LEGISLATION ON JOINT VENTURES IN ETHIOPIA.

Joint ventures in Ethiopia are addressed by three separate legal frameworks; the 1960
Commercial Code, the Investment Proclamation no. 280/2002 and the Public Enterprises
Privatization Proclamation no. 146/1991 (with its amendment Proclamation no. 182/1992)

The 1960 Commercial Code.

The 1960 Commercial Code defines a joint venture as a contractual agreement rather than a
business undertaking. However, it also provides that a joint venture is subject to the general
principles of law relating to partnerships which invokes the finding that it’s not just a mere
contractual agreement. In addition, article 212 lists joint venture as one of the six forms of
business organizations.

The code contains distinct regulatory features for joint ventures. They include;

1. A joint venture does not have legal personality.1

2. Unlike all the other business organizations, formation of joint ventures need not to be in
writing.2
3. Joint ventures are not to be made known to third parties.3
4. Unless otherwise provided in the agreement, every partner owns his contribution.4
5. A joint venture shall be managed by one or more managers who need not to be partners.
Where no manager is appointed, all the partners shall have status.5

INVESTMENT PROCLAMATION N0 1180/2020.

The investment proclamation No. 1180/ 2020 was enacted to replace the Investment
Proclamation No. 769/2012. It seeks to not only to maximise linkages between foreign and
domestic investments but also to leverage foreign capital to promote the competitiveness of
domestic investors.
Domestic and foreign investors investing jointly are required to obtain investment permits.6

The proclamation also provides for the minimum capital requirements for foreign investors. The
minimum capital required of a foreign investor jointly investing with a domestic investor shall be
1
Article 272 (3) the 1960 Commercial Code.
2
Article 214 the 1960 Commercial Code.
3
Article 272 (1) the 1960 Commercial Code.
4
Article 273 the 1960 Commercial Code.
5
Article 275 the 1960 Commercial Code
6
Article 10 (1) The investment proclamation No. 1180/ 2020
USD 150,000.7 This is significantly less than the required investment amount of any foreigner
seeking to invest in the country under the provisions of the proclamation.

In addition, the minimum capital required of a foreign investor investing in architectural or

engineering works or related technical consultancy services, technical testing and analysis or in
publishing works shall be USD 50,000 if the investment is made jointly with a domestic
investor.8 This is half the amount required if the investment would be made on his own.

The proclamation also re-establishes the Ethiopian Investment Board as an autonomous Federal
Government Agency having its own legal personality and accountable to the prime minister. One
of its objectives is to promote existing investment opportunities by preparing materials on same
and provide up on request, link-up services for participants of joint investment. 9 The board shall
decide in consultation with the relevant public and private sector stakeholders, to open to foreign
investors those investment areas reserved for joint investment with the government, or to
domestic investors, or for joint investment between domestic and foreign investors

7
Article 9 (1) The investment proclamation No. 1180/ 2020
8
Article 9 (3) The investment proclamation No. 1180/ 2020
9
Article 38 (6) The investment proclamation No. 1180/ 2020