PROCLAMATION NO. 98/1998
A PROCLAMATION TO PROVIDE FOR BUSINESS MORTGAGE
WHEREAS, it is stated under Article 186 of the Commercial
Code that the manner of keeping register of mortgage of business and canceling
entries shall be specified by law;
WHEREAS, it is also stated under Article 1175(1) of the
Commercial Code that the provisions of Article 179 of the code relating to
registration of Commercial Mortgage shall come into force on such day and on
such conditions as shall be notified by order published in the Negarit Gazeta;
WHEREAS, in order to create conducive environment to the
economic development by enabling banks to efficiently collect debts from
debtors whose business has been mortgaged with the banks and thereby
establishing a good business culture;
NOW, THEREFORE, in accordance with Article 55(1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows:
PART ONE
GENERAL
1. Short Title
This Proclamation may be cited
as "Business Mortgage Proclamation No, 98/ 1998".
2. Definition
In this Proclamation:
1) "Business" means a business specified under
the 1960 Commercial Code of Ethiopia;
2) "Bureau" means Regional or City Bureau of
Commerce and Industry or a Regional or City authority entrusted with the power
to register mortgages;
3) "City" means Addis
Ababa, Dire Dawa or any City which is accountable to the Federal Government;
4) "Region" means a region specified under Art.
47 of the Constitution of the Federal Democratic Republic of Ethiopia;
5) "Person" means a natural or juridical Person.
PART TWO
REGISTRATION OF BUSINESS MORTGAGE
3. Keeping of Register
1) Register of mortgage of business shall be kept in each
Region or City.
2) The manner of organizing and
keeping of register of mortgage shall be determined by the Executive Organ of
the Region or City.
4. Requirement ofBusiness
License
In order to mortgage a business,
the business shall be one which has been registered and given business license
by the appropriate Federal or Regional authority.
5. Application for
Registration
1) Any request for registration mortgage of business may be
submitted by the concerned person.
2) The request for registration
of mortgage shall be submitted by filling in two copies the application forms
for registration prepared by the Bureau.
3) The Applicant shall attach the contract or other
evidence which is the basis for the request of registration.
4) When the forms are presented to the Bureau, the Bureau
shall, after verifying the forms, give consecutive numbers in the order of
their submission.
6. Content of Application
form for Registration
1) The Bureau shall prepare application form for
registration.
2) The application form for registration shall include the
following:
a) the name and address of the applicant or agent
requesting for registration;
b) if the business has been mortgaged previously the
registry number and date of registry;
c) whether the mortgage emanates from the law or contract;
d) whether the application for
registration is for making new registration or amending the existing
registration;
e) the day, month and year of the filling of the form.
7. Identification Marks
1) The secured creditor may put identification mark on the
property mortgaged based on Article 175(1)(g) and Article 179(1)(e) of the
Commercial Code.
2) The identification marks made in accordance with sub-
Article (1) of this Article shall be entered in the Register.
8. Information entered in
the Register
1) Important information entered in the register, in
particular:
a) the day, month and year of
the entry of the mortgage in the Register;
b) any amount of money or other
sums both in numbers and words;
shall be written clearly.
2) any information entered in
the register shall be written in ink which does not fade-out.
9. Registration and
Registration Fee
If an application form for
registration of mortgage with the necessary documents has been presented and
verified by the Bureau, the applicant shall pay registration fee.
10. Correction of
Information Entered in the Register
1) Any information entered in the register, may be
corrected if it is found to be incomplete or incorrect.
2) The Bureau shall issue directives regarding correction
of information entered in the register.
11. Inspection
The Bureau may, in order to investigate
or inspect the status of the business registered as a mortgage, inspect the
said business on site or request information. The owner has an obligation to
cooperate thereto.
12. Cancellation Procedure
1) A person who requests for the cancellation of a mortgage
from the register shall submit the agreement allowing the release of the
mortgage or the final judgment of the court.
2) The registrar shall, after
verifying the document submitted to it, cancel the mortgage from the register.
PART THREE
SELLING OF BUSINESS MORTGAGE BY AUCTION
13. Agreement of Mortgage
Notwithstanding the provisions
of Art. 189 of the Commercial Code, an agreement which authorizes a secured
creditor bank whose claim is not paid to sell the mortgaged business, by
auction upon giving a prior notice of at least 30 days to the debtor, and to
transfer the ownership of the business to the buyer or to take over the
business, in consideration of its estimated value as specified in the contract
of loan, and have the ownership thereof registered in its own name; in cases
where bidders fail to appear upon a second public auction having been held
shall be valid.
14. Claim on Mortgaged
Business
A secured creditor bank which,
prior to the effective date of this Proclamation, has a claim on business
mortgage, registered in the Awraja Court in accordance with Article 1175(2) of
the Commercial Code as a result of a legal imposition to register mortgage on a
business, may sell the business by auction upon by giving a prior notice of at least
30 days to the debtor and transfer the ownership to the buyer or take over the
business, in consideration of its estimated value as specified in the contract
of loan, and have the ownership thereof registered in its own name; in cases
where bidders fail to appear upon a second public auction having been held.
15. Relationship between the
Bank and the Debtor
The sale made in accordance with
Articles 13 and 14 of this proclamation shall be deemed to have been executed
on behalf of the debtor.
16. Application of the Civil
Procedure Code to Auction
The provisions of Article
394-449 of the Civil Procedure Code shall, mutatis mutandis, be applicable
while the Bank is exercising its power of selling the business mortgage by
auction.
17. Liability of the Bank
The Bank shall be liable for any
damage it causes to the debtor in the process of selling in violation of the
relevant provisions of the Civil Procedure Code specified under Article 16 of
this Proclamation.
18. Powers and Duties of the
Bureau
1) The Bureau which has registered the business mortgage
shall have the powers and duties to take the necessary measures for carrying
out the sale by auction.
2) If the Bureau, while taking action in accordance with
sub- Article (1) of this Article, finds it necessary to use police force, it
may order police.
19. Cases Pending before the
Court
Any suit or decree on execution,
pending before a court prior to the coming into force of this Proclamation, may
be terminated upon application by the creditor bank with which the business has
been mortgaged and the bank may sell the business by auction and transfer the
property to the buyer in accordance with this Proclamation.
PART FOUR
MISCELLANEOUS Provision
20. Applicability of the
Commercial Code
1) The relevant provisions of the 1960 Commercial Code
shall be applicable in mortgage of business.
2) For the purpose of this Proclamation, the provisions in
the commercial Code concerning mortgage of business shall be read as follows:
a) if it concerns a region the
word "Teklay-gizat" shall be read as "Region" and the
"Ministry of Commerce and Industry" shall be read as
"Bureau".
b) if it concerns city the word "Teklay-gizat"
shall be read as "City" and the "Ministry of Commerce and
Industry" shall be read as "Bureau".
21. Fees
Fees for registration of
mortgage and related services based on the Commercial Code and this
Proclamation shall be determined by City or Regional law.
22. Effective Date
The provisions of Art. 179 of
the Commercial Code on registration of mortgage and the provisions of this
Proclamation shall enter into force as of the 19th day of February,
1998.
Done at Addis Ababa, this 19th day of February,
1998.
NEGASO GIDADA (DR.)
PRESIDENT OF THE FEDERAL DEMOCRATIC
REPUBLIC OF ETHIOPIA
Corrigendum No. 1/1998
Property Mortgaged or pledged
with Banks Proclamation No.97/1998 is hereby corrected by:
1. Omission of the ","
after the word "buyer", in Article 3, and insertion thereinafter of
the phrase "or to take over the property, in consideration of its
estimated value as specified in the contract of loan, and have the ownership
thereof registered in its own name; in cases where bidders fail to appear upon
a second public auction having been held."
2. Omission of the ","
at the end, of Article 4, and addition thereinafter of the phrase "or take
over the property, in consideration of its estimated value as specified in the
contract of loan, and have the ownership thereof registered in its own name; in
cases where bidders fail to appear upon a second public auction having been
held."
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