Any person engaged in commercial activity in Ethiopia is required to be registered and to have a business license. This page contains regulations and procedures needed to register one's business and obtain business license in Ethiopia.
- The 1960 Commercial Code of Ethiopia (provides the legal base for doing business in Ethiopia) (DOWNLOAD)
- Commercial Registration and Business Licensing Proclamation No. 980/2016 (DOWNLOAD)
Highlights on the Regulation of Commercial Registration and Business Licensing in particular the Commercial Registration and Business Licensing in Ethiopia 480/2016 (herein after "the Proclamation") are presented below.
Who regulates commercial registration and business license? (Article 4 and Article 21 of the Proclamation)
According to the Proclamation, the major government organ to regulate and administer commercial registration, trade name registration and business license are the Ministry of Trade and Industry (hereinafter the Ministry) and the respective Regional trade bureaus. Article 4 of the proclamation states that the Ministry should establish and administer a central commercial register and trade name registers which has a nationwide application; and make open and accessible to the public at large. However, the regional organs administering commercial activities and the Investment Commission may undertake commercial registration and trade name registration when delegated by the Ministry.
The Ministry issues licenses for those business categories to which licenses are issued at federal level, and regional organs administering commercial activities issues licenses for business categories to which licenses are issued at regional level. In a similar manner, the Ministry registers and issue certificates to sectoral associations established at federal level, while regional organs administering commercial activities registers sectoral associations established at regional levels and issue certificates of legal personality.
The Ministry is also empowered to issue business licenses unless such power is vested on another government organ. Some of the government organs, with the power to issue business license for specific sectors, are:
- The Ethiopian Investment Commission issues business license for foreign investors, investment jointly established by domestic and foreign investors, or domestic investors who want to benefit from the incentives accorded by the Commission.
- The Ministry of Mining and Petroleum issues business license prospecting and mining of minerals;
- The Ministry of Water, Irrigation, and Electricity issues business license for various water works services excluding water works construction services
- The National Bank of Ethiopia issues business license for banking, insurance and micro finance services;
Nonetheless, all relevant authorities with the power to issue licenses are required to conform to the provisions of the Proclamation.
Commercial Registration and Business Licensing Procedures
The procedures under the Proclamation are dealt on the Article on commercial registration and Business Licensing Procedure)
Rights of a Business Person Issued Business license (article 25 of the Proclamation)
Any person issued with a business license has the following rights:
- to engage in a business activity within the scope the business license and in compliance with this Proclamation, regulations and directives issued hereunder and provisions of other laws related to business activity;
- not be compelled to obtain additional business license for branches he opens to engage in a similar business;
- to obtain information on commercial registration and licensing service;
- to alter or amend commercial registration, trade name and business in accordance with this Proclamation; and
- to carry out other similar activities that are allowed by the Proclamation and other laws.
Obligations of a Business Person Issued Business license (Article 26 of the Proclamation)
Any person issued with a business license has the following obligations:
- to carry on the various business activities for which business licenses have been issued in a separate places or premises, where carrying on such activities at the same place or premises endangers public health and safety or property;
- display a price list for his goods and services by posting such list in a clearly noticeable place in his business premise or by affixing price tags on the goods;
- comply with the obligation that the nature of the business activity demands, fulfill standards and render service;
- display his business license in clearly noticeable places within the business premises, or in case of branch business offices display copies of business license affixed with seal of the licensing authority;
- not to assign his business license to the benefit of any person, pledge or lease it out;
- not to make use of his business license, where administrative or court decision is passed to dissolve a business organization or to ban a sole proprietor;
- to notify the registering office within one month in case of change of his business address;
- if it is a share company or private limited company shall cause audit of his financial statements by auditor every fiscal year and submit reports;
- provide information requested by concerned offices with respect to his business;
- not to transact at similar level; and
- comply with administrative measures taken by concerned authorities and other obligations provided for in other laws.
Inspection (Article 45 of the Proclamation)
The relevant authority has a power to inspect business establishment for enforcing the provisions of the Proclamation or any other relevant law. However, an inspector deployed by a relevant authority must show his identification cards and special identification cards pertaining to their inspection duties. Further, inspectors can only inspect business establishments at government working hours. Yet, inspectors may inspect business establishments during out of working hours, after obtaining an approval letter from the relevant authority for such purpose.
Administrative Measures and Grievances against Administrative Measures (Article 47 of the Proclamation)
The relevant authority has a power to take administrative measures provided in the Proclamation and other laws against any person who violates the provisions of the Proclamation or any other laws. In such deliberation by the relevant authority, any person aggrieved by the deliberation may submit his grievance to the head of the relevant authority within 10 days. The head of relevant authority to which the petition is submitted should notify his decision to the aggrieved person in writing within five days. In a notable manner, if the head of the relevant authority fails to notify such decision within the specified time, the aggrieved person may lodge his petition to a court of law having jurisdiction.
In any case, any person aggrieved by the decision given or if the head of relevant authority fails to notify within the specified time may lodge appeal in connection with his grievance to regular court having jurisdiction only on issues of law.
Penalties (Article 49 of the Proclamation)
The Proclamation encompasses several penalties, which range from fine to imprisonment, against persons who violate provisions of the Proclamation. Here are the sub-articles stipulated under Article 49:
- Any person who prepared or used false certificate of commercial registration, business license or special certificate of commercial representation shall, without prejudice to the confiscation of his merchandise, service provision and manufacturing equipments, be punished with fine from Birr 150,000 (one hundred fifty thousand) to Birr 300,000 (three hundred thousand) and with rigorous imprisonment from 7 (seven) years to 15 (fifteen) years.
- Any person engaged in business activity without having a valid license or any business person who has been engaged in a business out of the scope of his business license shall, without prejudice to the confiscation of merchandise, service provision and manufacturing equipments, be punished with fine from Birr 150,000 (one hundred fifty thousand) to Birr 300,000 (three hundred thousand) and with rigorous imprisonment from 7 (seven) years to 15 (fifteen) years.
- Any person or business person who undergoes or attempts to undergo commercial or trade name registration or obtains or attempts to obtain business license or special certificate of commercial representation upon presentation of false documents or uses or attempts to use such documentation for renewal of his business license or the special certificate of commercial representation shall, without prejudice to the confiscation of any benefits he may have earned, be punished with fine from Birr 60,000 (sixty thousand) to Birr 120,000 (one hundred twenty thousand) and with rigorous imprisonment from 7 (seven) years to 12 (twelve) years.
- Any business person who have transferred his business license to a third party by way of sale, lease, donation or in a similar fashion shall be punished with fine from Birr 50,000 (fifty thousand) to Birr 100,000 (one hundred thousand) and with rigorous imprisonment from 5 (five) years to 10 (ten) years; if the business license has been transferred to a foreign national the fine shall be from Birr 200,000 (two hundred thousand) to Birr 300,000 (three hundred thousand) and the imprisonment shall be from 7 (seven) years to 15 (fifteen) years.
- Any business person who fails to notify change of his business address to the registering office within the period specified in the regulations issued hereunder shall be punished with fine from Birr 5,000 (five thousand) to Birr 10,000 (ten thousand) and with simple imprisonment not exceeding three months.
- Any business person who fails to notify the registering office within 30 days changes that warrant amendments in the commercial registration pursuant to this Proclamation shall be punished with fine from Birr 5,000 (five thousand) to Birr 10,000 (ten thousand) and with simple imprisonment not exceeding three months.
- Any business person who refuses to provide information or attempts to obstruct the duties of workers or supervisors sent by a relevant authority as part of activities for the enforcement of this Proclamation, regulations or directives issued hereunder shall be punished with fine from Birr 5,000 (five thousand) to Birr 10,000 (ten thousand) and with simple imprisonment not exceeding three months.
- Any person who violates the other provisions of this Proclamation shall be punished with fine from Birr 10,000 (ten thousand) to Birr 30,000 (thirty thousand) and with simple imprisonment from one year to three years.