Assessing The Possibility Of Controlling Non-Financial Share Companies Via Selling Shares With No Voting Rights Under Ethiopian Company Law

Abstract

An increasing number of Ethiopian technology businesses have issued stock that precludes investors from voting on company decisions. However, whether nonvoting stock is a blessing or a curse is a basic point of contention for investors and academics. Therefore, the general objective of the study is to assess the possibility of controlling non-financial share companies via shares with no voting rights under Ethiopian company law and specifically, to investigate the concept of corporate control and the mechanisms there of in public share companies, to examine the Commercial Code and other pertinent laws of Ethiopia to see if they potentially accommodates corporate control through controlling non-financial share companies via selling non-voting shares, to demonstrate the prospects and challenges of recognizing corporate control through controlling non-financial share companies via selling non-voting shares and to examine a comparative experience from some randomly selected national jurisdictions on the issue of controlling non-financial share companies via selling non-voting shares. Finally, comparative and qualitative approaches were employed in the study. Opponents contend that nonvoting shares raise management agency expenses because they permanently shield business insiders from scrutiny and influence. On the other hand, supporters argue that nonvoting shares may offer advantages over agency charges, even with greater costs. For example, they may allow business insiders to pursue their long-term goals for the company without external shareholders interfering. In the typical property-owning scenario, control and ownership frequently coexist. When a corporation is publicly traded, there is a phenomenon that prevents the people who own the company from exercising control over it. This is because, as the number of shareholders increases, management get more control, and shareholders are only able to exercise ineffective control at shareholder general meetings. This article makes the assertion that ownership and control are becoming increasingly distinct in Ethiopia and provides some factual data to back up this assertion. The share company law should expressly forbid abusive self-dealings and direct or indirect insider trading by any member of the firm, including controlling shareholders, in order to safeguard minority shareholders against corporate insiders. Furthermore, it should be mandatory for the share company law legal structure to incorporate additional rules and regulations, such as voluntary codes and standards