Practical and Legal Gaps in Liquidation and Winding-Up of Plcs in Ethiopia: The Practice of Federal Courts in Addis Ababa
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Date
2024-12-01
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Addis Ababa University
Abstract
The dissolution and liquidation of a private limited company involve the processes of winding up a company's affairs and distributing its assets among creditors and shareholders. This can happen for various reasons, including insolvency, the completion of the company's purpose, or a decision by the shareholders. Various countries’ Commercial laws incorporate rules to regulate dissolution and liquidation of companies. From such rules, the appointment and criteria to be a liquidator is the main objective of dissolution and liquidation. Similarly, the new FDRE Commercial Code attempts to regulate these matters. Even though the Code has incorporated rules for the proper liquidation of companies, there are problems regarding the liquidation of companies in general and PLC’s in particular. Among these are inadequate rules on the qualifications and regulations of the liquidator, which cause unnecessary delays and damage to creditors and shareholders.
This thesis seeks to evaluate the legal framework's adequacy with regard to PLC winding up and liquidation, as well as the challenges that creditors, shareholders, and courts may confront throughout these processes and the unique aspects of PLC liquidations. The thesis builds on analysis of legislation, interviews, and literature reviews to achieve the study's goals. The thesis concludes that there are problems with the application of current rules, a lack of supporting legislation passed by relevant bodies, and a lack of clarity and adequacy in the provisions in the new FDRE Commercial Code. The requirements for becoming a liquidator are unclear, and there is no authority in place to license and oversee liquidators, causing issues, draining court time and resources, and damage to third parties.
Thus, the thesis maintains that, to provide additional clarity, the standards outlined in the Commercial Code should be backed by specific subordinate rules, and that an accountable body should take responsibility for licensing and overseeing liquidators
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Liquidator, Liquidation, Dissolution, Private Limited Company