Ethiopian Capital Market Eases Approach for Companies Missing Share Registration.

Addis Ababa — The Ethiopian Capital Market Authority (ECMA) is taking a more flexible stance toward companies that missed the recent share registration deadline, signaling support for firms navigating the country’s developing capital market.

 

The ECMA Director General, Hana Tehelku, stated that while selling shares without registration is subject to harsh penalties—up to 15 years in prison and fines ranging from 150,000 to 300,000 Br—enforcement will be flexible. Exemptions will be considered for new companies, those experiencing financial distress, and firms that are reporting losses.

 

Microfinance Institutions (MFIs) are struggling with compliance costs. A significant hurdle is the minimum paid-up capital requirement of 75 million Br, which 35% of the approximately 60 nationwide MFIs have yet to meet. Meklit Microfinance Institution illustrates this challenge; they initially incurred 11 million Br in advisory fees, but this was later reduced by 70% through collective engagement with advisors.

 

Consultants highlight ongoing confusion among new and forming companies, calling for standardized advisory fees and greater guidance from ECMA. Financial market trainer Yoseph Alemayehu also urged the launch of a derivatives market to protect investors amid currency fluctuations, emphasizing that stability, transparency, and investor education are crucial for market growth.

 

ECMA’s evolving approach aims to strike a balance between enforcement and support, thereby fostering compliance and sustainable development in Ethiopia’s emerging capital market.

Source: Addis Fortune