The Regulation Of Holding Company Under The New Commercial Code: A Comparative Study Of Ethiopia, Kenya, And Uganda

Abstract

The 2021 revision of Ethiopia's Commercial Code introduced a new regulatory framework for holding companies. This study examines this framework, comparing it with the new Ethiopian code and those of Kenya and Uganda. The new Ethiopian Commercial Code contains legal gaps and ambiguities concerning holding companies. These uncertainties create challenges for businesses and hinder effective corporate governance. This research aims to analyze the new Ethiopian legal framework for holding companies, compare it with the previous Ethiopian code and frameworks in Kenya and Uganda, identify legal gaps and ambiguities in the Ethiopian framework and develop recommendations for improvement based on the comparative analysis. The research employs a doctrinal legal research methodology, incorporating comparative legal analysis. Data collection involves analyzing primary sources (legal codes) and secondary sources (scholarly works). The study finds that while the new Ethiopian Commercial Code represents progress in regulating holding companies, it lacks clarity and precision in key areas. This creates uncertainties for businesses and hinders effective oversight. The research recommends several reforms to the Ethiopian framework, including clarifying the operational scope of holding companies, strengthening approval processes for transactions involving loans to directors, implementing effective enforcement mechanisms for maintaining registers of shares and debentures and providing clearer guidelines for auditor responsibilities in consolidated audits