(Source: LAW OF TRADERS AND BUSINESS ORGANIZATIONS: A Course Material
ALEMAYEHU FENTAW AND KEFENE GURMU)
Business organizations had gone through various stages
throughout the centuries before they came to acquire characteristics which have
made up distinct organizational forms prevalent in
The era of Emperor Menelik II witnessed the first business
organization- the Franco- Ethiopian Railway Company. And the company came about
by virtue of an imperial concession
granted to Alfred Ilg in 1894 with a view to constructing a railway from
Djibouti to Ethiopia via Harar to Entoto and then to the White Nile. Since it
was incorporated in
The second company to appear was the Bank of Abyssinia
which was formed in 1905 as a branch of the National Bank of
The next company that was formed in
The formation of the afore mentioned companied and the general trend would seem to have prompted promulgation of the following commercial laws: the Law of Loans of 1924, the Decree of Concessions of 1928, the Law of Bankruptcy of 1931, and the Company Law of 1933.
The Company Law of 1933 provides for various forms of business organizations, namely, share companies, joint stock companies, private limited companies, ordinary partnerships, and limited partnerships. It also contains several provisions pertaining to the formation, operation, and dissolution of companies.
In 1960, a more comprehensive commercial code was enacted. With respect to the drafting history of this code a few words were in order. Having accepted an invitation from the Imperial Ethiopian Government to draft a Commercial Code and a Maritime Code for Ethiopia, Professor Jean Escarra made several trips to Ethiopia in 1954, during which time he consulted with the Codification Commission and submitted to it the bulk of the texts later promulgated as Books II, IV, and V of the Commercial Code together with their exposes des motifs. Unfortunately, the work on the Commercial Code was interrupted due to the death of Professor Escarra in 1955. Then, the Imperial Ethiopian Government sent an invitation to Professor Alfred Jauffret to complete the unfinished draft Code by preparing the texts of Books I and III as well as to revise Prof. Escarra’s work. Prof. Jauffret submitted his draft texts along with a Final Report on March 1, 1958. The Amharic version of these texts was then submitted to the parliament, which in early 1960 approved the draft with several amendments. The final draft text of the Commercial Code was promulgated on May 5, 1960 and the Code came into force on September 11, 1960.
1.1 General Orientation of the Commercial Code
One of the crucial issues that the draftsperson had to resolve before he set out to work on the project was as to whether the Commercial Code should be subjective or objective. A subjective Commercial Code is one which regulates a community of persons designated as “traders”. It considers above all the traders, but in order for the legislature to decide which persons have the status of a trader she must take into consideration the profession or activities which she deems to have a commercial character. Whereas, an objective commercial code regulates acts known as “acts of commerce”, as opposed to persons. The scope of application of such commercial code is determined entirely by the enumeration of these acts.
In this regard, it has to be pointed out that the expert draftsperson opted for the subjective system to be the basis upon which he would build the 1960 Ethiopian Commercial Code. The distinctly subjective features of the Code can be gathered from Articles 5 and 10, i.e., the definitional provisions of traders and commercial business organizations respectively, although Article 5 incorporates a list of commercial activities secondarily. The inclusion of this list under Article 5 is secondary, because although such inclusion in the law constitutes the basis for the objective system of commercial law, it does not appear here, as in any subjective system, except as an enumeration of commercial activities carried out by any trader. The subjective features can also be discerned easily from the logical organization of the Law of Trades and Business Organizations. The Law of Trades and Business Organizations, as found in Books I and II of the Commercial Code, regulates a group of persons called traders and business organizations. According to Prof. Escarra, who opted for the subjective system, as he thought it to be, “it is the only logical system for determining the scope of coverage of the Commercial Code.” Prof. Jauffret also says that he followed Prof Escarra’s suit while drafting the text of Book I.
Nevertheless, we should bear in mind that such a watertight distinction between subjective and objective commercial law does not hold in practice and one could easily show that there is hardly any law which is exclusively subjective or objective. All the same, one has to choose between the two in order that the law has got a basis or a point of departure. Hence, the commercial law can be built upon certain acts known as “acts of commerce” or certain persons known as “traders.” The first belongs to the objective system while the second belongs to the subjective system.