Bankruptcy Law of Share Companies under Ethiopian Law: Focus on Non-Financial Sectors

Abstract

This research has investigated the Ethiopian bankruptcy law governing share companies in light of the 2005 legislative guide of the United Nations. The research employed doctrinal legal research approach and those collected data were analyzed qualitatively. The Ethiopian bankruptcy law is also compared with the international guidelines. The bankruptcy law regulating business organizations in general and share companies in particular is in operation since 1960. However, it is considered to be one of the least practiced laws of the country due to the reasons, such as historical background, lack of familiarity and existence of foreclosure law. The paper addresses whether there is a need to amend the bankruptcy law of share companies engaged in non-financial businesses in Ethiopia. In particular, it is devoted to deal with the scope of liquidation, initiation of liquidation, actors in liquidation and effects of liquidation. It is still tried to investigate the gaps and areas which need revision in the current bankruptcy provisions of the 1960 commercial code of Ethiopia. It has been concluded that, the bankruptcy provisions which are applicable for share companies fail to satisfy the current sophisticated business environment. In addition to these, the provisions are not in line with the standards of the legislative guide with regard to the critical issues. Therefore, this paper suggests that there is a need to revise and modernize the bankruptcy provisions governing share companies other than financial institutions in the country taking the current business environment and standards of the legislative guide into consideration.