Experts Developing New Commercial Code for a Modern Ethiopia

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A team of experts, camped out in Bishoftu, have been studying the commercial code of countries with similar legal systems

The first draft of the amended Commercial Code of Ethiopia will be completed before the end of this month.

About 20 experts drawn from various institutions, such as the Ministry of Trade (MoT), the Ministry of Justice (MoJ) and prominent attorneys have been working on the amendment since December 11, 2013. The main reason behind changing the existing Code, which is 54 years old, is to develop one more compatible with the current system of trade, and to be functional for the next 50 years, according to an expert in the group.

The group, which has camped in Bishoftu town for the duration of the work, is undertaking the amendment process – called pre-draft research – in three stages, two of which have already been finalised. The first phase focused on studying research that deals with the Ethiopian Commercial Code, as well as examining proclamations that have repealed parts of the commercial code and assessing the current status of commercial laws of those countries with similar legal systems to Ethiopia.

As a principle, the group has been urged to look into the laws of such developmental states as Japan, Taiwan and South Korea, but they found that their laws were largely copied from Germany and France.

“It is not appropriate to make a copy from a copy,” said the group member.

The second phase was aimed at identifying the elements that must be included in the new Commercial Code; particularly about the criteria Ethiopia should fulfil to become a member of the World Trade Organisation (WTO).

The third and the final phase of the pre-draft research of the new code aims at bringing together the findings of the 20 experts, who have been working in five groups.

The new code will come with substantial changes, particularly in relation to the development of new banking technologies, the expert said. Automated Teller Machines (ATMs) will, for the first time, be recognised by the code to come.

One of the concerns among investors in relation to the existing Code was that there was little security in bankruptcy laws. The new code could include provisions about financial and technical support by the government to bankrupt businesses.

Traders, in the new code, could for the first time include practicing professionals, such as attorneys engaged in profit making activities.

The existing Code was found to be deficient in governing the current structure of private limited companies. The existing Code was enacted at a time when those seeking to establish these companies were only expected to verbally announce their capital, rather than present bank statements, as is the case now. The new Code could include this change, thus making it more suitable to current private limited company structures.

The new Code is also said to be more relevant to the federal structure of government adopted by Ethiopia since 1991, in contrast to the existing Code, which was made for a unitary state.

The second phase of the research was completed three weeks ago. The team is back in Bishoftu as of last week, after a one week break, to complete its job before the end of March. After that, the steering committee at the MoJ will send the draft to various stakeholders, the expert said.