Central Bank Eases Filing Requirements

Dividend payments to shareholders of banks and insurance companies will be settled right after shareholder meetings, according to a new directive issued by the National Bank of Ethiopia (NBE).

The new directive was issued four weeks ago to rescind the former directive that mandates the approval of shareholders regular and extraordinary meeting minutes by the central bank, and registration of the minutes by the Document Authentication & Registration Agency (DARA).

“The process of approval and registration of the minutes of shareholder meetings sometimes proved time consuming,” reads the new directive signed by Yinager Dessie (PhD), governor of NBE. He continued that it “resulted in undue delay in dividend payments to shareholders of banks and insurance companies.”

The process of minutes approval and registration came on to the scene in 2015 following the issuance of a directive that required board chairpersons and secretaries of banks and insurance companies to deliver minutes of the general assembly to the central bank within 15 days of the assembly. Once the central bank approves the minutes, it will be sent to DARA for registration, according to the former directive.

The registration and approval processes took months, overlapping with the general assembly, and the extraordinary meetings of banks and insurance companies, according to Eyesuswork Zafu, a shareholder at United Insurance and board chairperson of United Bank.

“Besides, the minutes were being sent back and forth between the central bank and the financial institutions to correct simple and minor errors,” Eyesuswork told Fortune.

Whether the shareholders decided to reinvest their dividends or be paidout, they were supposed to wait until the process of approval and registration of the minutes was completed and the banks and the insurance firms received the blessing of the NBE.

The process took up to three months and remained a major source of disappointment for shareholders and the institutions.