Proclamation No. 1150/2019 that has amended some of the provisions of the Commercial Registration and Business Licensing Proclamation No. 980/2016 ''the amended Proclamation'' has entered into force as of August 9th 2019.
Accordingly, the amendment has re-defined "business person" as "any person who professionally and for gain carries on any of the activities specified in the Commercial Code [of Ethiopia of 1960] and the Ethiopian Business Licensing Categories". The amendment has also mandated the Ministry of Trade and Industry [which is renamed by the amendment] to issue the Ethiopian Business Licensing Categories Directive, which will provide the list and types of the commercial activities for which business licenses will be issued in Ethiopia. These new clauses of the amendment by far widens the list and types of the 22 business activities of Article 5 of the Commercial Code of Ethiopia of 1960.
The amendment has also mandated the Ministry of Trade and Industry to put in place and follow up the implementation of systems that will make it possible for service recipients to get registration and licensing services without physically appearing at the registering offices by means of information and communication technology. Further the Ministry of Trade and Industry, is allowed to set up "one stop shop centers" that will authenticate memorandum of associations and articles of associations and any amendments and alterations on these documents as well as that issues Tax Identification Numbers.
The amendment has also eliminated the requirement of publication of company name in newspaper circulation and the fifteen days waiting ahead of business registration, which was mandatory as per the amended Proclamation. This requirement is replaced by a new web-based system "where sole proprietorship or business organizations are established or registration certificate are issued to any person under this Proclamation, the relevant authority shall be means of accessible information communication technology make public information relating to their registration and licensing".
The previous legal requirement of getting registered any alterations or amendments on commercial organization's registration within 60 (sixty) days from the date of their notarization is eliminated and replaces by provision that states "the registering office shall before registering ensure any alterations of or amendments to commercial registration are prepared in accordance with the provisions of the Commercial Code [of Ethiopia of 1960]."
One of the failures that used to lead to cancellation of commercial registration by the registering office under the amended Proclamation, i.e. failing by business person to obtain a business license within one year after being entered into the commercial registration is totally removed by this amendment. Similarly, the previous provision that requires business persons who are engaged in manufacturing or engineering or other similar investment commercial activities to produce sufficient and acceptable evidence that justifies the causes of incompletion of investment activities and for not obtaining business license renewed is removed. The mandatory provision of the amended Proclamation that leads into the cancellation of the commercial registration as result of the cancellation of the business license of the business person is also revoked.
In addition, as per this amendment, cancellation of registration of private limited company will be valid after one month from the date of the registering authority makes it public by means of accessible communication and information technology. However, where the cancellation involves sole proprietorships it will be valid from the date of such cancellation.
The previous by provisions of the amended Proclamation relating to renewal of business license, which requires private limited companies who have lost three fourth of their capital to raise their capital by half to get their business license is lowered so as they will raise their capital only by quarter to get their license renewed. As per this amendment, business persons are given the right of renewing business license within one year of its expiry by only paying Birr 20,000 (twenty thousand) as penalty. Furthermore, business license not renewed by effecting this penalty amount will be deemed as cancelled. However, this same business license can be re-issued to the previous holder in case where an application is submitted to the registering organ a year after the end of the period for the renewal of license.
Finally, grounds that causes the prevention of registration of trade names that are stated under Article 16 of the amended Proclamation are also made to be applicable for registration of "company names". The amendment has replaced the phrase "registration of trade name" as used in part three of the amended Proclamation with "registration of company and trade names". Although, the amendment under its clause 13 has stated that "Article[s] 14 and 15 of the [amended] Proclamation are deleted and replaced by the following new Article 14 and 15" it has only amended the titles of Articles 14 and 15 into "Registration of Company Names" and "Registration of Trade Names", respectively. It seems that the intention of the legislature is just to amend the titles of these provisions and not to totally delete these two provisions as no replacement is provided in the amendment.
23 September 2019 and further edited on 23 April 2020
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 Commercial Registration and Business Licensing-Amendment-Proclamation1150-2019.pdf | 1769 kB |