A new law to improve the regulation of share companies has reached the Council of Ministers. The new rules will offer more protection for the public’s money, Girma Birru, Minister of Trade Industry, said. The Ministry of Trade and Industry (MoTI) has proposed a daft proclamation that will regulate the growing share company market.

The ministry has already submitted the draft proclamation to the Council of Ministers for approval, according to sources. The proclamation is expected to build on the old Commercial Code that contains basic concepts of share market.

Share companies should have a fixed capital in advance that is divided into shares; the company may not be established by less than five persons; and the capital shall not be less than 50,000 birr, according to the code issued 50 years ago.

The code also made founders of the share company liable. It says: the founders will be liable to third parties in respect of commitments entered into for the formation of the company. Expenses required for the formation and accuracy of statements made to the public are some of the liabilities.

Giving more protection to the public's assets is the basic intention of the draft proclamation, Girma Birru, minister of MoTI told Capital.

Currently, there are over 23 companies, such as breweries, cement factories, agro-industry firms and banks, that are selling their shares to the public.

"It is an issue of much concern that needs the serious attention of the government, however, it doesn't mean that the current share market is illegal", Girma told Capital.

However, Girma was not willing to divulge details of the draft proclamation because it is in the hands of Council of Ministers.

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