Scope of Application- as per Article 3 (1) (b) of the Organizations of Civil Societies Proclamation (herein after referred to as Proclamation No.1113/2019), it is applicable and regulates foreign organization;
Definition of Foreign Organization- Article 2 (4) of Proclamation No. 621/2009 had defined “Foreign Charities” to mean those Charities that are formed under the laws of foreign countries or which consist of members who are foreign nationals or are controlled by foreign nationals; while Article 2 (3) of Proclamation No. 1113/2019 has changed “foreign charities” to “foreign organizations” and it has defined it as “non-governmental organization formed under the laws of foreign countries and registered in Ethiopia”; please note that throughout this legal brief the word organization is used to include Foreign Organization;
Name of the Agency- the name of the Agency is changed from Charities and Societies Agency to the Civil Society Organizations Agency (herein after referred to as the Agency), as per Articles 2 (10) and 4 of Proclamation No. 1113/2019 and is made accountable to Federal Attorney General;
Powers of the Agency- as per Articles 6, 77, 78 and 89 (2) of Proclamation No. 1113/2019, the Agency is given the powers to register, monitor and supervise organizations; examine and follow up on the annual activity and financial reports of organizations; enable organizations to have internal governance system; to register and authenticate documents of organizations; to conduct investigation on the activities of organizations; suspend the activities of the organization, for upto three months period, in case of grave violation of laws; to give written warning to rectify violations of law; in case where the violations is not rectified as per the written warning, then the Agency will issue strict warnings; and in case where the organization fails to adhere to the strict warnings given to it, then the Agency can decide for its suspension and subsequently for its dissolution; and the Agency can refer criminal matters to the police or public prosecutor; Articles 77 (4), 77(5), 78 (4), 78(5) and 79 of Proclamation No. 1113/2019, gives the organizations rights to be heard. Finally, the Agency is empowered to enact Regulations.
Effects of Registration of Foreign Organization- once foreign organization obtains certificate of registration from the Agency, as stated under Article 61 of Proclamation No. 1113/2019, it will have its own legal personality, i.e. it can sue, be sued, conclude contracts, subject to the laws relating to special license (which is defined as Article 2 (8) and 2 (9) is license secured from sector administrator to participate in certain activity), can operate in the sector of its choice, entitled to conclude contracts, to own movable and immovable properties (however its right to dispose these properties is limited);
Operational Freedom of Foreign Organization- Article 62 of Proclamation No. 1113/2019, gives operational freedoms to all organizations including foreign organizations, to propose recommendations for the change or amendment of existing laws, policies, practices, or issuance of new laws or polices; however foreign organizations are not entitled to engage in lobbying for political parties; foreign organizations are allowed to implement projects activities or works in partnership with local organizations by providing financial, technical or in kind support; in collaboration with local and governmental organizations to give support to build the capacity of local organizations; all organizations including, that works for the benefit of the general public or third parties are expected to ensure its activities takes into account the interest of women, children, persons with disabilities, the elderly and other vulnerable groups; organizations cannot operate in sectors that requires additional permits from the relevant government bodies; all of the members, officers, and employees of organizations have the responsibility to give primacy to the organizations’ interest and take the necessary precaution to avoid conflict of interest;
Resource Mobilization and Administration of Foreign Organization- Article 63(1)(a) and 63(1)(b) of Proclamation No. 1113/2019, states all organizations have the right to move its properties from one region to another region or city administration, unless the Project Agreement states that such properties may not be transferred because they are necessary for the sustainability of a specific project it is implementing; organizations have the right to engage in any lawful business and investment activity in accordance with the relevant trade and investment laws in order to raise funds for the fulfillment its objectives. However, the profit to be obtained from such activities may not be transferred for the benefit of members and organizations have the right to solicit, receive and utilize funds from any legal source to attain its objective;
Income Generation Activity of Foreign Organization- Article 64 of Proclamation No. 1113/2019 provides that an organization which engages in income generating activities in accordance with Article 63(1) (b) may do so by establishing a separate business organization (company), by acquiring shares in an existing company, by collect public collections or operating its business as a sole proprietorship. An organization engaged in income generating activities is required to open a separate bank account and to keep separate books of account for its business in accordance with the relevant commercial and tax laws. The relevant tax, commercial registration and business licensing, and investment laws will be applicable to income generation activities under this provision. Income that is generated from income generating activities will be used to cover administrative and program costs of the organization. The income and resources that are acquired from income generating activities shall not be transferred or shared for the benefit of members or workers of the organization. When the organizations collect public collections, it is required to inform to the Agency. An organization engaged in income generating activities based is required to inform to the Agency within 15 (fifteen) days;
Administrative Expense of Foreign Organization- Article 63(2) of Proclamation No. 1113/2019, states that the Administrative cost of an organization established for the benefit of the general public or that of third Parties may not exceed 20 % (twenty percent) of its total income. For the purpose of this provision, “Administrative Expense” includes expenses which are not related to the project activities of an organization but are necessary to ensure the continuity of an organization and related to administrative activities, and includes salaries and benefits of administrative employees; purchase of consumables and fixed assets and repair and maintenance expenses related to administrative matters; office rent, parking fees, audit fees, advertisement expenses, bank service fees, fees for electricity, fax, water and internet services; postal and printing expenses; tax, purchase and repair of vehicles for administrative purposes, and procurement of oil and lubricants for the same; insurance costs, penalties and attorney fees. The Agency is entitled to issue Directive that exempts certain organizations from the applicability of this limitation on “Administrative Expense”;
Employment of Officers by Foreign Organization- Article 65 of Proclamation No. 1113/2019, states that no person shall act as an Officer or Board Management Committee Member of an Organization or a branch thereof if that person: has been convicted of a crime that involves fraud or other crimes that involve dishonest acts and has not been reinstated; has been convicted of any crime as a result of which she/he has been deprived of his/her civil rights and his/her civil rights have not yet been restored; is unable to act by reason of incapacity within the meaning of law; has been interdicted by a court. In addition to the restrictions laid out herein, a member of the board or executive committee of an organization cannot be employed in the same organization as an officer or ordinary employee;
Employing of Foreigners by Foreign Organization- Article 76 of Proclamation 1113/2019, states that no organization may employ a foreign national who is not given work permit under the relevant laws. However, a foreign organization is not barred from appointing a foreign national as its country representative. Foreign nationals other than the country representative may only be hired if the office granting work permit verifies that the work cannot be performed by Ethiopians. Yet this limitation will not be applicable to foreign nationals who are not salaried employees but come to Ethiopia to professionally contribute by working as volunteers for a period not exceeding 1 (one) year;
Obligation to Inform Changes by Foreign Organization- Article 68 of Proclamation No. 1113/2019 provides that if an organization makes changes to any of the following matters, it shall inform the Agency about the change or amendment and get it registered: its name or symbol, in case where it change of organization’s operational sector, change of Headquarters, change the region of operation, change of executive members or chief executive, amendments of its rules, and change of bank account or signatories. However, change of name by an Organization shall not affect any rights or obligations of the Organization;
Obligation to Display of Certificate by Foreign Organization- Article 69 of Proclamation No. 1113/2019 requires every organization to keep its certificate of registration in its Head Office and a copy thereof in its branches in a place that is visible to any visitor. Additionally, the symbol and name of the organization must be placed at a publicly visible place at both the head office and the branch offices;
Obligation to Keep Accounting Records by Foreign Organization- Article 71 of Proclamation No. 1113/2019 requires any organization to keep books of account that show the financial transactions in the organization are prepared in accordance with acceptable accounting standards. The books of account is required to contain entries showing from day to day all sums of money received and expended by the Organization, the matters in respect of which the receipt and expenditure takes place, name and identity of donors, source of donations; and record of the assets and liabilities of the Organization. The officers of an organization is required to preserve any accounting for at least 5 (five) years from the end of the financial year of the Organization in which they are made;
Annual Statements of Accounts and Examination of Account of Foreign Organization- Article 72 of Proclamation No. 1113/2019, requires any Organization to submit to the Agency an annual statement of accounts prepared in accordance with acceptable standards. However, Organizations whose annual flow of funds does not exceed Birr 200,000.00, (two hundred thousand) the statement of accounts may choose to only prepare a receipts and payments account and a statement of assets and liabilities. All Organizations’ account needs to be examined annually by a Certified Auditor within 3 (three) months after the end of the financial year. If one third of the organization’s members, donors or governmental bodies that have requested the examination of accounts, the Agency may appoint a certified external auditor. Where it appears to the Agency that the account of an Organization is not audited within 5 (five) months from the end of that year and the Organization is unwilling to have it audited, the Agency may appoint a certified external auditor and in such case the expenses of any audit carried out by an Auditor appointed by the Agency is to be paid by the Charity or Society concerned, or by its officers if the latter are found to be at fault;
Annual Activity Report by Foreign Organization- Article 73 of Proclamation No. 1113/2019 states that the officers of an organization shall prepare and submit to the Agency every Budget year major activity reports regarding the organization within 3 (three) months up on the end the Budget year. Every such annual activity report shall have attached to it the annual statement of accounts. After reviewing the reports, the Agency may require additional information or explanation;
Disclosure of Annual Activity Report to the Public by Foreign Organization- Article 74 of Proclamation No. 1113/2019 requires any annual activity report or other document kept by the Agency, when requested by any concerned body or members of the organization must be made open to the public at any given time. All organizations must make available at all times, to their beneficiaries and members, the books of account, audit reports and annual reports;
Effect of failure to Submit Reports by Foreign Organization- Article 70 of Proclamation No. 1113/2019, states that if an organization fails to provide its report within 3 (three) months from the expiry of the timeframe set by the Proclamation for submission of reports, the Agency will issue a notice in the gazette to verify its existence. If the organization does indeed maintain existence, the legal representative must be present to explain the situation within 30 (thirty) days from the publication of the notice. However, if the representative falls to do so, the Director General shall submit the issue to the Board for the decision of dissolution of the Organization;
Opening of Bank Account by Foreign Organization- Article 75 of Proclamation No. 1113/2019 requires an organization to get a written approval of the Agency to open a bank account. The Agency is required to respond to requests for such approval within 5 (five) days from receipt of the request. All financial transactions shall be performed through a bank account opened by an organization in its name. All banks have the obligation to provide the bank statement of accounts held by any organization to the Agency when requested. The Bank Account transaction can be done in the context of the organization rules;
Re-registration of already existing organizations- All organization registered under Proclamation No. 621/2001 except those organizations operating in a single region shall register again within one year after the coming into force of this Proclamation. All organizations operating in a single region shall be registered by the competent registrar of that region;
Repealed and Replaced- Charities and Societies Proclamation No. 621/2009 and Article 25 of the Commercial Code that prohibits associations not to engage in trading, is repealed and replaced as per Article 87 of Proclamation No. 1113/2019;
Transitory provisions- as it well known that the Council of Ministers has issued Regulation No. 168/2009, which was enacted as per Proclamation No. 621/2009. Article 88 of Proclamation No. 1113/2019, states that rights and obligations created by Proclamation No. 621/2009 will remain in effect and all powers, duties, rights and obligations of Charities and Societies Agency is transferred to the Agency.
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 Proclamation No. 1113_2019_Organizations of Civil Societies Proclamation.pdf | 901 kB |