Matters pedning before a court or quasi-judicial organ before the effective date of this law shall continue to be goverened by the law in force before the coming into force of this Proclamation.
2/ Decisions rendered before the effective date of this law based on laws that are repealed by Article 2 of this Code shall remain in force.
3/ The provisions of Books Three and Four of the Commercial Code Proclamation No. 166/1960 shall continue to apply pending the issuance of financial services Code subject to any clear contrary stipulations in other laws. - Power to Issue Regulations
The Council of Ministers may issue regulations necessary for the implementation of this Proclamation.
- Power to Issue Directives
The Ministry of Trade and Industry may issue directives necessary for the proper implementation of this Proclamation and Regulations issued under Article 4 of this law. - Amendement of the Proclamation
Any proposal to amend this Proclamation shall, after proper consultation with pertinent bodies, be submitted to the Council of Ministers by the Office of the Attorney General. - Effective Date
This law shall come into effect on the date of its publication in the Federal Negarit Gazette.
Done In Addis Ababa On The 12th Day Of April, 2021.
SAHLEWORK ZEWDIE
PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA.
BOOK ONE
TRADERS, TRADE AND BUSINESSES TITLE ONE
GENERAL PROVISIONS APPLICABLE TO TRADERS
CHAPTER ONE
PROVISIONS APPLYING TO PERSONS CARRYING ON A TRADE
Article 1. Applicability of the Civil Code
Unless otherwise provided in this Code, the provisions of the Civil Code shall apply to persons and business organizations carrying on a trade.
Article 2. Applicability of the Maritime Code
The relevant provisions of the Maritime Code shall apply to persons and business organizations carrying on maritime trade.
Article 3. Sole Traders and Business Organizations
The provisions of this Code applicable to sole traders, other than those provisions applicable to physical persons only, shall apply to business organizations.
Article 4. Institutions not Governed by this Law
1/ Unless otherwise expressly provided by law, the provisions of this Code shall not apply to administrative organs that are bodies corporate under public law, religious institutions, civil society organizations and cooperative societies even where they carry on activities under Article 5.
2/ Where administrative bodies that are bodies corporate under public law, religious institutions, civil society organizations or cooperative societies happen to be shareholders or partners in a business organization established pursuant to this law pertinent provisions of this law that are applicable to shareholders or partners, as the case may be, shall apply to them notwithstanding the provisions of Sub-Article (1) of this Article.
3/ Notwithstanding the provisions of Sub-Article (1) of this Article this law shall apply to public enterprises without prejudice to the applicability of the relevant special laws.
CHAPTER TWO TRADERS
Article 5. Persons to be Regarded as Traders
Persons who professionally and for gain carry on any of the following or similar activities shall be deemed to be traders:
1/ Purchase of movables or immovable properties with a view to re-selling them either as they are or after alteration or adaptation in retail or wholesale in a domestic or, as the case may be, foreign market;
2/ Purchase of movables or immovable properties with a view to letting them for hire;
3/ Agricultural and forestry development on land lawfully given to a right holder for commercial purpose;
4/ Animal husbandry and production of animal products beyond small-scale levels excluding persons entitled to use rural land under the law;
5/ Fishing and fish farming beyond small-scale levels;
6/ Warehousing activities in accordance with the Civil Code or other relevant laws;
7/ Minining activities not performed by handicraftsmen, exploration,drilling and production of feul oil or gas and related activities;
8/ Exploitation of quarries not by handicraftsmen for buildings, road or other construction works;
9/ Exploitation of salt pans not by handicraftsmen;
10/ Foodstuff production, production conversion, adaptation and maintenance of corporeal movable chattels, from such things as raw materials or semi- finished products not by handicraftsmen;
11/ Building, maintaining and cleaning of houses, buildings, roads and any other construction works and parts of such construction works not by handicraftsmen;
12/ Embanking, leveling, trenching or draining carried out on an immovable property of a third party not by handicraftsmen;
13/ Carriage of goods or persons including through postal services; packaging of goods and carrying out related activities not by handicraftsmen;
14/ Capturing and supplying water in different ways;
15/ Transporting, disposing or recycling of any waste including solid and liquid waste not by handicraftsmen;
16/ Producing, distributing and supplying electricity, gas and compressed air including provision of heating and cooling services;
17/ Repairing, washing and cleaning of movable and immovable things not by handicraftsmen;
18/ Publishing on paper media anything in whatever form by establishing a printing press and publishing sound and video recordings by any method;
19/ Publishing of works through paper printing, phtographs, audio and audiovisual records or television, radio, internet or any other means;
20/ Organizing public entertainment events and operating playgrounds and places of entertainment for the use of the public;
21/ Operating trade fairs and related activties;
22/ Broadcasting programs by establishing radio and television stations;
23/ Operating news and any information transmission services;
24/ Operating communication services through wire or wireless means as well as using satellite and internet technology;
25/ Organizing, providing or storing of information by using computer and software technologies and supplying it to the public through the internet and provision of space and computer for customers to access the information;
26/ Operating services categorized as commercial banking, investment banking, insurance, financial and related services and supporting services;
27/ Operating hotels, restaurants and food catering services, cafes, bars, night clubs and other similar services;
28/ Organizing and coordinating meetings, festivities, parties and similar events on behalf of others and decorating venues for such occasions;
29/ Operating travel agencies and coordinating travels; 30/ Operating beauty, fitness and hairdressing
establishments, as well as all kinds of health fitness
services including any kind of physiotherapy and massage services;
31/ Provision of consulting, auditing or similar skill or knowledge related services beyond small scale level using scientific, technical and professional knowledge;
32/ Operating in an organized manner veterinary and human health services, diagnostic services and provision of consultation, follow up, and related services for maintaining health and prevention of illness not by handicraftsmen;
33/ Provision of educational services and transfer and dissemination of knowledge services not by handicraftsmen;
34/ Operating business as a commercial agent, commission agent, commercial broker, stock broker and any kind of agency;
35/ Provision of security services be that personal or for property not by handicraftsmen;
36/ Operating any office support services including preparation of documents and duplication services not by handicraftsmen;
37/ Operating funeral and related services.
Article 6. Small-Scale Works
1/ Persons who undertake activities under Sub-Articles (4), (5), (31), (32), (33), (35) and (36) of Article 5 of
this Code in a small-scale shall not be deemed to be traders.
2/ A person shall be deemed to work at a small-scale level when he works, using his experiences or knowledge acquired through education or both, all alone by himself or with the assistance of not more than three employees or apprentices and he buys only such material as is necessary for carrying out his activities, without setting up stocks.
3/ Special law may be issued for people who work in small scale.
Article 7. Handicraftsmen
1/ The provisions of this Code relating to traders shall not apply to handicraftsmen.
2/ Handicraftsmen are persons with craftsmanship skills, who live mainly on their manual work, by working all
alone or with the assistance of members of their family and not more than three employees or apprentices and who buy only such material as is necessary for carrying out their activities, without setting up stocks.
3/ Handicraftsmen in most cases use their hands and may also use as appropriate, small tools or machines.
4/ Special law applicable to the activities of handicraftsmen may be issued.
Article 8. Agricultural and Forestry Undertakings
1/ Subject to the provisions under Sub-Articles (4) and
(5) of Article 5 Persons, who carry on activities relating to agriculture, forestry, plant nursery, cattle breeding or maintaining pasture land, shall not be deemed to be traders where they sell the products of the land they exploit or use, or animals or the products of animals bred mainly from the resources of the land which the said persons exploit or use or crops and processed animal products produced from the same land.
2/ Subject to Sub-Article (1) of this Article persons shall not be deemed to be traders whether the exploitation is individual or collective, such as an agricultural community or cooperatives.
Article 9. Holding Company
1/ A company that does not itself conducts operations to produce goods or render service by engaging in activities specified under Article (5) of this Code but holds shares in other business organisations that do so shall be deemed to be a trader.
2/ Notwithstanding the provision of Sub-Article (1) of this Article a holding company may directly produce goods or render service.
CHAPTER THREE
PERSONS INCAPABLE OF CARRYING ON A TRADE
Article 10. Incapable Persons
1/ Persons incapable under the relevant law may not be traders.
2/ Subject to the provisions of Article 12 and 13 of this Code, where incapable persons carry on a trade, they
shall not acquire the status of traders and their acts may be invalidated in accordance with law.
Article 11. Tutors
1/ Tutors may not carry on a trade in the name and on behalf of a minor.
2/ Where an enterprise forms part of the estate of a minor, whether a tutor should liquidate such enterprise or keep it going shall be determined pursuant to the provisions of the relevant law.
3/ The provisions of Sub-Article (1) and (2) of this Article shall also apply to the tutor of an interdicted person.
Article 12. Emancipated Minors
Minors emancipated in accordance with the relevant law may carry on a trade.
Article 13. Effect of minority in Relation to Third Parties
Notwithstanding any provisions to the contrary, where a minor who carries on a trade has caused himself to be entered in the commercial register as though he were of
age, his being a minor shall not affect third parties, subject to the provisions of Article 103 of this Code.
Article 14. Publication of Interdiction
The interdiction of a person shall not affect third parties unless notice of such interdiction has been entered in the commercial register notwithstanding the provisions of Article 103 of this Code.
CHAPTER FOUR
CARRYING ON A TRADE BY MARRIED PERSONS
Article 15. Right of Married Persons to carry on Trade
A trade carried on by a married person shall be regarded as a joint enterprise of the couple unless a spouse objects thereto.
Article 16. Notification of Objection
1/ As between spouses an objection under Article 15 of this Code may be notified to the trading spouse in any manner.
2/ Such objection shall not affect third parties, other than those who are aware of its existence, unless notice of such objection has been entered in the commercial register.
Article 17. Setting aside of Objection
1/ Where the trading spouse is of the opinion that the objection affects the interest of the family, he may apply to arbitrators to set aside the objection.
2/ Where the objection is set aside by the arbitrators, the spouse for whom the objection was set aside shall enter a notice to this effect in the commercial register.
Article 18. Debts contracted by the Trading Spouse
Debts contracted by the trading spouse shall be deemed to be debts of the marriage and may be recovered on the personal estate of each spouse and on common property.
Article 19. Effect of Objection
Where an objection under Article 15 has been entered in the commercial register or the existence of the objection is known pursuant to Article 16 Sub-Article (2), debts contracted by the trading spouse may be recovered on his personal estate only.
Article 20. Cooperation of Spouses
Where spouses carry on a trade in cooperation, the debt incurred by the trader spouse shall be deemed to be a matrimonial debt that is recoverable from the common property of the spouses and the private property of each spouse unless it is shown that one of them is the employee of the other.
CHAPTER FIVE RIGHT TO ACT AS A TRADER
Article 21. Freedom to carry on Trade
Subject to restrictions specified by law or prohibitions regarding unfair competition as may be prescribed, any person has the right to carry on any trade.
Article 22. Legal Prohibitions or Restrictions
1/ Particular persons may be restricted or prevented from acting as traders or from carrying on a particular trade that is incompatible with their work by legal provisions.
2/ Specific requirements as to age, qualifications, nationality or license may be imposed by law in respect of particular trades.
Article 23. Effect of Prohibitions and Restrictions
1/ Persons who carry on a trade subject to prohibition or without fulfilling legally prescribed special requirements or conditions shall be liable to the penalties provided by the relevant criminal law.
2/ Persons who carry on a trade subject to prohibition or restriction may not invoke the said prohibition or restriction to free themselves from liabilities incurred in carrying on a trade subject to prohibition or restriction. They may not hold themselves out to be traders to third parties but they shall be liable as though they were traders.
Article 24. Civic Associations
The conditions on which not-for-profit civic organizations or other organizations not established for business purpose may carry on trade and the consequences thereof may be determined by law.
Article 25. Business Organizations
No business organization shall carry on a trade which it is not permitted to carry on or which is subject to specific requirements with which the said business organization has not complied.
Article 26. Associations (Organizations) with Legal Personality under Public Law
The cases where a trade may be carried on by administrative or religious institutions or any other public undertaking and the conditions and effect of such trade may be prescribed by law.