Parliament Amends Six-Decade-Old Commercial Code

Mar 27 , 2021

Members of parliament unanimously ratified a revised Commercial Code earlier this week, marking the first time in over six decades that the Code has seen any major changes. Efforts to amend the Code for the last 34 years had been unsuccessful. Last revised 62 years ago, the new Code aggregated different previously scattered commercial laws into one bundled bill. It allows for the legal incorporation of holding companies and single-member companies and provides legal provision for shareholder meetings held virtually to be admissible before the law. The revised Code introduces a variety of insolvency procedures in addition to bankruptcy, including preventive restructuring and simplified reorganisation proceedings. It also incorporates new clauses that protect minority shareholders on corporate transparency and disclosure, improved rights, and more stringent stipulations of responsibilities on a corporate board of directors. The amendment is deemed to play an important role in hastening Ethiopia's bid to join the World Trade Organisation (WTO), argues a report from the parliamentary Standing Committee for Trade & Industry. According to this report, the changes made are expected to improve the ease of doing business and attract foreign investors.