1 / 15

legal set-up of Ethiopia’s policy, strategy and regulatory framework on joint ventures (February 14, 2014)

legal set-up of Ethiopia’s policy, strategy and regulatory framework on joint ventures (February 14, 2014) Presented by Mehrteab Leul Principal, Mehrteab Leul & Associates Law Office. 1.Introductory Remarks. On Foreign Joint ventures Vis a Vis Joint ventures among

conner
Download Presentation

legal set-up of Ethiopia’s policy, strategy and regulatory framework on joint ventures (February 14, 2014)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. legal set-up of Ethiopia’s policy, strategy and regulatory framework on joint ventures (February 14, 2014) Presented by Mehrteab Leul Principal, Mehrteab Leul & Associates Law Office

  2. 1.Introductory Remarks • On Foreign Joint ventures Vis a Vis Joint ventures among • local businesses; • Regulatory frame work • The purpose of this presentation is to point out drawbacks so that the Ethiopian legal environment would be investor friendly and conducive to • business;Making Ethiopia Destination for investments. • All indicators show we have a fast growing economy and we are attracting • the attention of MNCs. • MLA represents a number of MNC some of them are here for the first time.

  3. 2.Joint Ventures from the Regulatory Perspective • New Joint Ventures • Investment proclamation No. 769/2012 and • Investment Regulations No. 270/2012 • Joint ventures on existing companies. • Commercial Registration Proclamation No. 686/2010 • 3.New Joint Ventures • Name Registration • Global brands like Dell cannot be registered under the current practice. • If Dell wants to register Dell Ethiopia it is not allowed under the current practice. • It is time taking. It is not uncommon to be told to come after three days.

  4. Areas of investment allowed for foreign investors • Article 8 of Investment proclamation No. 769/2012 provides • “Areas of Investment open for foreign investors shall be • determined by regulation to be issued by the council of • ministers.” • Investment Regulations No. 270/2012 under article 4 (1) provides • “ A foreign investor shall be allowed to invest in areas of investment specified in the schedule attached hereto except those areas provided for in number 1.3.3, 1.4.2, 1.7, 1.11.3, 1.11.4, 5.3, 6.2, 8.2, 9.2, 9.3, and 12 of the schedule.” • The following are business activities allowed to foreigners under the regulation

  5. Manufacturing • Food industry • Beverage industry • Textile and Textile Products • Leather and leather products • Wood products industry • Paper and paper products industry • Chemical and chemical products • Basic pharmaceutical products and pharmaceutical preparations industry • Rubber and plastic products industry • Other non-metallic mineral products industry • Basic Metals Industry (Excluding Mining of Minerals) • Fabricated Metal products Industry (excluding machinery and • Computer, electronic and optical products industry

  6. Electrical product industry • Machinery/equipment industry • Vehicles, trailers and semi-trailers industry • Manufacture of office and household furniture (excluding those made of ceramics) • Manufacture of other equipment (jewellery and related articles, musical instruments, sport equipments, games and toys and similar products) • Integrated Manufacturing with agriculture • Agriculture • Crop Production • Animal production • Mixed crop and animal farming • Forestry

  7. Information and Communication Technology development in areas to be determined by directives to be issued by the Ministry of Communication and Information Technology • Electricity Generation, Transmission and Distribution • Hotel and Tourism • Construction contracting • Real estate development • Education and training • Architectural and engineering works, technical testing and analysis • Publishing • Import of LPG and Bitumen • Export trade excluding export of raw coffee, chat, oilseeds, pulses, precious mineral and hides and skins bought from the market, natural forestry products and live sheep, goat, camel, cattle and equines not raised by the investor • Supply of petroleum and its byproducts as well as wholesale of own products

  8. Investment Regulations No. 270/2012 under article 4 (2) provides • the following; “Notwithstanding the provisions of sub-article (1) of this Article theBoard may allow foreign investors to invest in areas other than those specified in the schedule, except those areas provided for in Article 6(1) and (2) of the proclamation and Article 3(1) of this regulation.”

  9. The investment areas where the Investment Agency Board do not • have discretion to allow are; • Transmission and distribution of electrical energy through the • integratednational grid system; • Postal services with the exception of courier services; • Air Transport services using aircraft with a seating capacity of • more than fifty passengers; • Manufacturing of weapons and Ammunition; • Telecom services; • Banking, Insurance, and micro credit and saving services; • Packaging forwarding and shipping agency services; • Broadcasting service; • Mass media service; • Attorney and legal consultancy services; • Preparation of an indigenous traditional medicines; • Advertisement, promotion, and translation works;

  10. How the investment Agency Board using its discretion? • No data as to the practice is publicly available. • No transparency; no clear guide lines; • In the present situation we are not able to advice clearly and • confidentlyclients.

  11. Questions we receive • How long does it take to get the approval? • What are the documents required? • What are the criterions for the board to consider to decide? • Notarization of documents The following documents are required to be notarized per article 14(2) of investment proclamation No. 769/2012; • Power of attorney • MOA and AOA of the parent company or a similar • document • Commercial registration document or a similar document • Resolution of the authorized organ of parent company • approving the investment.

  12. Lease agreement • The service is not predictable; • It is time taking; • The staffs do not have good knowledge; • The service need to be improved aiming simplicity; • We need to have notary service in big institutions like banks • and insurancecompanies. • The service need to be out sourced and investors should be • able to sign documents in the business centers of the big • hotels or in their offices. • Our experience; Pittards; Coca Cola and Nampak; • 4.Joint ventures on existing companies. • Applicable law is Commercial Registration Proclamation • No. 686/2010 ; • There is no clear provision of the law regulating JVs in existing companies;

  13. Recently I was in the ministry to follow a polish investment with • a volumeof a couple of million dollars; • There is no assigned department or staff for the service; • I was asked to come up with • A board resolution of the foreign investing company approving • the decision to invest in an already existing company in Ethiopia • andthe amount to be invested. • A cover letter to the Resolution written by the board chairman. • The above two documents need to be notarized and also legalized • bythe Ethiopian Embassy/consulate in the foreign jurisdiction. • Resolution of XXX(the local company) approving the sale of new • shares to xxxxx(the foreign company) and the amount of • investment thereof. • Draft amended articles and memorandum of association of USI • for approval.

  14. I am not sure whether the list is exhaustive; what is the source of the • requirements? • It took us weeks to get these information; • We are told that the ministry will write a letter to the investment • agency; no legal basis for the practice to our knowledge; • We asked “people with experience” and were advised the ministry • will write letter to the notary office supporting the JV. We do not • know what we are going to be asked at the notary office. • The process lacks clarity and transparency;

  15. Thank you!

More Related