Major Reforms on Business Licensing and Registration

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Minimum Capital Requirement

One of the important changes introduced by the new business registration and licensing proclamation (No.980/2016) is the total abolition of the requirement of minimum capital for private limited companies. This no more part of the requirements for registration and licensing under the proclamation, regulations, and directives issued. This means that the 15,000 ETB deposit at the banks before valid registration of a private limited company has been abolished altogether. Besides, the time taking procedures of depositing the said amount in blocked accounts after securing official letters from the registering authorities have also been eliminated.

Competency Certificate Requirement

The new business registration and licensing proclamation (No. 980/2016) limits the application of competency certificate requirement to just a few licenses justified by the nature and sensitivity of the business concerned (see Article 42(1) of the proclamation. Accordingly, a directive issued (Directive No.18/2018;2011 Eth Cal) by the Ministry of Trade had restricted the requirements to merely 313 business licenses, down from more than 1352.

Newspaper Publication of Company Name

The mandatory requirement to publish proposed trade names in a newspaper of national circulation and wait for a lapse of 15 days was abolished by the Proclamation No. 980/2016. As a result of this, a total of 15 days has been taken off from the overall time needed to start a business. In addition, trade name registration which used to be exclusive responsibility of the ministry of Trade, has now been decentralized and as a result regions and city administrations (including all local government units in Addis Ababa) can offer the service across the country further bringing down the time it used to take to get one’s trade name registered. Further, overly vague and strongest requirement name registration under the previous legislation has been simplified with the result that anyone seeing a trade name should only comply with a simple list of procedures.

Establishment of Physical Address

Under the previous proclamation proof of one’s physical address in almost all cases involved the authentication of lease agreement and constituted one of the burdensome requirements because in addition to paying fees it took up considerable time to process the notarization. A directive (referenced as 010/2017) issued by the Ministry of Trade has broadened the possiblity of establishing business address without the need to autenticate lease agreements under certain conditions and totally waived some businesses of the need for lease agreements. Those micro and small enterprise (of whatever form) also need not to authenticate their business address documents, it would only suffice to produce documents indicating their designated physical address. Painters, carpenters, bricklayers, builders etc can now establish address using their home address. Those engaged in public transportation can merely establish their address as indicated in their residential ID cards.