The provisions of THE NEW commercial code on PLC in comparison to the provisions on PLC in THE FORMER commercial code: Any betterment?
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Date
2024-06
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Addis Ababa University
Abstract
Private limited companies (PLCs) are the most popular and prevalent form of company in
Ethiopia. As economic machines the formation, governance and management of PLCs must be
conducive to the economic growth and development of the country. PLCs in Ethiopia, however,
have been surrounded by problems. Many of the problems are believed to be related with the
provisions of the 1960 CC governing PLCs in Ethiopia. With the aim of alleviating the problems,
bridging insufficiencies, filling gaps and facilitating commerce, the new 2021 CC came up with
changes (improvements, deletions, and inclusion of new ideas) on PLC provisions.
A comparative exploration of the changes and identification of betterments, deficiencies & gaps
on PLC provisions as well as evaluation of how much PLCs have used the betterments and its
implications are not yet sufficiently done.
After an article by article exploration of the provisions of the new CC on PLCs in comparison to
the provisions on PLCs in the former CC, and after evaluation of the practical application of the
betterments and its implications, the researcher unveils and concludes that, in comparison, the
new CC came up with up to date betterments but there still are deficiencies and gaps. Moreover
investors in PLCs are not yet sufficiently using the betterments made on PLC provisions in the
new CC. Therefore the researcher recommends organizing awareness creation forums on the
betterments on PLC provisions in the new CC and the legislature has to amend the CC to
correct the noted deficiencies and to fill the gaps to minimize agency problems and improve
protection of minority shareholders and facilitate commerce.