Dissolution and Winding Up of PLCs under the Ethiopian Law
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Date
2017-06
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Addis Ababa University
Abstract
Dissolution and winding up of companies comprise the beginning of termination proceedings,
liquidation of the company’s assets and liabilities and the proceedings for the extinguishment of
a company’s existence. The terms “dissolution” and “winding up” have different usages and
meanings in different legal systems. For the English and the British Commonwealth legal
systems, “dissolution” is the final stage in the proceeding of terminating a company’s existence
that a company is said to be dissolved only if its assets are thoroughly collected, changed into
cash and distributed to those entitled persons i.e. creditors and shareholders.
Under the Ethiopian law, a company ceases to exist and losses its legal personality after the
Commercial registrar cancels its registration and its cancellation has been published in the
Official Commercial Gazette. In every Civil Law legal system, including the Ethiopian legal
system, dissolution is the very first act that brings the termination of a company’s operations. It
is after the completion of the dissolution proceeding, either voluntarily or compulsorily, the
winding up of the company is to be carried out that is to mean to liquidate the assets and
liabilities of the company. Generally, dissolution and winding up of a company constitutes the
initial step or decision to end a company’s existence, finding out of its assets and paying off its
liabilities, as well as its final extinguishment.
As the principal focus of the study is the dissolution and winding up of PLCs under the Ethiopian
law, this study strives to test the adequacy of the Ethiopian law in deliberating and resolving the
dissolution and winding up of PLCs; and, in search of model solutions, this study make use of
the comparative study of the laws of foreign jurisdictions that have a well developed legal
infrastructure which could give us critical guidance to resolve the challenges we face in dealing
with the dissolution and winding up of PLCs under our legal system. The writer will also try to
uncover what the actual practice looks like from court decisions as well as interviews conducted
to practitioners and experts.
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Law