The New Ethiopian Commercial Code - Uncovering the Major Changes in Composition, Role and Accountability of the Board of Directors

Ethiopia introduced a new Commercial Code in March 2021, replacing the Commercial Code of the Empire of Ethiopia Proclamation No. 166/1960 (the repealed Commercial Code) that governed business operation since 1960. There were many factors that necessitated the revision of the repealed Commercial Code including the demand for responsible corporate management. In Ethiopia, the emergence of publicly held share companies and the rise in the number of shareholders demand to give due emphasis to corporate management. The 1960 Ethiopian Commercial Code failed to provide an adequate legislative response to complex governance issues of the day. Consequently, the Federal government of Ethiopia introduced wide-ranging legal reforms as part of the economic liberalization and modernization. However, the lack of up-to-date legal research and expert commentaries has remained a major challenge to adapt for practice and for the judicial sector. This paper aims to uncover changes under the new Commercial Code of the Federal Democratic Republic of Ethiopia Proclamation No. 1243/2021 (the FDRE Commercial Code) concerning the composition, role, and accountability of the board of directors.