Proclamation No. 487/2022
THE DEFINITION OF OBJECTIVES AND FUNCTION OF THE ETHIOPIAN INVESTMENT HOLDINGS COUNCIL OF MINISTERS REGULATION
WHEREAS, the Ethiopian Investment Holdings has been established under the Definitions of Powers and Duties of the Executive Organs of the Federal Democratic Republic of Ethiopia Proclamation No. 1263/2021;
WHEREAS, it is provided by the Proclamation that the organization and function of the Ethiopian Investment Holdings shall be defined by a Regulation to be issued by the Council of Ministers and thereby it has become necessary to issue a Regulation that defines its organization and functions;
WHEREAS, there is a need to create an institutional framework that allows attraction of private investment into Ethiopia in a strengthened manner and creation of an enabling environment for enhanced joint investment between the private and public sectors in such a way that serves the strategic needs of the economy;
WHEREAS, it has become necessary to create an institutional framework that allows the full optimization of the value of the range of state-owned assets such as real estate, land, infrastructure and state-owned enterprises through a coordinated strategic oversight;
WHEREAS, it is imperative to uphold and incorporate strong corporate governance principles to instill commercial and investment discipline in the management of state-owned assets and resources;
WHEREAS, it has become necessary to bring together various state-owned assets under one legal entity, in a manner that allows the government to provide a strategic oversight, attract sizeable foreign investment and technology;
NOW THEREFORE, in accordance with Article 103 of the Definition of Powers and Duties of the Executive Organs of the Federal Democratic Republic of Ethiopia Proclamation No. 1263/ 2021, the Council of Ministers has issued this Regulation.
SECTION ONE
GENERAL PROVISIONS
1. Short Title
This Regulation may be cited as “The Definition of Objectives and Function of the Ethiopian Investment Holdings Council of Ministers Regulation No 487/2022”.
2. Definition
In this Regulation, unless the context otherwise requires:
“Government” means the Government of the Federal Democratic Republic of Ethiopia;
“State-owned Asset” means a wholly or majority state-owned enterprise, share company or financial institution; land or building under state ownership or possession; and other tangible or intangible assets over which the Federal Government has full or partial ownership or other stake;
“Board” means the Board of Directors of the Ethiopian Investment Holdings established in accordance with Article 10 of this Regulation;
“Sub-Funds” means funds founded by Ethiopian Investment Holdings individually or holding or owning shares in them with counterpart funds, financial institutions, companies or any other public entity;
“Subsidiary” means company owned by Ethiopian Investment Holdings individually, or company in which Ethiopian Investments Holdings is a shareholder with other parties and maintains direct or indirect control;
“Person” means any natural or legal person
3. Basis
Ethiopian Investment Holdings may be referred by its short name “EIH” as necessary.
Ethiopian Investment Holdings shall be accountable to the Office of the Prime Minister.
Ethiopian Investment Holdings, as well as sub-funds and companies set up by Ethiopian Investment Holdings or it participates in setting up thereof shall be considered private business organization regardless of the shareholding percentage of the government.
Unless otherwise provided by Article 54 of the Definition of Powers and Duties of the Federal Executive Organs Proclamation No. 1263/ 2021 and this Regulation, the provisions of the Ethiopian Civil Code, the Commercial Code, and any other relevant laws shall apply to Ethiopian Investment Holdings and its subsidiaries.
4. Head Office
Ethiopian Investment Holdings shall have its Head Office in Addis Ababa and may have branch offices inside or outside Ethiopia.
5. Objective
The objectives of Ethiopian Investment Holdings are to:
Serve as a strategic investment arm of the government of Ethiopia;
Contribute to sustainable economic development, through professional management of its funds and assets achieving the optimal use thereof in accordance with international best practice and corporate governance principles, and to maximize the value for the benefit of current and future generations;
Provide a strategic vehicle to attract foreign investment by, among others, establishing a co-investment platform, consolidating assets for further monetization, unlocking values from current unutilized assets and thereby bring the highest possible return on investment.
6. Capital
The authorized capital of Ethiopian Investment Holdings is Birr One Hundred Billion of which Birr TwentyFive Billion is paid up in cash and in kind.
The Board may increase, reduce or alter in any form the authorized capital of the Ethiopian Investment Holdings as provided under Sub-Article (1) of this Article.
7. Source of Funds
The source of funds of Ethiopian Investment Holdings are the following:
1/ Pool of state-owned assets Ethiopian Investment Holdings administers as provided under this Regulation;
2/ Returns and revenues of the investment of its assets;
3/ Proceeds from the sale of its assets or entities;
4/ Loans and other facilities including proceeds of the issuance of bonds and other financial instruments;
5/ Other resources allocated to it and approved by the Board of Directors.
8. Transfer of Assets
Up on the Request of the CEO of Ethiopian Investment Holdings and with approval of the Board of Directors, the ownership of a stateowned enterprise or any other state-owned asset shall be transferred to the Ethiopian Investment Holdings or any of the funds established and fully owned by the Ethiopian Investment Holdings.
9. Duties and Responsibilities
1/ Ethiopian Investment Holdings shall have the following duty and responsibility:
a) Operate and carry on a business of a holding company as per
the Ethiopian Commercial Code;
b) Hold shares, debentures, bonds and securities,
which are in its ownership;
c) Invest in any business and
investment opportunities as it sees profitable;
d) Take part in capital market, money market and similar other sectors
through purchase, sell or other investment undertakings;
e) Takeover and manage state-owned assets that may be assigned to it by
the Board of Directors in accordance with Article 8 of this Regulation;
f) Transform property of state-owned enterprises and other assets
transferred to it into optimal income generating ventures, through
structure and system change;
g) Establish, control, manage and administer sub-funds;
h) Acquire share in existing entities or
funds solely or in association with local or foreign entities;
i) Establish or promote a new company or companies for the purpose of
acquiring or undertaking all or any of the assets and liabilities of said
company;
j) Manage, supervise and exercise control of the subsidiaries under its
pool;
k) Hire appropriate staff, determine their payment and incentives in
accordance with commercial principles and international best
practice;
l) Decide on matters of incorporation of any of its subsidiaries in any part
of the world;
m) Undertake all preparatory works and decide on the dissolution, amalgamation, division, sale,
privatization, spin-off of subsidiaries it calls into its pool;
n) Decide on the company form of the entities it calls into its pool or
decides to establish;
o) Borrow, raise money from local and foreign sources, issue debt
instruments and secure or discharge any debt or obligations in such
manner as may be considered fit;
p) Enter into any guarantee, indemnity or suretyship and to charge some or
all of the subsidiaries for their respective debts as appropriate;
q) Authorize borrowing of funds or any other forms of indebtedness or
guarantorship by its subsidiaries involving domestic and foreign
financiers or business partners;
r) In carrying out its objectives, it may cooperate and participate with
domestic and foreign counterpart funds and financial institutions;
s) Purchase, sell, rent, lease, exploit and utilize fixed and movable assets;
t) solicit input, data and have consultations with the Ministry of
Finance and other relevant institutions to enhance the alignment
of its activities with national investment, debt servicing,
budgetary and other policy objectives;
u) Perform other activities necessary for the attainment of its objectives.
2/ With respect to subsidiary companies under its ownership; Ethiopian Investment Holdings shall have the duty and responsibility to:
a) Serve and fulfil the powers and functions of a holding company as
per the Ethiopian Commercial Code;
b) Establish a system to enable them play appropriate role in the
economy, enable them to develop modern corporate management,
design proper guidelines that help them achieve their goals, and follow
up the implementation of the same;
c) Decide on their increase or reduction of capital, sale, amalgamation,
division, spin-off, or any other restructuring, either by taking over
one or more subsidiary companies or by the formation of a new company;
d) Supervise that they have developed strategic and annual plan consistent
with Ethiopian Investment Holdings’ strategic plans, approve
such plans and monitor implementation of the same;
e) Devise dividend policy, and cause to execute;
f) Appoint members of the management board and decide on their
remuneration and other benefits ;
g) Assist them to follow transparent procedures; develop a system under
which they issue timely and proper financial and performance reports;
follow up implementation of same;
h) Perform any other task that is necessary for the attainment of its
objectives.
SECTION TWO
ORGANIZATION OF THE ETHIOPIAN INVESTMENT HOLDINGS
10. Organization
Ethiopian Investment Holdings shall have the following governance structure:
1/ A Board of Directors;
2/ A Chief Executive Officer and Executive Management;
3/ Necessary staff; and
4/ An Independent International Advisory Board, as necessary.
11. Board of Directors
1/ The Board of Directors of Ethiopian Investment Holdings shall be chaired by the Prime Minister of the Federal Democratic Republic of Ethiopia.
2/ The Board shall constitute 6 (six) members to be appointed by the chairperson for a term of three years which may be renewed.
3/ The CEO of Ethiopian Investment Holdings shall participate in the Board’s meetings on ex-officio non-voting capacity.
4/ The Board shall meet once every month; provided however that it shall meet at any time at the request of the chairperson.
5/ Decisions of the Board shall be passed by majority votes and, in case of a tie, the chairperson shall have a casting vote.
12. Powers and Responsibilities of the Board of Directors
The Board shall have the power and responsibility to:
1/ Set the strategic vision and business direction of the Ethiopian Investment Holdings and its subsidiaries;
2/ Follow up the general performance of the Ethiopian Investment Holdings in accordance with the performance indicators developed by it;
3/ Approve the overall management structure of the Ethiopian Investment Holdings, including the assignment, compensation, and dismissal of members of the Executive Management of Ethiopian Investment Holdings;
4/ Determine the assignment, dismissing remuneration and other benefits of the CEO, senior management and Auditors of Ethiopian Investment Holdings;
5/ Adopt the general policies and internal regulations of Ethiopian Investment Holdings;
6/ Approve the dissolution, amalgamation or division of Ethiopian Investment Holdings and its subsidiaries or the transfer of the ownership and supervision of Ethiopian Investment Holdings’ subsidiaries to another authority in any other manner;
7/ Increase, reduce, or in any form alter the authorized capital of Ethiopian Investment Holdings;
8/ Decide on the transfer, pledge, mortgage or otherwise dispose of any share or any interest in any share of the subsidiary of Ethiopian Investment Holdings to third parties;
9/ Adopt the internal policies, operational guidelines, standards, budget, annual plans and targets of Ethiopian Investment Holdings;
10/ Develop the financial, administrative and technical regulations of Ethiopian Investment Holdings, personnel, contracts and procurement policies;
11/ Determine and approve annual budgets and performance objectives in line with Ethiopian Investment Holdings policies and standards;
12/ Form sub-committees to oversee investment, governance, internal audit, risks and other issues as necessary;
13/ Discuss on investment plan of the Ethiopian Investment Holdings proposed by the CEO; approve and monitor the implementation of same;
14/ Set the dividend policy of Ethiopian Investment Holdings and its subsidiaries balancing the sustainable distribution of profits as dividends to the government including resources needed for national investment, debt servicing, budget and other policy objectives with that of the retention of profits for Ethiopian Investment Holdings investment to generate future returns;
15/ Approve external Auditor report of the Ethiopian Investment Holdings and follow up that corrective measures are taken as per the audit findings;
16/ Approve Memorandum of the Ethiopian Investment Holdings as may be necessary;
17/ Decide on remuneration and other benefits of Board of Directors;
18/ Perform other functions that may be prescribed in Ethiopian Investment Holdings’ internal rules and regulations as well as other mandates that may be necessary for the protection of the ownership rights of the government in the Ethiopian Investment Holdings and its subsidiaries;
19/ The Board may delegate to any person, a committee or institution the exercise of any powers or the performance of any of its functions or its duties under this Regulation; 20/ Without prejudice to the provisions of this Article, the Board may draw up its own rules of procedure.
13. Liability of the Board of Directors
1/ The Board of Directors shall carry out their duties with due care.
2/ Members of the Board shall be committed to maintain confidentiality of the information made available to them while exercising membership tasks thereof in the Ethiopian Investment Holdings.
3/ Members of the Board shall observe Ethiopian Investment Holdings’ code of good practice and guidelines.
14. Powers and Responsibilities of the CEO
The CEO shall have the powers and responsibilities to:
1/ Develop the strategic vision and the general investment policy of Ethiopian Investment Holdings in line with the objectives set out under this Regulation and directions of the Board of Directors;
2/ Manage the day-to-day operations of Ethiopian Investment Holdings in accordance with this Regulation and its strategic objectives;
3/ Prepare and submit to the Board the internal regulations as well as the work program and budget of Ethiopian Investment Holdings and implement same upon approval;
4/ Represent the Ethiopian Investment Holdings in respect of its relations with third parties including legal proceedings brought by or against it or delegate agents and legal representatives to act on its behalf;
5/ Conclude all contracts, agreement and transactions falling within the objectives of Ethiopian Investment Holdings;
6/ Hire, suspend and remove the staff of Ethiopian Investment Holdings;
7/ cause to Study and submit to the Board’s approval the salaries, bonus and other remunerations of the staff of Ethiopian Investment Holdings; and implement same;
8/ Open, operate, and close bank accounts for the Ethiopian Investment Holdings;
9/ Ensure proper books of accounts of the Ethiopian Investment Holdings are maintained in accordance with internationally accepted accounting standards and any other national rules and regulations;
10/ Submit performance reports to the Board of Directors;
11/ Perform other duties assigned to him/her by the internal regulation of Ethiopian Investment Holdings.
15. Liability
The Ethiopian Investment Holdings shall not be liable beyond its total assets.
16. Tax Emption
1/ Dividends of the Ethiopian Investment Holdings from its organizations shall be exempted from all taxes, duties and the like.
2/ Such exemptions shall not apply to the sub-funds and companies in which Ethiopian Investment Holdings is a shareholder.
3/ This shall take place without prejudice to any exemptions stipulated in other law.
17. Financial Year
1/ The financial year of Ethiopian Investment Holdings shall be the Ethiopian government fiscal year that begins on Hamle 1st and ends on Sene 30th of the Ethiopian calendar.
2/ However, if Ethiopian Investment Holdings is unable to use the financial year prescribed under Sub-Article (1) above for various reasons, it may use a different financial year with the permission of the Board of Directors.
18. Audit
1/ Without prejudice to the powers and duties of the Federal Auditor General or its designee Auditor under other laws, the accounts of Ethiopian Investment Holdings shall be audited by both internal and external independent Auditor to be assigned by the Board.
2/ The Auditors shall audit the annual and quarterly financial statements.
3/ The annual financial statements, the Auditor's report and the detailed annual report about the activity of Ethiopian Investment Holdings and its plan for the next year shall be submitted to the Board of Directors, within three months from the end of each financial year.
4/ Any asset under the Ethiopian Investment Holdings shall be recorded in its ledger in accordance with internationally accepted accounting standards.
19. Duration
The Ethiopian Investment Holdings is established for an indefinite duration.
20. Inapplicable Laws
Without prejudice to Article 54 of the Definition of Powers and Duties of the Executive Organs Proclamation No. 1263/2021, the Definition of Powers and Duties of the Public Enterprises Holding and Administration Agency Regulation No. 445/2019 and any other law, regulation, directive or practice shall, in so far as it is inconsistent with this Regulation, have no force or effect in respect of matters provided for by this Regulation.
21. Effective Date
This Regulation shall enter into force on the date of publication in the Federal Negarit Gazette.
Done at Addis Ababa on this 31st day of January, 2022.
ABIY AHMED (Dr.)
PRIME MINISTER OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA