Ethiopia’s Capital Market Regulator Warns Against Illegal Share Sales Linked to “Arba Minch Water” Project

Ethiopian Capital Market Authority has issued a public warning to investors over unauthorized share sales promoted by Baira Share Company, citing violations of securities laws and ongoing investigations into the scheme.

The company is accused of publicly advertising shares primarily via social media for a proposed water production venture called “Arba Minch Water” without securing the legally mandated regulatory approvals, according to the regulator.

Under Ethiopia’s capital market framework, any public offering of securities must receive prior authorization. The Authority referenced Public Offering and Trading of Securities Directive No. 1030/2024, which explicitly prohibits the sale of unregistered securities, as well as Capital Market Proclamation No. 1248/2021, under which such activities may constitute a criminal offence.

In addition to the unauthorized offering, the dissemination of promotional materials without regulatory clearance is itself a violation, exposing the company and its agents to potential legal penalties.

The Authority has advised the public to avoid engaging with the offer, warning investors not to purchase shares or transfer funds to the company or its representatives. An administrative investigation is currently underway to determine the extent of the violations and identify responsible parties.

The case highlights increasing regulatory scrutiny as Ethiopia’s capital market develops and attracts new participants. Authorities have emphasized that investor protection remains a priority, particularly as informal or misleading investment schemes begin to emerge alongside formal market growth.

As the country continues to build its capital market infrastructure, regulators are urging investors to verify the legitimacy of any public offering and ensure that issuers are properly licensed and approved before committing funds.