Ethiopia Company Formation: A Guide for Foreign Investors (2025)

1. Choosing a Legal Structure:

• Private Limited Company (PLC):
  • The most common form for foreign investors.
  • Offers limited liability to shareholders.  
  • Requires a minimum of two shareholders.
• Share Company (SC):
  • Suitable for larger businesses and those seeking to raise capital through public offerings.
  • Requires a higher minimum capital.
• Branch Office:
  • An extension of a foreign company.
  • The foreign company remains liable for the branch's obligations.
• Representative Office:
  • Used for market research and promotion activities.
  • Cannot engage in commercial activities.

2. Obtaining Investment Permits and Approvals:

• Ethiopian Investment Commission (EIC):
  • The EIC is the primary authority for investment-related approvals.  
  • Obtain an investment permit from the EIC.
  • The EIC also helps with obtaining other necessary permits.
• Trade Registration and Licensing:
  • Register the company with the Ministry of Trade and Regional Integration.
  • Obtain a trade license.

3. Preparing Legal Documents:

• Memorandum and Articles of Association (MOA/AOA):
  • Draft the company's MOA/AOA, outlining its purpose, share capital, management structure, and other key details.
  • These documents must be in Amharic and may require notarization.
• Power of Attorney:
  • If applicable, provide a power of attorney to a representative in Ethiopia.

4. Securing a Business Location:

• Obtain a lease agreement for office or commercial space.
• The type of business location will depend on the business activity and structure.

5. Opening a Bank Account:

• Open a corporate bank account in Ethiopia.
• This requires the company's registration documents and other supporting documents.

6. Tax Registration:

• Register the company with the Ethiopian Revenues and Customs Authority (ERCA) for tax purposes.  
• Obtain a Tax Identification Number (TIN).

7. Obtaining Necessary Sector-Specific Licenses and Permits:

• Depending on the business activities, approvals may be required from other government agencies (e.g., Ministry of Health, Ministry of Agriculture).  
• Key Considerations for Foreign Investors:

EIC Assistance:

• Legal and Professional Advice:
  • Seek professional legal and business advice to ensure compliance.
• Language:
  • Amharic is the official language, and many documents must be in Amharic.  
• Documentation:
  • Prepare all necessary documents accurately and completely.
  • Regulations are Subject to Change:
    • It is extremely vital to keep up to date with any and all changes to the rules set in place by the governing bodies.
  By following these steps and seeking professional advice, foreign investors can successfully establish a business presence in Ethiopia.