Business entities in Ethiopia

Business entities in Ethiopia

Ethiopia business structure and legal requirements to setup Since 2003, Healy Consultants provides our Clients with the best corporate structures for doing business in Ethiopia. There are different ways to start operations in Ethiopia, the most common being through the setup of an Ethiopian limited liability company (LLC). Alternatively, entrepreneurs may also establish a public limited company (SC) for larger investments. Foreign legal entities may also set up branch offices or representation in form of a liaison office.

The Ethiopia limited liability company (LLC)

  • The Ethiopia LLC is the preferred legal entity used by entrepreneurs setting up businesses in Ethiopia. A limited liability company requires at least 1 director and 2 shareholders who can either be individuals or legal entities. The director and shareholder can be of any nationality and must not be resident in Ethiopia. A minimum paid-up share capital of US$750 is also required to complete the incorporation process;
  • At least 3 auditors must be appointed if the limited liability company has more than 20 shareholders. The entity name must also include the words “Private Limited Company” at the end.

The Ethiopia public limited company (SC)

  • The Ethiopia SC requires at least 5 shareholder and 3 directors who can either be individuals or corporate bodies to be incorporated. The directors and shareholders can be of any nationality and must not be resident in Ethiopia. A public limited company requires a share capital of US$2,500 at incorporation;
  • A public limited company must appoint at least 1 statutory auditor at incorporation. The auditor can either be an individual or a legal entity.

The Ethiopia branch

The Ethiopia Commercial Law allows foreign companies looking to establish businesses in Ethiopia to open branch offices in the country. The branch office must seek approval from the Ethiopian Investment Commission before commencing operations in Ethiopia. At least 1 director of any nationality must be appointed to be the legal representative of the branch office in Ethiopia.

The Ethiopia liaison office

This entity must first seek approval from Ministry of Trade and Industry before establishment. An Ethiopia representative office is not considered a legal entity and is not allowed to conduct commercial activities in Ethiopia. A liaison office must appoint at least one director to represent the company in Ethiopia. This entity may only engage in i) promotional activities ii) marketing of products and services for their parent company within Ethiopia.

Comparison table between Ethiopia business entities

 LLCPLCBranch officeRep office
Also known as:PLCSCBranchLiaison office
How long to set the company up?5 weeks6 weeks7 weeks6 weeks
How long to open company bank account?5 weeks5 weeks5 weeks5 weeks
Legal liability?LimitedLimitedUnlimitedUnlimited
Wholly foreign owned?YesYesYesYes
Minimum capital?US$750US$2,500US$1US$1
File annual tax return?YesYesYesNo
Tax registration certificate required?YesYesYesNo
Recommended corporate bank account?United BankBank of Abyssinia Commercial Bank of Ethiopia Dashen Bank
Does our Client need to travel?NoNoNoNo
Resident director required?NoNoNoNo
Resident shareholder required?NoNoNoNo
Minimum directors allowed?1311
Minimum shareholders?2511
Tax identification code (TIN) needed?YesYesYesNo
Corporate shareholders allowed?YesYesYesYes
Corporate director(s) allowed?YesYesYesYes
Ethiopia corporate tax rate?30%30%30%0%
Annual financial statements required?YesYesYesNo
Statutory audit required?NoYesNoNo
Regulated by?Ministry of TradeMinistry of TradeMinistry of TradeMinistry of Trade
Allowed to issue sales invoices?YesYesYesNo
Allowed to sign contracts?YesYesYesNo
Allowed to import and export goods?YesYesYesNo
Can rent an office space in Ethiopia?YesYesYesYes
Can buy Ethiopia property?YesYesYesNo
Can own equity in other Ethiopia companies?YesYesYesNo
Total Ethiopia business setup costs in Yr. 1US$14,800US$16,800US$15,000US$14,050
Subsequent annual costs (incl. accounting and tax fee)US$7,200US$9,200US$7,200US$1,400
Sample engagement invoiceEthiopia LLC invoiceEthiopia PLC invoiceEthiopia branch invoiceEthiopia RO invoice

Contact us

For additional information on our company setup services in Ethiopia, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Simon Guidecoq, directly:
client relationship officer - Simon
Ethiopia Chamber of Commerce & Sectoral Association Ethiopia government portal Ethiopia ministry of trade Ethiopian revenues and customs authority National bank of Ethiopia