Shareholder Agreements in the Light of the new Commercial Code of Ethiopia: The Case of Plcs

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Date

2024-05

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Publisher

Addis Ababa University

Abstract

Shareholders of a PLC may conclude SHA that exists beside the MoA to control the operation of the business and regulate the relationship amongst themselves. These agreements are not required to be entered into the commercial register as they don’t form part of the MoA. Authentication and registration are also not validity requirement for SHA in Ethiopia, unlike the case of MoA. Therefore, these agreements are kept confidential and contain classified information. As a result, parties tend to include provisions that are inconsistent with the Commercial Code and the MoA of the companies. The Commercial Code’s silence on the existence of SHAs and their content leads to questions about their legal basis and the extent to which parties’ freedom of contract is honored. To properly address the issues, both doctrinal and non-doctrinal methods of conducting research have been used. Consequently, the research findings revealed that the agreements are treated as any other contracts; however, provisions in a SHA that are inconsistent with the provisions of the commercial code or the MoA could face challenges in enforceability.

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Keywords

PLC, MoA, Commercial Code, SHA

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