Investment Registration, Incorporation and Licensing of a Private Limited Company (PLC) for Securities Investment Advisory Services in Ethiopia
1. Scope
This addresses the requirements and procedures for:
Registration and incorporation of a Private Limited Company (PLC) in Ethiopia by a foreign investor, whether wholly foreign-owned or jointly with a domestic investor; and
Licensing of such a company to provide securities investment advisory services under Ethiopian law.
This is based on:
• Investment Proclamation No. 1180/2020 and Investment Regulation No. 474/2020;
• Ethiopian Commercial Code (2021);
• Capital Market Proclamation No. 1248/2021 and Directive No. 980/2024 issued by the Capital Market Authority (CMA);
• Relevant practice of the Ethiopian Investment Commission (EIC) and CMA.
2. Investment Registration and Company Incorporation
2.1 Legal Framework
The establishment of a PLC is governed by:
• Investment Proclamation No. 1180/2020;
• Investment Regulation No. 517/2022
• Ethiopian Commercial Code 1234/2021
Foreign investors may establish a PLC either as a wholly foreign-owned company or jointly with Ethiopian investors.
2.2 Minimum Capital Requirements
Wholly foreign-owned investment: USD 200,000.
Joint investment with Ethiopian investor: USD 150,000.
Capital must be introduced through the formal banking system and registered with the EIC.
Note: Reduced capital thresholds exist for architectural or engineering works or relating consultancy services in technical testing and analysis or in publishing works (USD 100,000 wholly foreign-owned; USD 50,000 joint investment), but these do not apply to financial or securities investment advisory services.
2.3 Registration Procedure
Fill investment application with business activity, ownership, and capital details to EIC.
Submit draft Memorandum of Association for EIC review and authentication.
Obtain commercial registration certificate.
Obtain Investment Permit to commence business.
2.5 Documentation Requirements
Individual Shareholders:
• Passport copy;
• Proposed company name;
• Draft Memorandum of Association;
• Business plan.
Corporate Shareholders:
• Certificate of Incorporation;
• Memorandum and Articles of Association;
• Board Resolution appointing a representative;
• Power of Attorney;
• Representative’s ID.
• All foreign originated documents must be authenticated by the Embassy of Ethiopia.
2.6 Directors and Resident Representative
• Foreign nationals may serve as directors.
• The company must designate a resident representative in Ethiopia to receive notices, act as point of contact with authorities, and ensure compliance.
• The resident representative may be a director, shareholder, or the General Manager (GM), and must be formally recorded in the Memorandum of Association or a board resolution.
3. Licensing for Securities Investment Advisory Services
3.1 Legal Framework
Licensing is governed by:
• Capital Market Proclamation No. 1248/2021;
• Capital Market Service Providers Licensing Directive No. 980/2024 issued by CMA
No person may provide capital market services without a license.
3.2 Minimum Capital Requirement :
- The minimum capital requirement varies depending on the type of service license. For your reference, please find attached the schedule One of the Capital Market Service Providers Licensing Directive No. 980/2024, which sets out the minimum capital requirements based on the specific service license.
3.3 Licensing Requirements
Applicants must submit:
Application and Fees: CMA form and payment.
Company Documents: Commercial Registration Certificate or Investment Permit, Tax Identification Number, Memorandum of Association, Board Resolution.
Governance and Controls: Business plan, risk framework, internal controls.
Personnel: CVs and fit-and-proper evidence for directors, senior management, and key staff.
Financial Records: Evidence of capital adequacy and financial capacity, including audited financial statements (if prior operations exist) or interim management accounts (if newly established).
CMA Inspection: CMA may conduct a brief on-site check of offices, staff, and operational readiness before license issuance.
Board of Directors: Minimum of three directors; at least one independent director if the company has two or more shareholders.
4. Ongoing Compliance
• Submit periodic reports to CMA.
• Maintain minimum capital.
• Comply with governance, operational, and risk management standards.
5. Estimated Timeline
Process | Timeline |
|---|---|
Investment Registration and Company Incorporation | 2–4 weeks |
Capital Market Licensing | 6–8 weeks |
6. Key Points
Based on the foregoing:
A foreign investor may establish a PLC in Ethiopia, either wholly or jointly with a domestic investor.
Registration with the EIC and incorporation under the Commercial Code are required.
Minimum capital thresholds must be satisfied (USD 200,000 wholly foreign-owned; USD 150,000 joint investment).
A CMA license must be obtained before commencing securities investment advisory activities.
The company must designate a resident representative, maintain a qualified board of directors, and comply with CMA governance and reporting obligations.
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For investors seeking to establish a Private Limited Company (PLC) and obtain licensing for securities investment advisory services in Ethiopia, Malo LLP provides professional legal support throughout the process—from investment registration and company incorporation to capital market licensing and regulatory compliance. For further information or assistance, please contact Malo LLP.