po – Ethiopian Capital Market Authority

PREAMBLE

Article . Preamble

Whereas, the Capital Market Proclamation No. 1248/2021 instructs the Ethiopian Capital Markets Authority to determine the requirements for public offering and trading of securities by a directive; Whereas, it is necessary to provide for a regulatory framework that allows for effective and efficient regulation of public offering and trading of securities and which protects investors’ interest; ensures the existence of an orderly, fair, efficient and transparent capital market; and promotes the development of capital market in Ethiopia; Now, therefore, the Authority hereby issues this Directive on the Public Offering and Trading of Securities in accordance with Articles 75, 76, 77, and 108(2) of the Proclamation.📋Copy Citation

CHAPTER ONE – GENERAL PROVISIONS

Article 1. Short Title

This directive may be cited as the “Public Offering and Trading of Securities Directive No 1030/2024”📋Copy Citation

Article 2. Definitions

Unless the context otherwise requires:📋Copy Citation

1)“Proclamation” means the Capital Market Proclamation No. 1248/2021.📋Copy Citation

2)“Allotment Policy” means the criteria set by the Issuer regarding the allocation and distribution of securities to investors in respect of an offering.📋Copy Citation

3)“Book Building” means the process undertaken by or on behalf of an Issuer to assess the demand and determine the price for an Issuer’s securities prior to their issuance.📋Copy Citation

4)“Book Closure Date” means a date on which only security holders duly registered as shareholders at such date would be entitled to receive the benefits or participate in actions for which a closure date is determined.📋Copy Citation

5)“Book Runner” means a person responsible for handling the Book Building process.📋Copy Citation

6)“Bonus Shares” means shares of an Issuer distributed to shareholders in proportion to their existing holdings without the requirement for any additional cash or in-kind payment.📋Copy Citation

7)“Business Days” means calendar days excluding Saturdays, Sundays, and public holidays observed in the Federal Democratic Republic of Ethiopia.📋Copy Citation

8)“Calendar Days” means consecutive days, including Saturdays, Sundays, and public holidays observed in the Federal Democratic Republic of Ethiopia.📋Copy Citation

9)“Certificate of Commercial Registration” means a legal document issued by the Government of Ethiopia to verify the legal existence and registration of a commercial entity pursuant to the Commercial Code, Commercial Registration and Licensing Proclamation No. 980/2016, and any amendments or succeeding as thereto.📋Copy Citation

10)“Certificate of Registration of Securities” means a legal document issued by the Authority upon registration of an Issuer’s securities.📋Copy Citation

11)“Certification” means the act of attesting the authenticity of a corporate document by the corporate by signed and sealed letter.📋Copy Citation

12)“Commercial Code” means the Commercial Code of the Federal Democratic Republic of Ethiopia, Proclamation No. 1243/2021, and any amendments or succeeding as thereto.📋Copy Citation

13)“Company Under Formation” means a share company that is being formed by a public subscription as referenced in Article 258 of the Commercial Code.📋Copy Citation

14)“Compliance Advisor” means an Investment Bank licensed by the Authority, other eligible Capital Market Service Providers licensed by the Authority, or a lawyer or an auditor approved by the Authority, as described in Article 14 of this Directive.📋Copy Citation

15)“Convertible Loan Agreement” means a loan agreement between an Issuer and an investor that can be converted into a determinable number of equity shares on specified terms and conditions.📋Copy Citation

16)“Equity Valuation Report” means the report issued by a Transaction Advisor in relation to the valuation of the Shares to be issued pursuant to a Public Offer or the Securities to be Listed on a Securities Exchange.📋Copy Citation

17)“Escrow Account” means a blocked account opened in a bank licensed by the National Bank of Ethiopia where funds are held in custody while the offering process is completed.📋Copy Citation

18)“Expert” means a person who is suitably qualified or experienced and very knowledgeable or skilled in a particular area.📋Copy Citation

19)“External Auditor” means an auditor licensed by a relevant authority to perform audit services and approved by the Authority.📋Copy Citation

20)“False Market” means an instance where there is misinformation or incomplete information in the market that compromises proper price discovery of a security.📋Copy Citation

21)“Feasibility Report’’ means the report provided by an appropriate Expert on the assessment of the practicality or viability of a proposed plan or project, which includes information on the proposed business, its risks and potential, and other relevant information that will enable an investor to fully understand the nature of the proposed plan or project.📋Copy Citation

22)“High Net Worth Individual” means an individual with a net worth of at least 10,000,000 (ten million) Birr, excluding automobile and primary residence, or such amount as may be prescribed by the Authority.📋Copy Citation

23)“Institutional Investor” means:📋Copy Citation
(a) banks, insurance companies, microfinance and other financial institutions.📋Copy Citation
(b) Federal and regional governments.📋Copy Citation
(c) Collective Investment Schemes, including private equity funds and hedge funds;📋Copy Citation
(d) State owned enterprises;📋Copy Citation
(e) Pension and retirement funds or arrangements; or📋Copy Citation
(f) Any other institution as the Authority may determine from time to time based on its financial capacity and the ability to appreciate investment and investment risk.📋Copy Citation

24)“Information Memorandum” means a document providing information in relation to securities, the offer and the issuer.📋Copy Citation

25)"Internal Control" means the policies, procedures, and practices put in place by management to ensure the safety of assets, the accuracy of financial records and reports, the achievement of corporate objectives, and compliance with laws, regulations, and applicable corporate governance standards.📋Copy Citation

26)“Investment Permit” means authorization received from the relevant governmental entity to carry out investment activities in Ethiopia.📋Copy Citation

27)“Issuer” means an entity that issues securities.📋Copy Citation

28)“Listing by Introduction” means the process by which issued Securities are Listed on a Licensed Securities Exchange without concurrently raising additional capital.📋Copy Citation

29)“Listing” means the admission of a security to the official list of a Licensed Securities Exchange, and the terms ‘List’ and ‘Listed’ shall be construed accordingly.📋Copy Citation

30)“Material Contract” means a contract that could significantly impact the financial performance or operations of an issuer.📋Copy Citation

31)“Material Information” means any information that may affect the price of a security or influence investment decisions, including both material facts and material changes relating to the business, financial performance and related affairs of a company.📋Copy Citation

32)“Memorandum of Association” means an instrument drawn up to establish a business organization according to the Commercial Code of Ethiopia Proclamation no.1243/2021.📋Copy Citation

33)“Minimum Subscription Amount” means the minimum amount set to be raised by an issuer to implement the business plan or undertaking as indicated in the Registration Statement.📋Copy Citation

34)“Offer Document” means any document containing relevant information to help an investor make securities related investment decisions. Such documents may include Prospectus, Information Memorandum or any equivalent document.📋Copy Citation

35)“Offer” means a proposition for subscription or an Offer for sale of securities.📋Copy Citation

36)“Offer for Sale” means the Offer of all or a portion, of the securities held by security holder(s) of the issuer to the public wherein proceeds go to the security holder rather than the Issuer.📋Copy Citation

37)“Offer for Subscription” means the Offer of Securities where an Issuer invites investors to purchase newly issued Securities.📋Copy Citation

38)“Offer Period” means the period during which an Offer of Securities remains open for subscription.📋Copy Citation

39)“Preferred Right of Subscription” means a shareholders’ right to purchase additional shares in proportion to their existing holdings.📋Copy Citation

40)“Preliminary Prospectus” means the initial Prospectus used in a Book-Building process, which does not have complete particulars on the price and quantum of Securities to be issued.📋Copy Citation

41)“Pricing Supplement” means a document that provides an updated price, issue date, size, tenure, and utilization of proceeds of a specific Offer under a Shelf Registration.📋Copy Citation

42)“Professional Parties” means advisers, Experts, or anyone performing related activities during the registration and offering process in a professional capacity.📋Copy Citation

43)“Profit Forecast” or “Earnings Forecast" means a prediction for an Issuer’s future financial performance, expressed as net income, earnings or profit.📋Copy Citation

44)“Promoter” means the Person described in article 248 of the Commercial Code of Ethiopia proclamation no. 1243/2021.📋Copy Citation

45)“Publicly Held” means, in reference to a “Publicly Held Company” or an “Issuer of Securities which are Publicly Held”, the Securities a share company have been subject to a public subscription as set out in the Commercial Code and that are currently held by more than fifty (50) security holders.📋Copy Citation

46)“Qualified Investor” means a buyer of securities with a high level of financial sophistication or capacity to appraise investment opportunities and risk shall include:📋Copy Citation
(a) Institutional Investors as defined by this Directive;📋Copy Citation
(b) High-Net-Worth Individual as defined in this Directive; and📋Copy Citation
(c) Any other category of investors as the Authority may determine from time to time.📋Copy Citation

47)“Quoted” means the placement of a bid or offer price for the purpose of buying or selling Securities.📋Copy Citation

48)“Registration Statement” means a document filed by an issuer pursuant to this Directive in order to register its securities with the Authority.📋Copy Citation

49)“Retail Investor” means a person other than a Qualified Investor who invests for their own account and requires a greater level of protection relative to a Qualified Investor.📋Copy Citation

50)“Share-Based Payment” means a form of compensatory payment that Issuers provide to their employees, directors, or other service or goods providers in the form of equity instruments.📋Copy Citation

51)“Shelf-Registration” means Registration Statement that allows the Issuer to make multiple offerings at intervals within the validity period as approved by the Authority.📋Copy Citation

52)“Supplementary Prospectus” means a document that contains material information necessary to update, amend, change, or supplement the information in a Prospectus.📋Copy Citation

53)“Transaction Advisor” means a duly licensed Investment Bank or Securities Investment Advisor adequately capitalized, staffed, established as PLC or Share Company business forms under the Commercial Code and approved by the Authority.📋Copy Citation

54)“Zero Coupon Bond” means a bond that does not pay interest.📋Copy Citation

55)“Person” means a physical or juridical person.📋Copy Citation

56)In this Directive, any expression in the masculine shall include the feminine.📋Copy Citation

57)Any term used in this Directive shall have the meaning assigned to it in the Proclamation.📋Copy Citation

Article 3. Scope of Application

1)This Directive shall apply to the Offer of Securities to the public in Ethiopia and to securities to be traded on a Securities Exchange or through the Over-The- Counter (OTC) Market.📋Copy Citation

2)The provision of Sub Article (1) of this Article shall be applicable on Securities issued by Public Enterprises fully or partially owned by the Federal Government of Ethiopia or Regional States.📋Copy Citation

CHAPTER TWO - REGISTRATION OF SECURITIES

Article 4. Prohibition

Except those Securities exempted from registration by the Proclamation or this Directive, no Securities shall be offered or sold to the public, Listed or Quoted on a Securities Exchange, or sold or purchased through the Over the- Counter Market without the prior registration of the Security by the Authority.📋Copy Citation

Article 5. Securities Exempted from Registration

1)In addition to Securities exempted by the Proclamation Article 75(4), Securities exempted from registration shall include:📋Copy Citation
(a) Securities guaranteed by the Federal Government of Ethiopia;📋Copy Citation
(b) Securities Offered in Private Placement, Securities Offered through Small Offerings, Securities Offered to Qualified Investors, and📋Copy Citation
(c) Offer of Securities Made Outside of Ethiopia📋Copy Citation

2)An offer or Sale of securities by the issuer, distributor, or any affiliates shall be deemed to occur outside of Ethiopia if:📋Copy Citation
(a) The offer and, sale is made in an offshore transaction; and📋Copy Citation
(b) No direct or indirect selling efforts are made in Ethiopia by the issuer, distributor, or any affiliates.📋Copy Citation

Article 6. Eligibility of the Issuer

1)Without prejudice to the exemption from registration set out in the Proclamation and in this Directive or other directive as may be issued by the Authority, no Person shall make an offer to the public unless the Issuer concerned is:📋Copy Citation
(a) a share company as defined in the Commercial Code;📋Copy Citation
(b) a Company Under Formation which meets and complies with the requirements of Chapter two Section 1 Sub Section 2 of this Directive;📋Copy Citation
(c) a statutory body established by or pursuant to law is empowered to issue its own Securities;📋Copy Citation
(d) a Multilateral Agency; or📋Copy Citation
(e) such other entity approved by the Authority to offer Securities to the public under this Directive or other directive as may be issued by the Authority.📋Copy Citation

2)Without prejudice to Sub-Article (1) (b) of this Article in respect to a Company Under Formation, all Issuers shall meet the following eligibility requirements to issue Securities to the public:📋Copy Citation
(a) the applicable corporate governance requirements and standards;📋Copy Citation
(b) have audited financial statement prepared in accordance with Article 8(1)(c)(ix);📋Copy Citation
(c) be solvent; and📋Copy Citation
(d) issue Securities that are freely transferable📋Copy Citation

Article 7. Application Procedure

1)An application to register Securities shall require a Registration Statement which is prepared in accordance with this Directive and submitted to the Authority in the form to be prescribed by the Authority.📋Copy Citation

2)All applications and accompanying documents shall be filed with the Authority in Amharic or English. If any information or document to be filed with the application is in any other language, then it shall be accompanied by an authenticated translated version in Amharic or English.📋Copy Citation

3)All application information and documents, or copies of such information and documents, shall be typewritten and, in all cases, shall be clear and easily readable.📋Copy Citation

4)All applications shall be accompanied by evidence of payment of fees as prescribed by the Authority’s Fee Directive.📋Copy Citation

Article 8. Registration Statement Requirements

1)A Registration Statement filed with the Authority shall include:📋Copy Citation
(a) A letter signed by a duly authorized officer or the Transaction Advisor;📋Copy Citation
(b) A Prospectus or any other offer document, as applicable; and📋Copy Citation
(c) The accompanying information and documents as indicated hereunder:📋Copy Citation

(c) (i) copy of the Certificate of Commercial Registration;📋Copy Citation

(c) (ii) copies of business licenses and if applicable, investment permits of the Issuer issued by the relevant government organ;📋Copy Citation

(c) (iii) an authenticated copy of the Memorandum of Association of the Issuer and other applicable incorporation documents, including any amendment thereof, indicating the shareholders, Board of Directors, and capital of the Issuer;📋Copy Citation

(c) (iv) where applicable, the appropriate tax documentation;📋Copy Citation

(c) (v) a certified copy of the resolution(s) of the shareholders or the Board of Directors authorizing the Offer of the Securities, as applicable;📋Copy Citation

(c) (vi) a certified copy of the resolution(s) of shareholders passed at an extraordinary general meeting authorizing the increase in capital or the issuance of Securities, as applicable;📋Copy Citation

(c) (vii) a Certified copy containing the details of the Board of Directors, as applicable;📋Copy Citation

(c) (viii) a no-objection from the Issuer’s primary regulator where the Issuer is a financial institution or whenever the Authority deems it necessary.📋Copy Citation

(c) (ix) a copy of the Annual Report for the preceding 3 (three) years, signed by the Chairman of the Board of Directors, disclosing the following information:📋Copy Citation

(c) (ix) (I) audited financial statements prepared in accordance with the requirements of this Directive;📋Copy Citation

(c) (ix) (II) where the latest audited annual financial statement of the Issuer is dated more than 6 (six) months, an interim financial statement reviewed under the prevailing auditing standard by an External Auditor shall also be submitted; and📋Copy Citation

(c) (ix) (III) The amount of capital of the company clearly showing the issued and paid-up capital;📋Copy Citation

(c) (x) a Valuation Report issued by the Transaction Advisor on the valuation of the securities to be issued or to be offered;📋Copy Citation

(c) (xi) a summary and copies, where required, of the Issuer’s material contracts;📋Copy Citation

(c) (xii) a schedule of pending claims and litigation, if any, affecting the Issuer;📋Copy Citation

(c) (xiii) an external independent legal opinion as described in this Directive;📋Copy Citation

(c) (xiv) a summary and copies of agreements with Underwriters, Transaction Advisors and other agreements entered with Professional Parties in respect to the securities being registered;📋Copy Citation

(c) (xv) a written consent of Experts provided pursuant to Article 39 of this Directive.📋Copy Citation

(c) (xvi) a schedule of estimated expenses and fees payable to all external Professional Parties related to the registration and the offer;📋Copy Citation

(c) (xvii) evidence of an Escrow Account opened for the subscription monies in a financial institution licensed by the National Bank of Ethiopia (NBE); and📋Copy Citation

(c) (xviii) Where the Prospectus indicates that the securities are to be listed on a Licensed Securities Exchange:📋Copy Citation

(c) (xviii) (I) a letter of provisional approval of Listing from the Licensed Securities Exchange, or📋Copy Citation

(c) (xviii) (II) in the absence of a provisional approval the issuer shall include in the Prospectus a clear indication of the status, required steps to obtain a Listing and how it will meet the listing requirements of the Securities Exchange.📋Copy Citation

2)The Authority may require additional or more specific information or documents from the issuer based on the sector, offer, or the nature of the issuer’s business.📋Copy Citation

Article 9. General Requirements

1)An offer by a Preferred Right of Subscription shall adhere to the requirements set out in the Commercial Code and to the requirements set out in this Directive.📋Copy Citation

2)Preferred rights may be traded on a Licensed Securities Exchange or through the Over-TheCounter Market during the period of the subscription.📋Copy Citation

3)The application for the registration of an Offer by way of a Preferred Right of Subscription shall be filed with the Authority prior to the offer of the securities under the preferred right of subscription.📋Copy Citation

4)The right to exercise the preferred right of subscription shall not commence until after the approval of the registration statement by the Authority.📋Copy Citation

5)The Authority may impose conditions on an offer by a Preferred Right of Subscription where it deems it necessary for the protection of existing shareholders and potential investors📋Copy Citation

Article 10. Application for Registration

Except as otherwise stated in this Sub Section of the Directive, an Issuer shall file an application for registration of an Offer by way of a Preferred Right of Subscription in accordance with the Application Procedures set out in Article 7 and the Registration Requirements of Article 8.📋Copy Citation

Article 11. Publication of Notice of Subscription

1)The notice of subscription for the Offer by way of a Preferred Right of Subscription shall be published in accordance with the requirements established under the Commercial Code and shall indicate to shareholders the following:📋Copy Citation
(a) Procedures for the exercise of the preferred rights by shareholders; and📋Copy Citation
(b) procedures for the disposal, assignment, or trading of the preferred right by a shareholder;📋Copy Citation

2)The notice of subscription sent to shareholders shall indicate where a copy of the Prospectus will be found.📋Copy Citation

Article 12. Waiver of Preferred Right of Subscription

An Offer of Securities wherein the preferred rights have been waived by a resolution of shareholders at an extraordinary general meeting shall comply with the relevant provisions of this Directive or any other directive as applicable.📋Copy Citation

Article 13. General Requirements

1)A Company Under Formation shall be required to: -📋Copy Citation
(a) raise at least 10% of the capital through private issuance as described under Chapter of this directive before it offers securities to the public; and📋Copy Citation
(b) appoint a Compliance Advisor.📋Copy Citation

2)The securities purchased under Sub Article 1 (a) of this Article shall be restricted from trading or otherwise being transferred for 2 (two) years following the establishment of the company.📋Copy Citation

3)The Authority may waive the requirement under Sub Article 1 (a) of this Article or reduce the percentage based on the sector, offer, the amount to be raised or the nature of the issuer’s business.📋Copy Citation

Article 14. Requirement of a Compliance Advisor

1)A Company Under Formation shall retain the services of a Compliance Advisor approved by the Authority, for three years beginning from its establishment.📋Copy Citation

2)The contract with the Compliance Advisor shall be in writing and shall be submitted to the Authority for approval along with the application for the release of the escrow account📋Copy Citation

3)The Compliance Advisor shall be responsible for:📋Copy Citation
(a) advising, monitoring, and guiding the Issuer in complying with all applicable laws and regulations;📋Copy Citation
(b) taking all reasonable steps to brief the Issuer’s Board of Directors and management of their responsibilities and obligations in relation to the company, its shareholders and other stakeholders;📋Copy Citation
(c) assisting in the formulation and implementation of corporate governance practices in the Issuer and its operations; and📋Copy Citation
(d) carry out any other related activities relating to the issuer as may be requested by the Authority from time to time.📋Copy Citation

4)The Compliance Advisor shall review the Issuer’s ongoing information disclosures, including disclosures of financial information, prior to is publication, to ensure that the Issuer’s Board of Directors and management have appropriately disclosed information relating to the Issuer and the securities which are the subject of the Public Offer.📋Copy Citation

Article 15. Application to Register the Public Offering

1)A Company Under Formation seeking to offer its shares to the public shall file a Registration Statement with the Authority which includes a Prospectus prepared in accordance with the requirements stated in Chapter Four and is accompanied by the following:📋Copy Citation
(a) the contract entered into with the Transaction Advisor;📋Copy Citation
(b) commitment letter to retain the service of a Compliance Advisor immediately after the conclusion of the offer, as per the requirement of Article 13(1) (b) of this Directive;📋Copy Citation
(c) profiles and resumes of Promoters and proposed key management staff, if any;📋Copy Citation
(d) a written business plan that explains the proposed business, the business strategy, and the long-term objectives of the business organization and services to be rendered or the products to be offered;📋Copy Citation
(e) the Feasibility Report on the proposed business, together with information on the Expert who prepared the report including their name and address, qualification and expertise in the topic covered by the report;📋Copy Citation
(f) organogram of the Company Under Formation.📋Copy Citation
(g) a copy of the draft memorandum of association of the company, accompanied by a letter from a lawyer stating the memorandum of association fulfills the requirement of the Commercial Code;📋Copy Citation
(h) where applicable, an audited statement of affairs of the company from an External Auditor;📋Copy Citation

(i) projected financial statements which contain the profit or loss forecast of the company for at least 3 (three) years, together with the basis for the estimates and projections;📋Copy Citation
(j) an independent accountant’s report on the projected financial statements referenced in Sub-Article 1(i) of this Article, prepared in accordance with the prevailing accounting standard as set by the Accounting and Auditing Board of Ethiopia or any relevant Ethiopian Authority;📋Copy Citation
(k) an external independent legal opinion as described in Article 44 of this Directive;📋Copy Citation
(l) evidence of an Escrow Account arrangements in accordance with Article 8(1)(c)(xvii) of this Directive; and📋Copy Citation
(m) a no-objection from the Issuer’s primary regulator where the Issuer is a financial institution or as deemed necessary by the Authority on a case-by- case basis.📋Copy Citation

2)A Company Under Formation shall comply with the general requirements set out under Chapter Two Section 1 of this Directive, as applicable.📋Copy Citation

Article 16. Offer Period for Companies Under Formation

1)Notwithstanding the offer period for shares in a Company Under Formation which is determined in accordance with the Commercial Code, where the offer period is greater than one (1) year, the Issuer shall include disclosure in the “risk” section of its Prospectus that the offer period is greater than one (1) year and the possible risk associated with a prolonged offer period to investors.📋Copy Citation

2)The Prospectus submitted as part of the application to register a Public Offering for a Company Under Formation shall be valid only for one (1) year period following its approval by the Authority. Where the offer period is greater than one (1) year the Issuer shall, at least one month before the expiration of the current prospectus, file a new Prospectus with the Authority and have such Prospectus approved.📋Copy Citation

3)Notwithstanding the Issuer’s ongoing disclosure obligations the Issuer shall provide to the Authority with a written update on its capital raising activity every six months.📋Copy Citation

Article 17. Obligation of Promoters and Founders

The Promoters and founders shall adhere to all the requirements of a Company Under Formation as set out in the Commercial Code, and in addition, the Promoter shall:📋Copy Citation

1)open an escrow account in the name of the Company Under Formation into which the gross subscription proceeds shall be deposited by the subscribers and provide the Compliance Advisor with view only access of the escrow account;📋Copy Citation

2)utilize a maximum of 4 (four) percent of the gross subscription proceeds and such utilization shall be limited to defraying the cost associated with the formation of the company. This maximum amount may be increased by the Authority; and📋Copy Citation

3)at all times, give the Transaction or Compliance Advisor, as the case may be, access to the books and accounts of the Company Under Formation.📋Copy Citation

Article 18. Filing of Report after the Formation of the Company

Upon conclusion of the formation of the Company, the Company shall submit the following documents to the Authority.📋Copy Citation

1)a copy of the Certificate of Commercial Registration and other investment permit or business license of the company, as applicable, issued by the relevant government organ;📋Copy Citation

2)evidence to the appointment of a compliance advisor.📋Copy Citation

3)an authenticated copy of the memorandum of association of the issuer and other applicable incorporation documents showing the shareholders, Board of Directors, and capital of the issuer (including amendments)📋Copy Citation

4)the external auditors report on the formation procedure as required by the Commercial Code Article 261;📋Copy Citation

5)a certified extract of the resolution(s) of the meeting of subscribers held in accordance with the Commercial Code;📋Copy Citation

6)evidence of transfer and registration of the property contributed in-kind in the name of the company, if applicable;📋Copy Citation

7)profiles of the Board of Directors and key management staff of the company, if applicable; and📋Copy Citation

8)any other information or document as may be requested by the Authority.📋Copy Citation

Article 19. Eligibility to Issue Debt Securities

1)An Issuer who is eligible to issue or offer Debt Securities through a Public Offer shall fulfill the following :📋Copy Citation
(a) If the issuer is a Share Company it must have been in existence for at least one (1) year;📋Copy Citation
(b) is has not been in breach of any of its loan repayment covenants; and📋Copy Citation
(c) has the issued capital of the company fully paid- up.📋Copy Citation

2)An Issuer who is subject to a primary regulator shall comply with the debt limits set by the relevant regulator.📋Copy Citation

Article 20. General Requirements

1)Debt Securities issued through a Public Offer shall have the following characteristics:📋Copy Citation
(a) be denominated in Ethiopian Birr;📋Copy Citation
(b) have a tenure of more than one year;📋Copy Citation
(c) have a fixed term or duration;📋Copy Citation
(d) have a fixed or variable coupon rate, if applicable;📋Copy Citation
(e) coupons, returns, and interest shall be payable periodically on certain specified intervals from the issue date, with the exception of zero-coupon bonds; and📋Copy Citation
(f) do not embed any swaps, options, or other derivatives .📋Copy Citation

2)A convertible or exchangeable bond which has the option to be converted into or exchanged to shares, may be offered through a Public Offer.📋Copy Citation

Article 21. Conditions

1)The Authority may impose conditions on a Public Offer of Debt Securities including:📋Copy Citation
(a) require payment obligations in relation to Debt Securities to be guaranteed by a bank or a third-party legal entity; or📋Copy Citation
(b) determine the type of investors to whom the offer can be made.📋Copy Citation

2)Where a third party provides a guarantee as per Sub Article 1(a) of the Article, the Prospectus shall also contain information about the guarantor and a description of the nature and type of guarantee provided.📋Copy Citation

3)The Authority may require, depending on the nature of the guarantor, the inclusion of information about the guarantor in order to ensure that investor have all such information for purposes of making an informed decision.📋Copy Citation

Article 22. Credit Rating Requirements

1)A credit rating on the Debt Securities, if obtained, shall be from a Credit Rating Service Agency licensed or authorized by the Authority.📋Copy Citation

2)Where the Issuer obtains more than one credit rating on its Debt Securities, the Issuer shall disclose each such credit rating in the related Prospectus.📋Copy Citation

3)Following the issuance of the Debt Securities, the Issuer shall ensure the credit rating is reviewed by each Credit Rating Service Agency that granted a rating, at least once a year throughout the term duration of the Debt Securities, or more frequently as may be required by standards applicable to such ratings or as otherwise required by the Authority.📋Copy Citation

4)Debt Securities offered or issued through a Shelf Registration and for which a credit rating is obtained shall have a credit rating either assigned for the full amount of the securities registered in the Shelf Program or for a tranche.📋Copy Citation

5)Where the credit rating referenced in Sub Article 4 of this Article is for a tranche all tranches are required to be rated.📋Copy Citation

Article 23. Registration Requirements for Debt Securities

In addition to the requirements of Article 8 of this Directive, a Registration Statement for Debt Securities shall be accompanied by:📋Copy Citation

1)a copy of the bond indenture;📋Copy Citation

2)where applicable, a credit rating report issued by a licensed or authorized Credit Rating Service Agency;📋Copy Citation

3)where applicable, copy of the guarantee agreement or document; and📋Copy Citation

4)any other document or information as may be required by the Authority; and📋Copy Citation

5)where the proceeds from the Public Offer are intended for use to finance a Project, a Feasibility Report of the project that includes the name, address, qualifications and expertise of the expert shall be required.📋Copy Citation

Article 24. Other Related Requirements

No issuer shall amend the terms or conditions in relation to issued debt securities without the consent of bondholders as per the Commercial Code, the offer document, and the approval of the Authority.📋Copy Citation

Article 25. Eligibility for Shelf Registration

1)An Issuer who is eligible to Offer or issue Securities by way of a Shelf Registration shall be: a) Listed on a Securities Exchange for at least 3 (three) years; b) up to date on its ongoing information disclosure obligations; c) not in breach of any terms and conditions of a loan which have resulted in default during the last 12 (twelve) calendar months preceding the date of approval of the Shelf Registration; and d) not in breach of any capital market related laws .📋Copy Citation

2)The total value of the Offer or issuance under the Shelf Registration shall not be less than (five) billion Birr.📋Copy Citation

Article 26. Validity of a Shelf Registration

1)A Shelf Registration shall be valid for a period of 3 (three) years from the date of its approval.📋Copy Citation

2)A Shelf Registration shall not be renewable.📋Copy Citation

3)A Shelf Registration by a statutory body or a Multilateral Agency shall be valid indefinitely, unless otherwise specified by the Issuer or the Authority.📋Copy Citation

Article 27. Application for a Shelf Registration

1)An Issuer which desires to issue securities under shelf registration shall file an application for Shelf Registration in accordance with the application procedures set out in Article 7 and the registration requirements of Article 8 of this Directive.📋Copy Citation

2)The Issuer shall be required to file an updated prospectus with and secure the approval of the Authority before each issuance.📋Copy Citation

3)The Authority shall decide on the updated prospectus within 20 (twenty) business days.📋Copy Citation

Article 28. Publication of Shelf Prospectus

The shelf Prospectus and any update thereof shall be published in accordance with Article 52 of this Directive.📋Copy Citation

Article 29. Registration of Shares Without Concurrently Raising Capital

1)Securities that are currently held by shareholders are required to be registered with the Authority.📋Copy Citation

2)An Issuer proposing to List by Introduction on a Securities Exchange or trade on an Over-The-Counter Market shall file its application to register in accordance with Article 8. However, such an issuer is not required to fulfil Article 8’s requirement for the disclosure of allotment policy.📋Copy Citation

3)An application to register shares pursuant to this Article shall be limited to the shares that an Issuer has previously issued, and no new securities shall be offered or registered as part of the Registration Statement.📋Copy Citation

Article 30. Registration of Offers Not Requiring a Prospectus

The Registration Statement filed with the Authority for Offer of Securities which is exempt from the obligation to issue a Prospectus as specified in Article 35 of this Directive, shall include the Information Memorandum which states the reasons for and the details of the Offer or allotment, and the number and nature of the Securities issued, together with the accompanying information and documents deemed necessary in relation to the Offer undertaken.📋Copy Citation

Article 31. Registration Requirements for Bonus Shares

1)An application for registration of securities to be issued as Bonus Shares shall be made in a form designated by the Authority within 1 (one) month of the approval by the shareholders.📋Copy Citation

2)The registration of Bonus Shares shall be accompanied by the following:📋Copy Citation
(a) certified copy of the resolution(s) of the Board of Directors authorizing the registration and issuance of the Bonus Shares, if applicable;📋Copy Citation
(b) a certified copy of the resolution passed at an extraordinary general meeting authorizing the Bonus Shares; and📋Copy Citation
(c) Any other information necessary to ensure the registration statement is complete, accurate and comprehensive.📋Copy Citation

3)The Authority will ascertain from the Issuer’s financial statements whether provision has been made for the Bonus Shares from the Company’s available reserve funds or profit that exists at the time the bonus issue was declared.📋Copy Citation

4)The Authority will register the Bonus Shares within 7 (seven) business days of receipt of the application, subject to compliance with all registration requirements.📋Copy Citation

5)This provision is applicable only to Issuers who have equity shares duly registered with the Authority prior to the issuance of the Bonus Shares.📋Copy Citation

Article 32. Registration Requirement for Convertible Debt Securities

1)Securities to be issued after the conversion of a Debt Security into equity shares based on predetermined agreements or conditions by the parties involved, shall be registered with the Authority within thirty (30) Calendar Days of conversion.📋Copy Citation

2)An application for registration of equity shares equity arising from convertible debt shall require the following:📋Copy Citation
(a) Information Memorandum containing the following details:📋Copy Citation

(a) (i) the terms of the Convertible debt securities agreement;📋Copy Citation

(a) (ii) the convertible amount;📋Copy Citation

(a) (iii) the requirements for or the conditions of conversion;📋Copy Citation

(a) (iv) the name of the issuer, the purchaser of the debt security and the person to whom the new shares are going to be issued.📋Copy Citation
(a) (v) outstanding share capital of the Issuer including amounts issued and paidup;📋Copy Citation

(a) (vi) class of securities into which the Debt Securities are to be converted, as well as rights attached to them;📋Copy Citation

(a) (vii) effects of conversion, including on the Issuer’s share capital, share structure and debt profile; and shareholding structure pre-conversion and post-conversion.📋Copy Citation
(b) a copy of the Convertible debt securities agreement duly Certified by the company secretary;📋Copy Citation
(c) where applicable, a Certified extract of the resolution(s) of the Board of Directors authorizing the issuance of the convertible debt;📋Copy Citation
(d) a Certified extract of the resolution of the shareholders passed at an extraordinary general meeting approving the increase in capital, or issuance of convertible debt;📋Copy Citation
(e) evidence of receipt of the borrowed amounts under the Convertible Debt Securities agreement; and📋Copy Citation
(f) any other information required by the Authority📋Copy Citation

3)The provisions of this Article shall be applicable only to Issuers who have equity shares duly registered with the Authority prior to the conversion of the debt security.📋Copy Citation

CHAPTER THREE - OFFER OF SECURITIES

Article 33. Appointment of a Transaction Advisor

1)An issuer who seeks to register its securities with the Authority shall retain the service of a Transaction Advisor who is in good standing with the Authority.📋Copy Citation

2)The Transaction Advisor shall be responsible for ensuring that the Offer of Securities is made in accordance with the provisions of the Proclamation, this Directive, and any other directive the Authority may issue.📋Copy Citation

3)A Transaction Advisor shall be responsible for:📋Copy Citation
(a) advising and guiding the Issuer in complying with laws in relation to the capital market and the offer.📋Copy Citation
(b) taking reasonable steps to brief the Issuer’s Board of Directors and management of their responsibilities and obligations in relation to the company, its shareholders and other stakeholders;📋Copy Citation
(c) coordinating the preparation of the Registration Statement and other transaction documents;📋Copy Citation
(d) coordinating the activities of other Professional Parties to the Offer;📋Copy Citation
(e) filing of the Registration Statements with the Authority and responding to any question or clarifications that the Authority may seek on behalf of the Issuer;📋Copy Citation
(f) where the issuer is a company under formation the transaction Advisor shall provide the Authority with an update on the Offer and confirmation that it has diligently executed its responsibilities and obligations under this Directive:📋Copy Citation
(f) every three (3) months during the course of the Offer; and📋Copy Citation
(f) upon completion of the Registration of the Issued Securities as set out in Article 18 of this Directive, and📋Copy Citation
(g) carrying out any other activity as may be contained in this Directive or as requested by the Authority with respect to the issuance from time to time.📋Copy Citation

4)Where more than one Transaction Advisor is appointed the issuer shall identify and appoint the lead Transaction Advisor from among these Transaction Advisors.📋Copy Citation

5)The Authority may waive the requirement to appoint a Transaction Advisor for Offers, allotments or issuances which are exempt from the obligation to issue a Prospectus as set out in Article 35(1) of this Directive.📋Copy Citation

Article 34. Prospectus Requirement

No Person shall sell, offer, or solicit the sale of Securities to the public without a Prospectus that has been approved by the Authority unless:📋Copy Citation

1)the Offer of Securities is subject to a valid exemption from the obligation to issue a Prospectus in accordance with Article 35 of this Directive or📋Copy Citation

2)the Securities are exempt from Registration by the Authority as set out in Article of this Directive.📋Copy Citation

Article 35. Exemption from Obligation to Issue a Prospectus

1)Without prejudice to the requirement to register Securities as set out in Chapter Two Section of this Directive, the obligation to issue a Prospectus shall not apply to any of the following:📋Copy Citation
(a) an issuance of shares resulting from the conversion or exchange of other Securities of Issuer, where the resulting shares are of a class of shares previously issued and registered with the Authority;📋Copy Citation
(b) an issuance of shares resulting from the exercise of the rights conferred by other securities of the Issuer including options and warrants, where the resulting shares are of a class of shares previously issued and registered with the Authority;📋Copy Citation
(c) shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve any increase in the issued capital;📋Copy Citation
(d) shares offered, allotted or to be allotted free of charge to existing shareholders, and bonuses paid out in the form of shares of the same class as the shares in respect of which such bonus are paid; or📋Copy Citation
(e) shares offered, allotted or to be allotted to existing employees by their employer.📋Copy Citation

2)With the specific approval of the Authority, shares offered upon merger, acquisition, division, or exchange of shares, within the context of the laws and regulations pertaining to mergers, acquisitions and divisions, may be exempt from the obligation to issue a Prospectus if the Issuer offering such shares is a Listed Company which is current and in compliance with its applicable ongoing information disclosure obligations set out in this Directive and the rules of the exchange where it is Listed.📋Copy Citation

3)Notwithstanding the provisions of Sub-Article (1) and (2) of this Article, an Information Memorandum or an Offer Document stating the reasons for, and the details of, the offer or allotment, and the number and nature of the Securities issued shall be provided to investors, and such document issued in relation to the issue of securities shall not contain any untrue, misleading, or incomplete statement.📋Copy Citation

Article 36. Form and Content of a Prospectus

1)The content of a Prospectus shall include information required by Chapter Four of this Directive, as applicable.📋Copy Citation

2)The information in the Prospectus shall be presented in a manner that can be easily comprehensible and analyzable by investors under appropriate captions or headings reasonably indicative of the principal subject matter set forth thereunder.📋Copy Citation

3)The information in the Prospectus must not include a presentation of estimates, projections, forecasts including Profit or Earnings Forecasts, or forward-looking statements, without sufficient qualification or factual basis.📋Copy Citation

4)Where a Prospectus contains financial information based on financial statements that are not audited or reviewed by an External Auditor, such information shall:📋Copy Citation
(a) be consistent with and not contradict any information given in audited or reviewed financial statements;📋Copy Citation
(b) clearly indicate that the information referred is not from audited financial statements; and📋Copy Citation
(c) state the basis for its preparation.📋Copy Citation

5)The information required in a Prospectus shall follow the order set out under Chapter Five of this Directive and shall be presented in a manner so as not to obscure any of the required information necessary and to keep the required information from being incomplete or misleading.📋Copy Citation

6)A Prospectus shall contain all such information as investors would reasonably require and reasonably expect to find therein, for the purpose of making an informed investment decision.📋Copy Citation

7)The Prospectus shall include an application form to be filled out by subscribers with provisions for subscribers to indicate their names, addresses, the amount of securities which an applicant seeks to purchase, the date of the application, and a declaration that they have read the Prospectus.📋Copy Citation

8)The information to be included in a Prospectus shall be such information that is within the knowledge of any person responsible for the Prospectus, or that it would be reasonable for him to obtain by making inquiries.📋Copy Citation

9)In determining what information is required to be included in a Prospectus, the Authority shall consider the nature of the Issuer or offeror and the type of Securities being offered.📋Copy Citation

Article 37. Incorporation by Reference

1)Information that has been previously submitted to the Authority and released to the public through the Authority, Issuer or a Securities Exchange and that remains publicly available may be incorporated by reference in the Registration Statement.📋Copy Citation

2)Information incorporated by reference into the Registration Statement shall be:📋Copy Citation
(a) the most recent information held by the Issuer,📋Copy Citation
(b) refer to the source of such information, and📋Copy Citation
(c) state how such information may be accessed.📋Copy Citation

3)All information incorporated by reference shall be clearly identified by document type, date, page number, paragraph, caption, or other means of identification as the Authority may prescribe.📋Copy Citation

4)If only certain pages of a document are incorporated by reference and filed as an exhibit, the document from which the material was taken shall be clearly identified in the reference.📋Copy Citation

5)Information shall not be incorporated by reference in any case if such incorporation would render the statement incomplete, unclear, or confusing.📋Copy Citation

Article 38. Persons Responsible for Prospectus

1)The persons responsible for the information in a Prospectus shall be jointly and severally liable to pay compensation for losses or damage suffered by persons relying on information included in the Prospectus that is inaccurate, misleading, or incomplete.📋Copy Citation

2)The persons responsible shall include:📋Copy Citation
(a) the Issuer of the Securities to which the Prospectus relates;📋Copy Citation
(b) each person who is a member of the Board of Directors and named in the Prospectus as a Director or as having agreed to become a Director of that Company either immediately or at a future time;📋Copy Citation
(c) the Promoter of a Company Under Formation;📋Copy Citation
(d) each Person who accepts and is stated in the Prospectus as accepting responsibility for all or any part of the Prospectus;📋Copy Citation
(e) the offeror of the Securities, where the offeror is not the Issuer. Where the offeror is a corporate entity each person who is a member of the Board of Directors of that corporate entity at the time, and when the Prospectus is published; or📋Copy Citation
(f) each Person not falling within any of the foregoing paragraphs who has authorized the contents or any part of the Prospectus, Supplementary Prospectus, or Offer Document.📋Copy Citation

3)Where a Person has accepted responsibility for or authorized only part of the contents of any Prospectus, he shall be responsible under Sub Article (2) (d and f) of the Article only for that part and only if it is included or substantially included in the form and context to which he has agreed.📋Copy Citation

4)Any agreements, provisions, disclaimer, or expressions mitigating, limiting, disclaiming or removing the responsibility arising from a Prospectus or Offer Document shall be null and void.📋Copy Citation

Article 39. Expert Statement in a Prospectus

A statement made by an Expert shall not be included in the prospectus unless:📋Copy Citation
(a) the Expert has given his consent in writing and has not, before approval of the Prospectus, withdrawn his written consent to include the statement in the form and context in which it is included in the Prospectus;📋Copy Citation
(b) a statement appears in the Prospectus that the Expert has given and has not withdrawn his consent; and📋Copy Citation
(c) the Prospectus includes the experience, background and qualifications of the Expert named in the Prospectus.📋Copy Citation

Article 40. Omission from Prospectus

The Authority may authorize the omission from a Prospectus of information whose inclusion would otherwise be required by these Directives if the Authority determines that:📋Copy Citation
(a) disclosure of such information would be contrary to the public interest; or📋Copy Citation
(b) disclosure of such information would be seriously detrimental to the Issuer, provided that the omission of such information would not be likely to mislead the public, and the information is, in the Authority’s view, of minor importance only and, as such, will not influence the assessment of the activities, assets, liabilities, financial position, profits and losses, or implicit risks and prospects of the Issuer.📋Copy Citation

Article 41. Amendment to the Prospectus Prior to Approval

1)Where after the submission of a Prospectus but before approval, a material change occurs or an error in the information submitted is found that makes the facts contained in the Prospectus misleading, incorrect, inadequate, or incomplete in any respect, the issuer shall file, as soon as practicable and in any event within 10 (ten) calendar days from the occurrence of the change or the identification of the error, an amendment thereto, setting forth the error or the change and providing current information that would make the information in the Prospectus true, correct, and complete.📋Copy Citation

2)If the Issuer fails to meet its obligation under Sub-Article (1) of this Article, the Authority shall issue an order directing the Issuer to file an amendment or may reject the registration📋Copy Citation

Article 42. Financial Reporting Requirements

1)The financial statements and the financial reports required pursuant to this Directive shall be prepared in accordance with the prevailing accounting standard.📋Copy Citation

2)Issuers who do not satisfy the financial information specified in Article 8 (1)(c)(ix)(I) shall comply with the financial information requirements set out in this Article.📋Copy Citation

3)An Issuer that has completed the Formation Process but has been in operation or existence for less than 3 years shall comply with Article 8 of this Directive, with the exception that the financial information specified in Article 8 (1)(c)(ix) shall be fulfilled with:📋Copy Citation
(a) audited financial information covering the period beginning on the date of Formation up to the latest practicable date, before the publication of the Prospectus as appropriate; and📋Copy Citation
(b) a comprehensive business plan as described in this Article.📋Copy Citation

4)The Issuer referenced in Sub-Article 2 of the Article shall provide a business plan which comprehensively describes:📋Copy Citation
(a) the Issuer’s strategic objectives;📋Copy Citation
(b) its plans for the development of the business in terms of introduction of new products or services and plans for generating sales and revenue;📋Copy Citation
(c) the key assumptions upon which the business plan is based; and📋Copy Citation
(d) a sensitivity analysis of the business plan to variations in the major assumptions.📋Copy Citation

5)The business plan shall, at a minimum, cover the 3-year period for which financial information is required in a Registration Statement, or as relevant for the Issuer’s specific business plan.📋Copy Citation

6)Depending on the purpose of the registration, the Authority may require that the Issuer referenced in Sub-Article 2 of this Article comply with the requirements of Company Under Formation under Article 13 (1) of this Directive.📋Copy Citation

Article 43. Equity Valuation Report

Where the Authority is in doubt as to the veracity and accuracy of the information stated in the Valuation Report submitted in accordance with Article 8 (1)(C)(x) of this Directive, the Authority may request for a second valuation of the securities by a different Transaction Advisor at the expense of the Issuer or offeror.📋Copy Citation

Article 44. External Independent Legal Opinion

1)The external independent legal opinion submitted in accordance with Article 8 (1)(C)(xiii) shall address:📋Copy Citation
(a) whether the Issuer is duly established and authorized to issue the Securities;📋Copy Citation
(b) whether the existing capital of the Issuer and any proposed changes thereto are in conformity with applicable laws and have received all necessary authorizations;📋Copy Citation
(c) whether all licenses required to perform the business or proposed business of the Issuer as stated in the prospectus have been duly obtained;📋Copy Citation
(d) whether all consents required to perform the business or proposed business of the Issuer as stated in the prospectus have been duly obtained;📋Copy Citation
(e) the validity of evidence of ownership of major assets as stated in the Prospectus or Offer Document;📋Copy Citation
(f) any material contract and agreements with Underwriters, Transaction Advisors and other agreements entered with Professional Parties with respect to the securities being registered.📋Copy Citation
(g) any other material items with regards to the legal status of the Issuer and the proposed issue, as relevant; and📋Copy Citation
(h) any other legal matter in relation to the application for the registration of the securities as may be requested by the Authority.📋Copy Citation

2)The provider of the external independent legal opinion shall be a qualified legal practitioner or law firm, registered in Ethiopia.📋Copy Citation

Article 45. Review of registration statement

1)The Authority shall review the Registration Statement submitted to the Authority to ensure that all information and documents contained therein is accurate, sufficiently clear, comprehensive, reasonably specific, and timely. However, the Authority does not evaluate the merits of any transaction or determine whether an investment is appropriate for any investor.📋Copy Citation

2)The Authority’s review process is not a guarantee that the disclosure is complete and accurate, and responsibility for complete and accurate disclosure lies with the Issuer and others involved in the preparation of an Issuer’s filings.📋Copy Citation

3)Where applicable, the Authority shall communicate comments on the Registration Statement as the case may be, requesting revision, update, clarification or correction of deficiencies in the Prospectus.📋Copy Citation

4)Each submission of the Registration Statement to the Authority submitted after the first draft shall highlight all changes made to the preceding draft and a separate written explanation as to how the comments from the Authority have been addressed shall be provided. An unmarked draft or clean version shall also be submitted therewith.📋Copy Citation

5)The final draft of the Registration Statement submitted to the Authority shall be accompanied by:📋Copy Citation
(a) list indicating how the disclosure requirements of the Registration Statement and any additional requests by the Authority have been complied with; and📋Copy Citation
(b) any other information requested by the Authority for review and approval.📋Copy Citation

Article 46. Timeline and Processing of Application

1)Once an application to register Securities is filed with the Authority, any communication regarding a pending application from or to the Authority shall be conducted by a formal letter.📋Copy Citation

2)Except as otherwise stated in this Directive, a Registration Statement filed with the Authority shall be reviewed within 20 (twenty) business days. In the case of an Initial Public Offer, this time frame shall be 30 (thirty) business days.📋Copy Citation

3)The timeline specified under Sub Article (2) of this Article shall reset once the Authority communicates to the Issuer, offeror, or the Transaction Advisor its comments to revise, update, or clarify information or a deficiency in the application.📋Copy Citation

4)A delay by the Authority to act on the Registration Statement within the time limits laid down in Sub Article (2) of this Article shall not be construed to constitute approval or non-approval of the registration statement by the Authority.📋Copy Citation

Article 47. Approval of Registration Statement

1)The Authority shall approve the Registration Statement where it considers that the information contained in the Registration Statement, including the Prospectus or Offer Document, as applicable, is complete, accurate, sufficiently clear, comprehensive, reasonably specific, and timely, and where the offer or issuance shall not jeopardize the principal objective of the Authority.📋Copy Citation

2)An approval by the Authority is not an affirmation of the accuracy of the information contained therein, nor shall it be construed as advice or a recommendation of the related securities.📋Copy Citation

3)A Registration Statement shall be deemed approved only as to the securities specified in the Prospectus or Offering Document.📋Copy Citation

Article 48. Certificate of Registration of Securities

1)The Authority shall issue a Certificate of Registration of Securities in the form to be specified to the Issuer upon the approval of the Registration Statement.📋Copy Citation

2)The Certificate of Registration shall specify the securities registered by the Issuer including the type and amount registered by the Authority.📋Copy Citation

Article 49. Registration with the Central Securities Depository

After the Certificate of Registration of Securities is issued by the Authority: -📋Copy Citation

1)Where the securities that are registered are existing securities the issuer shall dematerialize its securities at the Central Securities Depository in accordance with the requirements of the Dematerialization Directive.📋Copy Citation

2)Where the securities that are registered are new securities the issuer shall register such securities at the Central Securities Depository within five (5) business days.📋Copy Citation

Article 50. Rejection or Refusal of Registration Statement

1)The Authority shall reject an application for the registration of securities if it finds that:📋Copy Citation
(a) the Registration Statement is, on its face, incomplete, misleading, inaccurate in any material respect, includes any untrue statement of a material fact or omits to state a material fact required to be stated therein and the issuer fails to amend the Registration Statement as required;📋Copy Citation
(b) the Issuer, senior officer, Board of Director, a controlling person of the Issuer, a person performing similar functions, or any underwriter, Transaction Advisor or Compliance Advisor has been convicted by a competent judicial body of an offense involving dishonesty, fraud, breach of trust, or Prohibited Trading Practices or has been judicially declared insolvent;📋Copy Citation
(c) the Prospectus is not in accordance with, or the Issuer has violated, any of the provisions of the Proclamation, this Directive, or any directive or any request of the Authority;📋Copy Citation
(d) the issuance thereof might be contrary to the interest of investors and the public in general, having regard to whether a reasonable investor would lose confidence in the capital market and be less willing to invest if the Authority did not take action to restrict the securities issuance in question, and may include;📋Copy Citation

(d) (i) an offering structured to manipulate or circumvent the provisions of the Proclamation or this Directive;📋Copy Citation

(d) (ii) an offering that would otherwise be illegal;📋Copy Citation

(d) (iii) where it is determined that the business of the Issuer may not be conducted with integrity and in the best interest of the security holders of the Issuer because of past conduct of the Issuer or any of the Issuer’s officers, Board of Directors, Promoters, or controlling persons or major security holders;📋Copy Citation

(d) (iv) an Escrow Account for the holding of the proceeds payable to the Issuer from the sale of the securities has not been opened in a licensed bank; or📋Copy Citation

(d) (v) a person that has prepared or certified any part of the Prospectus or Offering Document, or that is named as having prepared or certified a report or valuation used in connection with the Prospectus or Offering Document, is not acceptable.📋Copy Citation

2)For the purpose of this Article, a person may be deemed unacceptable for failing to be appropriately authorized or licensed to provide service in relation to the Registration Statement or for lacking the appropriate qualifications or expertise to be named an Expert in the Prospectus or Offering Document.📋Copy Citation

3)The Authority, having provided the Issuer with an opportunity to be heard, may reject an application for registration and refuse registration of the security. Any rejection by the Authority shall be in a formal letter and it shall state in a clear and precise manner the basis for the decision.📋Copy Citation

4)An Issuer may appeal against the Authority’s decision in accordance with provisions of the Proclamation.📋Copy Citation

Article 51. Access to Documents Submitted in a Registration Statement

Statement Information or documents prescribed as part of the Registration Statement shall be made available to the public in accordance with the disclosure methods set out in this Directive and in accordance with the data protection requirements applicable.📋Copy Citation

Article 52. Publication of a Prospectus

1)An Issuer of Securities shall obtain the approval of the Authority prior to issuing its Prospectus.📋Copy Citation

2)The publication of the approved Prospectus shall be within 30 (thirty) calendar days of the approval and at least 10 (ten) calendar days before the Offer to the public is scheduled to start, or in such other timeframe as may be approved by the Authority from time-to-time.📋Copy Citation

3)Access to the Prospectus shall not be subject to a registration process, an acceptance of a disclaimer limiting legal liability, or the payment of fees.📋Copy Citation

4)The text and format of the Prospectus, and any supplement to the Prospectus made available to the public, shall at all times be in the form and content as approved by the Authority.📋Copy Citation

5)The Prospectus shall be deemed available to the public when published in electronic form on the website of the Issuer in the form prescribed by the Authority. The Prospectus shall also be posted on the website of the intermediaries placing or selling the Securities and on the website of the Securities Exchange where the Issuer’s Securities trade or admission to trading is sought.📋Copy Citation

6)The Prospectus shall be published in a dedicated and easily accessible section of the Issuer’s website, which shall be evident from the landing page. It shall be downloadable, printable, and in a searchable electronic format that cannot be modified.📋Copy Citation

7)Where an approved Prospectus is not published within the timeframe set under Sub Article (2) of this Article, it shall be required to be re-validated by the Authority before publication and distribution and may require payment of fees to the Authority.📋Copy Citation

8)An Issuer shall provide an Abridged Prospectus in English and Amharic which includes:📋Copy Citation
(a) a summary of the historical financial information in the Prospectus;📋Copy Citation
(b) a description of the shareholding structure, including debt structure, prior to the issue and the anticipated structure after the issue of securities;📋Copy Citation
(c) the key information on the Issuer and its business, the securities being offered, the offer process, if applicable; and📋Copy Citation
(d) the risk associated with investment in the Securities📋Copy Citation

9)An approved Prospectus shall remain publicly available in electronic form for at least (ten) years after its publication on the website of the Issuer.📋Copy Citation

10)Unless the context requires otherwise, the references to a Prospectus in this Directive shall include a Supplementary Prospectus.📋Copy Citation

Article 53. Advertisement

1)No Person shall publish an Advertisement relating to a Public Offer without the prior approval of the Authority.📋Copy Citation

2)Any Advertisement shall not be issued to or caused to be issued to the public unless it states that a Prospectus is or will be published, as the case may be, and indicates where investors can obtain or will be able to obtain a copy.📋Copy Citation

3)The Advertisements referred to in Sub Article (2) of this Article shall be submitted to the Authority not later than 3 (three) business days prior to the publication, and the Authority may require such amendments thereto as it may consider necessary.📋Copy Citation

4)Advertisements shall be clearly recognizable as such, and the information contained therein shall not be inaccurate or misleading and shall be consistent with the information contained in the Prospectus to be published and approved by the Authority.📋Copy Citation

5)An Advertisement shall be misleading if it contains:📋Copy Citation
(a) statements made about the performance or activities of the company, in the absence of necessary explanatory or qualifying notes, which may give an exaggerated picture of the performance of the company; or📋Copy Citation
(b) an inaccurate portrayal of the company’s past performance or its portrayal in a manner that suggests that past gains or income will be repeated in future.📋Copy Citation

6)All information disclosed in an oral or written form concerning the Public Offer, even where not for advertising purposes, shall be consistent with the information contained in the Prospectus or Offer Documents.📋Copy Citation

7)Any Advertisement reproducing or asserting to reproduce any information contained in a Prospectus shall produce such information in full, disclose all relevant facts, and not be restricted to selected extracts relating to that item.📋Copy Citation

8)An Advertisement shall avoid the use of extensive technical legal terminology or complex language and the inclusion of excessive details that may distract the investor. Ambiguous and high-sounding words shall be avoided, and slogans and terminologies that can mislead the investor, such as “top offer," “superior offer,” “brighter future," “reliable," “profitable,” and other similar language, shall be prohibited from use.📋Copy Citation

9)An Advertisement shall not contain statements that promise or guarantee profits.📋Copy Citation

10)Advertisements disseminated to potential investors shall be amended where:📋Copy Citation
(a) supplement to the Prospectus is subsequently published in accordance with Article of this Directive, or📋Copy Citation
(b) a significant new factor, material mistake, or material inaccuracy mentioned in the supplement renders the previously disseminated advertisement materially inaccurate or misleading.📋Copy Citation

11)Advertisements shall not contain endorsements from models, celebrities, fictional characters, or caricatures.📋Copy Citation

12)Advertisements shall not appear in the form of crawlers that run simultaneously with the program in a narrow strip at the bottom of the television screen or other media.📋Copy Citation

13)An Advertisement shall present the information in the Prospectus in a balanced way, including by way of presentation of the negative and positive aspects of such information with the same prominence without omission or selective presentation of certain information.📋Copy Citation

14)Where the issuer is a Company Under Formation the Advertisement shall describe the risk associated with being under formation.📋Copy Citation

15)The following statement shall be prominently placed in all forms of Advertisements: “Please read the Prospectus in full and, where in doubt as to the action you should take consult a licensed financial adviser for guidance before investing in securities. The approval of the prospectus by the Authority is not an endorsement or recommendation to purchase the securities offered.”📋Copy Citation

16)Issuers or their intermediaries are prohibited from stating, directly or indirectly, that the Authority has approved, authorized, or certified the merits or weaknesses of an offering.📋Copy Citation

17)Where it is necessary for the orderly operation of the capital market, investor protection, or to avoid systemic risk, the Authority may prohibit, restrict, or suspend an Advertisement, or require its withdrawal, or amendment.📋Copy Citation

Article 54. Underwriting of Public Offers

1)The Underwriting of Public Offers shall be at the discretion of the Issuer.📋Copy Citation

2)The Underwriting agreement shall be subject to the prior approval of the Authority📋Copy Citation

3)Where an Issuer opts for Underwriting, the Offer shall be underwritten by an Investment Bank. Any relationship of the Underwriter to the Issuer or any of the Issuer’s Directors shall be disclosed to the Authority.📋Copy Citation

4)Where the Offer is underwritten by a syndicate of Underwriters, the lead Investment Bank shall be designated to act as the lead Underwriter. In the case of a debt issuance, the lead Underwriter need not be the lead Investment Bank.📋Copy Citation

5)All Underwriting and sub-underwriting agreements shall be submitted to the Authority along with other registration documents.📋Copy Citation

6)The following shall apply to Underwriting:📋Copy Citation
(a) Subject to the offer period under Article (57) of this Directive, the underwritten securities shall be sold by the Underwriter within such period as may be predetermined by the Issuer and approved by the Authority;📋Copy Citation
(b) where the underwriting agreement is a firm or standby underwriting and the underwritten securities are not disposed of within the offer period, the Authority may, on the written application of the Underwriter, extend the period of sale referred to in Sub Article (6)(a) of this Article having regard to market conditions and other factors that are relevant in the circumstances; and📋Copy Citation
(c) Underwriters shall submit quarterly reports to the Authority with respect to the undisposed securities until the same is fully disposed of.📋Copy Citation

7)Where any party or parties in an Underwriting agreement intend to terminate the agreement, such party or parties shall give not less than 5 (five) business days’ notice to the Authority and shall state the reasons for the intended termination. If the Authority is satisfied with the reasons given, it may give approval for the termination of the agreement.📋Copy Citation

8)If the Authority does not approve the termination, the Underwriter shall continue to fulfil its obligations under the Underwriting contract.📋Copy Citation

Article 55. Underwriting Commission

The commission for Underwriting shall be subject to negotiation between the Issuer and the Underwriter and shall be a set fee for the amount underwritten.📋Copy Citation

Article 56. Effective Date of Prospectus

1)A Prospectus shall be effective as of the date of approval by the Authority and shall be effective for the Offer Period specified pursuant to Article 57 of this Directive.📋Copy Citation

2)Notwithstanding Sub-Article 1 of this Article, a Prospectus shall not be effective for a time-period greater than 6 (six) months.📋Copy Citation

Article 57. Offer Period

1)The Offer Period shall be determined by the Issuer but shall not be for more than 90 (ninety) calendar days.📋Copy Citation

2)Notwithstanding Sub-Article 1 of this Article, the Authority may, on an application by the Issuer or the offeror, grant an extension of the Offer Period.📋Copy Citation

3)Any application for an extension of the Offer Period shall be made in writing to the Authority at least 5 (five) business days before the date of closure of the Offer . No Offer shall continue beyond the closing date unless prior written approval of the Authority is obtained.📋Copy Citation

4)The Authority may grant an extension of the offer period. However, no such extension shall be granted unless the Issuer’s latest audited financial statement or interim financial statement included in the Prospectus or Offer Document shall remain valid throughout the extension period.📋Copy Citation

5)The new closing date shall be immediately announced by the Issuer using the same means as when the initial Offer was announced.📋Copy Citation

6)The Offer shall only be opened to the public on the terms and conditions approved by the Authority.📋Copy Citation

Article 58. Material Changes to Prospectus

1)Where, after the approval of the Prospectus by the Authority and at any time between the approval and before the closing of the Offer Period, the information contained in the Prospectus is or has become misleading, incorrect, inadequate, or incomplete in any material respect, or new developments have made it so, or new information that is material to the Offer becomes available that impacts the accuracy of information previously provided, the issuer shall:📋Copy Citation
(a) immediately suspend the Offer of Securities if an offering is still being conducted; and📋Copy Citation
(b) with the prior approval of the Authority, issue a Supplementary Prospectus before recommencing the Offering of Securities.📋Copy Citation

2)Information shall be considered material if:📋Copy Citation
(a) there is a significant change affecting any matter contained in the Prospectus, the inclusion of which was required by this Directive; or📋Copy Citation
(b) a significant new matter arises the inclusion of which would have been required if it had arisen when the Prospectus was being prepared.📋Copy Citation

3)Where a Supplementary Prospectus has been approved the Issuer shall make the Supplementary Prospectus available in the same manner as the previous publication of the Prospectus.📋Copy Citation

Article 59. Withdrawal Rights

1)Where investors have already agreed to purchase or subscribe for the securities before the Supplementary Prospectus is published, the Supplementary Prospectus shall have the right to withdraw purchase or subscriptions exercisable within 10 (ten) Business Days after the publication of the supplement.,📋Copy Citation

2)The period provided under Sub-Article (1) of this Article may be extended by the Issuer.📋Copy Citation

3)The Supplementary Prospectus shall contain a prominent statement concerning the right of withdrawal, clearly stating:📋Copy Citation
(a) a right of withdrawal is only granted to those investors who have already subscribed for the securities before the supplement was published;📋Copy Citation
(b) the period in which investors can exercise their right of withdrawal; and📋Copy Citation
(c) how investors may contact the Issuer should they wish to exercise the right of withdrawal.📋Copy Citation

Article 60. Authority’s Power to Suspend or Cancel Offer

Where it is necessary for the orderly operation of the capital market, investor protection, or to avoid systemic risk, the Authority may prohibit, restrict, suspend, cancel, order a withdrawal, or the amendment of an offer.📋Copy Citation

Article 61. Under-Subscription

1)Where the total amount subscribed in an Offer is less than the Minimum subscription amount specified in the Prospectus, the Offer shall be terminated by the Issuer within thirty (30) calendar days of the closing date of the Offer Period subject to the approval of the termination by the Authority.📋Copy Citation

2)The Issuer shall publish details of the decision to terminate the Offer on its website or other applicable method of disclosure within five (5) business days upon obtaining approval of the termination by the Authority.📋Copy Citation

3)All monies shall be returned to subscribers of the terminated offer within 15 (fifteen) business days after the approval of the termination by the Authority.📋Copy Citation

Article 62. Over-Subscription

1)If an Offer is oversubscribed, an Issuer may retain an amount representing not more than (fifteen) percent of the Offer size, provided that the appropriate disclosure has been made in the Prospectus, indicating the extent to which oversubscription would be retained and the purpose for which such monies would be used.📋Copy Citation

2)Any surplus monies above the allotment in accordance with Sub Article 1 of this Article, shall be returned to subscribers within 10 (ten) business days of the approval of the Allotment Report by the Authority.📋Copy Citation

Article 63. Notice of Completion or Termination of an Offer

1)The Issuer shall notify the Authority in writing of the completion or termination of the Offer within thirty (30) business days from such completion or termination.📋Copy Citation

2)The notice shall:📋Copy Citation
(a) for a completed Offer, state the number of Securities sold along with the allotment report required under Article 74 of this Directive or📋Copy Citation
(b) for a terminated Offer, state the reasons for the termination and include confirmation that all amounts paid by investors subscribing to the publicly offered Securities have been returned in full.📋Copy Citation

Article 64. Document Retention Obligation

1)An Issuer, offeror, and all intermediaries involved in an Offer shall retain all documents generated in connection with an offer for 10 (ten) years after the conclusion of the Offer.📋Copy Citation

2)The Authority shall have the power to inspect the records, books and documents relating to an Offer.📋Copy Citation

Article 65. Condition for Approval of Subsequent Public Offers

1)As a condition for approval to any subsequent Public Offer, the Authority shall determine whether:📋Copy Citation
(a) the Issuer has applied the proceeds of any prior offers in accordance with the use of proceeds stated in the related Prospectus;📋Copy Citation
(b) the Annual Report filed by Issuer as part of its ongoing information disclosure obligations includes disclosure on the use of the proceeds from any prior Offers; and📋Copy Citation
(c) that all subscribed shares from the prior offer have been paid up.📋Copy Citation

2)Offers of Securities pursuant to a Shelf-Registration shall not be subject to this Article until after the expiry of the validity period of the Shelf Registration.📋Copy Citation

Article 66. General

1)An Offer of Securities undertaken by way of a Book Build may be solely to Qualified Investors or to both Qualified Investors and Retail Investors in the manner set out in this Section.📋Copy Citation

2)Where the Offer is to both Qualified Investors and Retail Investors:📋Copy Citation
(a) the securities to be offered by way of a Book Build shall be separately identified as the “Book Building portion”; and the balance of the Securities to be offered shall be referred to as the “Fixed Price portion;” and📋Copy Citation
(b) two Escrow Accounts shall be opened for the subscription monies, one for Qualified Investors and the other for Retail Investors.📋Copy Citation

3)No incentive, whether in cash or kind, shall be paid to investors to participate in the Book Building process or the Offer of Securities.📋Copy Citation

Article 67. Preliminary Prospectus

1)A preliminary Prospectus shall be filed and approved by the Authority prior to its distribution and commencement of the book building.📋Copy Citation

2)The preliminary Prospectus shall be complete in all regards in accordance with this Directive, except for price which shall be included in the updated Prospectus at the end of the Book Build.📋Copy Citation

3)The preliminary Prospectus shall:📋Copy Citation
(a) specify a price range for the “Book Build portion” of the offer which shall have an upper limit that is not greater than 20% of the lower limit, unless approved by the Authority; and📋Copy Citation
(b) indicate the criteria by which the “Fixed Price portion” of the offer will be determined.📋Copy Citation

4)The preliminary Prospectus shall include a legend indicating in bold that it is “subject to completion.”📋Copy Citation

Article 68. Book Runner

1)The Issuer shall appoint a Book Runner(s), who shall be the Transaction Advisor, who shall be responsible for the Book Building.📋Copy Citation

2)Where more than one Book Runner is appointed, a lead Book Runner shall be designated, and the lead Book Runner shall have the primary responsibility of the Book Build process.📋Copy Citation

Article 69. Book Building Process and Book Runner Responsibilities

1)A Book Building process shall be open for a maximum of 7 (seven) business days, herein referred to as “the Book Build period.”📋Copy Citation

2)The Book Runner shall verify the identity of the investor prior to the acceptance of a purchase order.📋Copy Citation

3)The Book Runner shall maintain records including the names of the investors, the number of securities ordered and the price the investor is willing to subscribe to the securities📋Copy Citation

4)The Book Runner(s) shall receive orders with bids from the Qualified Investor during the Book Building period, which it shall aggregate, on a daily basis, and submit to the lead Book Runner.📋Copy Citation

5)Qualified Investors who participate in the Book Building shall have the right to change or withdraw their orders during the Book Building Process as set out in the terms and conditions specified by the Book Runner.📋Copy Citation

6)The lead Book Runner shall provide the aggregate total amount of the orders received during the Book Building period to the issuer and the authority.📋Copy Citation

7)Following a review of the orders received, the Book Runner and the Issuer shall determine the issue price for the securities in accordance with the criteria disclosed in the preliminary Prospectus.📋Copy Citation

8)Upon the determination of the issue price, the number of securities to be offered in the Fixed Price portion shall be determined by calculating the amount needed to be raised through the Fixed Price portion divided by the issue price determined by the Book Build.📋Copy Citation

9)Upon determining the issue price and the offer size, the Issuer’s preliminary Prospectus shall be updated as described in this Section.📋Copy Citation

10)The Book Runner and any other intermediaries associated with the Book-Building process as indicated in the preliminary Prospectus, shall maintain records for the Book Building process for ten (10) years following the offer.📋Copy Citation

Article 70. Allotment of Securities Offered in the Book Building Process

1)Within two (2) Calander Days of the close of the Book Building period, the lead Book Runner shall communicate to the Qualified Investors who submitted orders in the Book Building process the number and price of the securities which they have been allocated in line with the Allotment Policy set out in the preliminary Prospectus.📋Copy Citation

2)Such investors shall deposit the payment of their subscription in the designated account for the offer within two (2) Calander Days of notification by the Book Runner.📋Copy Citation

Article 71. Updated Prospectus

1)Within forty-eight (48) hours of the close of the Book Building period, the Issuer shall file a Prospectus with the Authority which has been updated to include the issue price and the offer size, together with an allotment proposal.📋Copy Citation

2)After receiving the updated prospectus, the authority will examine it and make an appropriate decision within 5 (five) business days.📋Copy Citation

3)The issuer shall publish the updated prospectus within one (1) day of the approval by the Authority.📋Copy Citation

Article 72. Offer for the Fixed Price Portion

1)The Offer Period for the “Fixed Price portion” shall open within 5 (five) business days from the date of the approval of the updated prospectus and shall remain open for a period of at least 10 (ten) working days.📋Copy Citation

2)The Fixed Price portion shall be offered to the public at the same price determined in the Book Building portion to Qualified Investors.📋Copy Citation

3)Investors in the Fixed Price portion of the offer shall be allotted the securities in accordance with the Allotment Policy set out in the approved updated Prospectus.📋Copy Citation

4)The Qualified Investors who participated in the Book Building portion shall not be barred from participating in the Fixed Price portion of the offer; subject to the prior allotment to Retail Investors participating in the Fixed Price portion.📋Copy Citation

Article 73. Allotment Principles and Requirements

1)The allotment of Securities shall be made on the basis of the Allotment Policy disclosed in the Prospectus. Where adherence to the Allotment Policy is impractical, an amendment to the Allotment Policy may be permitted, with the approval of the Authority prior to the allotment.📋Copy Citation

2)Every investor within the same group shall be treated equally and fairly, and demands must be evaluated in the same manner.📋Copy Citation

3)The Authority may declare any irregular allotment of Securities null and void and may prescribe appropriate measures to rectify such irregularities.📋Copy Citation

Article 74. Allotment Report

1)Within 30 (thirty) calendar days or such other time as may be determined by the Authority following the closing of a Public Offer, the Issuer shall file an Allotment Report with the Authority.📋Copy Citation

2)The Allotment Report shall contain:📋Copy Citation
(a) summary of subscriptions received;📋Copy Citation
(b) list of allottees acquiring 5% or more of the securities on offer;📋Copy Citation
(c) list of all subscriptions received, including list of those rejected and the basis for rejection; and📋Copy Citation
(d) the proposed allotment to subscribers.📋Copy Citation

3)Where the Issuer or Transaction Advisor fails to submit the Allotment Report within the stipulated period or any extended period granted, the Authority may impose an appropriate penalty or direct that the issuance be terminated.📋Copy Citation

4)The approval of the Allotment Report by the Authority shall be a condition for the release of subscription monies in an Escrow Account.📋Copy Citation

Article 75. Cancellation of Unsubscribed Securities from Registration Record

1)The Authority shall remove from its registration record፦📋Copy Citation
(a) For a completed offer, those securities that were not subscribed📋Copy Citation
(b) For a terminated offer, all securities that were previously registered.📋Copy Citation

2)All securities that are removed from the Authority’s record as stated under Sub Article (1) of this Article shall also be removed from the registration record of the Central Securities Depository.📋Copy Citation

Article 76. Publication of Allotment Result

1)Within five (5) business days of approval of the allotment report by the Authority, the Issuer shall publish a summary of the allotment results on the Issuer’s website.📋Copy Citation

2)Where applicable, permission to List on a Securities Exchange or to deal in the securities shall take effect no later than thirty (30) business days after approval of the allotment report.📋Copy Citation

CHAPTER FOUR: CONTENT OF A PROSPECTUS

Article 77. Front Page

1)The front page shall state the name of the Issuer, the Transaction Advisor(s) the type of offer, the amount or number of securities being offered, and the price and amount payable in full on application. The front page of the Prospectus shall contain the following statements:📋Copy Citation
(a) The Prospectus is issued under the provisions of the Capital Market Proclamation, and in compliance with the Public Offer and Trading Directives of the Authority for the purpose of giving information to the public regarding the Securities.📋Copy Citation
(b) The Prospectus has been approved and the Securities that it offers has been registered, by the Ethiopian Capital Market Authority.📋Copy Citation
(c) Please read the Prospectus in full and, where in doubt as to the action you should take consult an appropriate licensed independent securities advisor for guidance before investing in securities.📋Copy Citation
(d) The Issuer, Board of Directors of the Issuer, and the chief executive officer and the chief financial officer, or in the case of Company Under Formation, Issuer, the Promoter and persons performing such functions, accept full responsibility for the information contained in the Prospectus and, to the best of their knowledge and belief, have taken all reasonable care to ensure that the information in the Prospectus is in accordance with facts and does not omit anything likely to affect the importance of such information or make the expression of such information or opinion misleading or untrue.📋Copy Citation
(e) Investing in this offer involves risks, with reference to the relevant pages on risk factors that should be considered by prospective investors.📋Copy Citation

2)The following statement shall be on the front page of the Prospectus in capital letters and in bold type: “The approval of the Prospectus and the registration of the Securities should not be construed as an endorsement by the Ethiopian Capital Market Authority of the Issuer or of the Securities that are the subject of this Prospectus. The Ethiopian Capital Market Authority does not assume responsibility for the correctness of any statements, opinions, or reports included herein.”📋Copy Citation

Article 78. Table of Contents

A Prospectus shall have a detailed table of contents that shows the subject matter of the various sections or subsections of the Prospectus and the page number on which each such section or subsection begins.📋Copy Citation

Article 79. Definitions and Abbreviations

The Prospectus shall have a section dedicated to a glossary of abbreviations and technical terms to guide investors on definitions and explanations of abbreviations and terms, especially for companies engaged in technical activities.📋Copy Citation

Article 80. Corporate Directory

The corporate addresses and telephone numbers of the Issuer's branch and regional office, head office, e-mail, website, and registrar’s office, as applicable, should be included in the prospectus.📋Copy Citation

Article 81. Person Responsible for the Information Disclosed

1)The Prospectus shall include a declaration by the Issuer, the Board of Directors of the Issuer, and the chief executive officer and the chief financial officer, or in the case of Company Under Formation, Issuer, the Promoter and persons performing such functions, accept full responsibility for the information contained in the Prospectus and, to the best of their knowledge and belief, have taken all reasonable care to ensure that the information in the Prospectus is in accordance with facts and does not omit anything likely to affect the importance of such information or make the expression of such information or opinion misleading or untrue.📋Copy Citation

2)Where a statement or report attributed to a person as an Expert is included in the Prospectus, the following shall be disclosed for that person:📋Copy Citation
(a) accept full responsibility for the information it provided and consented its inclusion in the Prospectus and, to the best of their knowledge and belief, have taken all reasonable care to ensure that the information it provided is in accordance with facts and does not omit anything likely to affect the importance of such information or make the expression of such information or opinion misleading or untrue; and📋Copy Citation
(b) Details of qualifications📋Copy Citation

3)In relation to any person responsible for any information disclosed in the Prospectus, the following shall be provided:📋Copy Citation
(a) the name, address, and function of the person responsible for the information or any parts of it, given in the Prospectus;📋Copy Citation
(b) in the case of corporate entities, the name and registered office; and📋Copy Citation
(c) material interest, if any, in the Issuer.📋Copy Citation

Article 82. Third-Party Information

1)Where information is obtained from a third-party, a confirmation that such information has been accurately reproduced and that, as far as the Issuer is aware and is able to ascertain from information published by that third-party, no facts have been omitted that would render the reproduced information inaccurate or misleading shall be included.📋Copy Citation

2)The source(s) of all third-party information shall be clearly disclosed.📋Copy Citation

Article 83. External Auditors

1)Names and addresses of the Issuer’s auditors for the period covered by the historical financial information shall be disclosed.📋Copy Citation

2)Details of the auditor’s license from the Accounting and Auditing Board of Ethiopia or any other authorized entity.📋Copy Citation

Article 84. Summary Section of the Prospectus

1)The summary shall contain an introductory cautionary statement indicating that:📋Copy Citation
(a) it is an introduction to the Prospectus;📋Copy Citation
(b) it is to be read together with the other parts of the Prospectus; and📋Copy Citation
(c) any decision to invest in the Securities should be based on consideration of the Prospectus as a whole.📋Copy Citation

2)The summary shall include key information contained in the Prospectus including information on the Issuer, the business, the Securities, the offer being undertaken, and the key risks.📋Copy Citation

Article 85. Information on the Issuer

1)Information on the Issuer shall include clear description of the history and development of the Issuer including the following:📋Copy Citation
(a) the legal and commercial name of the Issuer and the registered address of the Issuer;📋Copy Citation
(b) details on the Issuer’s incorporation including the country of incorporation of the issuer, the date of incorporation and information regarding its commercial registration; and📋Copy Citation
(c) details of any recent events particular to the issuer and which are to a material extent relevant to an evaluation of the Issuer’s solvency.📋Copy Citation

2)An organizational chart or organogram shall be provided where the Issuer is part of a group. A brief description of the group, including a description of the group structure and the Issuer’s position within the group shall be required.📋Copy Citation

3)The Issuer’s significant subsidiaries, including name, incorporation details, the proportion of ownership interest held, and, if different, the proportion of voting power held, in each subsidiary shall be included.📋Copy Citation

Article 86. Business Overview

1)A comprehensive description of the business done by the Issuer or intended to be done by the Issuer shall be provided.📋Copy Citation

2)A description of the Issuer’s business strategy and objectives shall be disclosed together with the Issuer’s future challenges and prospects.📋Copy Citation

3)The important events and developments in the Issuer’s business.📋Copy Citation

4)A clear and coherent description of the business plan shall be provided, and if it is a Company Under Formation or newly formed, it shall be augmented with financial information, as necessary, in accordance with the requirements of this Directive.📋Copy Citation

5)Without prejudice to Sub Article (4) of this Article, the Authority may require the Issuer to file a Feasibility Report, prepared by an Expert.📋Copy Citation

Article 87. Operations and Principal Activities

1)A description of the Issuer´s operations and principal activities, stating the main categories of products sold or services performed shall be included.📋Copy Citation

2)Information on any interruptions in the Issuer’s business that may have or have had during the recent past (covering at least the previous twelve months) a significant effect on the Issuer’s operations.📋Copy Citation

3)Information on any significant new products or services that have been introduced and, to the extent the development of new products or services has been publicly disclosed, the status of their development.📋Copy Citation

4)Status of development shall describe whether such products or services are in the planning states, whether protypes exists, the degree to which product design has progressed or whether further work or capital resources are necessary.📋Copy Citation

5)The extent to which the Issuer is dependent, if at all, on any licenses, patents, or contracts, where such factors are of fundamental importance to the Issuer’s business or profitability shall be disclosed.📋Copy Citation

6)The particulars of royalties payable or items of a similar nature in respect of the Issuer and any of its subsidiaries shall be disclosed.📋Copy Citation

7)If the Issuer is dependent on a single customer or client or on a single supplier, based on any metric, not limited to revenue or profit, that dependency shall be disclosed and described in the Prospectus.📋Copy Citation

8)The Issuer shall provide information on its employees and shall also specify whether there are any key dependencies on any specific personnel for its operations.📋Copy Citation

9)Where the company relies on the availability of raw materials, disclosure on the availability and the procedures by which raw materials are derived shall be provided.📋Copy Citation

Article 88. Principal Markets and Competition

1)A description of the principal markets in which the Issuer competes, including a breakdown of total revenues by operating segment and geographic market shall be provided.📋Copy Citation

2)A description of the Issuer’s competitive environment, and the basis for any statements made by the Issuer regarding its competitive position.📋Copy Citation

Article 89. Regulatory Environment

The regulatory environment in which the Issuer operates its business, and the key impacts on the Issuer’s business, strategy and operations shall be described.📋Copy Citation

Article 90. Employees

1)Information on the employees of the Issuer and its subsidiaries shall be provided, including the number of employees, the type of employment segmented into full-time and part-time, as applicable.📋Copy Citation

2)A description of compensation benefit plans, Share-Based Payments or any arrangements for involving the employees in the capital of the Issuer shall be included.📋Copy Citation

Article 91. Issuer’s Debt Position

1)Information on the Issuer’s debt position shall be provided, including:📋Copy Citation
(a) the name and address of the major banks providing services to the Issuer as lender, providing credit facilities or any indebtedness;📋Copy Citation
(b) whether the Issuer is a guarantor to any significant debt; and📋Copy Citation
(c) material changes in the Issuer’s borrowing and funding structure since the last financial year.📋Copy Citation

2)Credit ratings assigned to an Issuer, whether at the request or with the cooperation of the Issuer in the rating process as applicable, shall be disclosed.📋Copy Citation

3)A relevant description of the expected financing for the Issuer’s business plans and activities shall be provided.📋Copy Citation

Article 92. Issuer’s Investment Activity

1)A description of the Issuer’s material investments made since the date of the last published financial statements including the geographical distribution of these investments, and information on the progress of such investments or any firm commitments which have been made.📋Copy Citation

2)Information concerning the Issuer’s principal future investments, if any (including new plants, factories, and research and development), and the method of financing such investments shall be provided.📋Copy Citation

Article 93. Property, Land and Fixed Assets

1)Information regarding the material physical property, land and fixed assets on which the Issuer depends shall be provided, indicating the location, and general physical and legal characteristics of the same.📋Copy Citation

2)Disclosure in relation to assets referenced in Sub Article (1) of this Article shall address the valuation attributed to such assets including the method and basis of determining the valuation of such assets.📋Copy Citation

3)The Authority may require the Issuer to provide, at its own expense, a Special Valuation Report as a reference in Article 99, having considered the nature of the assets and the industry in which the Issuer operates.📋Copy Citation

Article 94. Material Contracts

1)A summary of each material contract to which the Issuer or any member of the group is a party, for the two years immediately preceding publication of the Prospectus shall be provided.📋Copy Citation

2)The summary shall include the date and duration of the contract, the parties to the contract, the subject matter of the contract and the key terms, monetary values and conditions for each material contract:📋Copy Citation

3)Any contractual arrangement which governs the relationship between an Interested Person and the Issuer and other shareholders shall be disclosed specifying terms and conditions and other relevant details.📋Copy Citation

Article 95. Financial Information

1)The financial information included in the statement shall adhere to the requirements of Article 8(1) (c)(ix) and Article 42 of this Directive, as relevant.📋Copy Citation

2)The audited historical financial information included in the Prospectus shall include:📋Copy Citation
(a) statement of financial position;📋Copy Citation
(b) the statement of profit or loss and other comprehensive income;📋Copy Citation
(c) a statement of changes in equity;📋Copy Citation
(d) the cash flow statement;📋Copy Citation
(e) the accounting policies and explanatory notes.📋Copy Citation

3)If the Issuer prepares both separate and consolidated annual financial statements, it must include both sets of financial statements in the Prospectus.📋Copy Citation

4)An audit report on the financial statements of the issuer for each of the years presented shall indicate whether or not the financial statements give a true and fair view of the affairs of the issuer.📋Copy Citation

5)If audit reports on the annual financial statements contain qualifications, modifications of opinion, disclaimers, or an emphasis on matter, such qualifications, modifications, disclaimers, or emphasis on matter must be reproduced in full in the Prospectus, along with the reasons given.📋Copy Citation

6)If applicable, the interim financial statements and the review report from the External Auditor shall be disclosed in the same manner as the audited financial information.📋Copy Citation

7)Where financial information in the Prospectus is not extracted from the Issuer’s audited or reviewed financial statements, the Prospectus shall state the source of the information and clearly state that the information has not been audited or reviewed.📋Copy Citation

Article 96. Profit Forecast

1)Where a profit forecast or a profit estimate is included in the Prospectus, the profit forecast or estimate shall be clear and unambiguous and contain a statement setting out the principal assumptions upon which the Issuer has based its forecast, or estimate.📋Copy Citation

2)The forecast or estimate shall comply with the following principles:📋Copy Citation
(a) there must be a clear distinction between assumptions about factors which the Board of Directors can influence and assumptions about factors which are exclusively outside their influence;📋Copy Citation
(b) the assumptions must be reasonable, readily understandable by investors, specific and precise, and not relate to the general accuracy of the estimates underlying the forecast; and📋Copy Citation
(c) the assumptions shall draw the investor’s attention to those uncertain factors that could materially change the outcome of the forecast.📋Copy Citation

3)The Prospectus shall include a statement that the profit forecast or estimate has been compiled and prepared on a basis that is both comparable with the historical financial information and consistent with the Issuer’s accounting policies.📋Copy Citation

4)The forecast shall be accompanied by an independent accountant’s review report.📋Copy Citation

Article 97. Significant Change in the Issuer’s Financial Position

1)A description of any significant change in the financial position of the Issuer and its subsidiaries, if applicable, which has occurred since the end of the last financial period for which either audited financial statements or interim financial information have been published; or state that there are none.📋Copy Citation

2)All off-balance sheet financing by the Issuer and any of its subsidiaries, including all known contingent liabilities, shall be quantified (where practicable) and disclosed by way of notes to the financial statements.📋Copy Citation

3)Where six months have elapsed since the end of the financial year to which the last audited financial statement relates, an interim financial statement, which must be reviewed covering at least the first six months following the end of that financial year, must be included in or appended to the Prospectus.📋Copy Citation

4)The interim financial statements should include comparative statements for the same period in the prior financial year, except that the requirement for comparative balance sheet information may be satisfied by presenting the year-end balance sheet.📋Copy Citation

5)The Issuer shall have any interim financial statements in the document reviewed by an External Auditor. If such a review has been performed and is referred to in the document, a copy of the auditor’s interim review report must be provided in the document.📋Copy Citation

6)A description of the issuer’s material investments made since the date of the last published financial statements and which are in progress and/or for which firm commitments have already been made, including the geographical distribution of these investments and the method of financing such investments.📋Copy Citation

Article 98. Pro Forma Financial Information

1)Pro Forma financial information should be provided where any part of the proceeds of the issue are to be used directly or indirectly in any manner resulting in the acquisition by the issuer of shares in another entity that, by reason of that acquisition or anything to be done in consequence of or in connection with it, that the entity will become a subsidiary of the Issuer.📋Copy Citation

2)Pro Forma financial information shall include a description of how the transaction might have affected the assets, liabilities, and earnings of the Issuer had the transaction been undertaken at the commencement of the period being reported on or at the date reported. This requirement may be addressed by the inclusion of pro forma financial statements.📋Copy Citation

Article 99. Special Valuation Report

1)A special valuation report may be required where the specific nature of the operations or planned activities of the Issuers warrants, including where the Issuer is dependent on land, property or the rights for purposes of executing their business plan or operating their business as described in the Prospectus.📋Copy Citation

2)The Special Valuation Report shall,📋Copy Citation
(a) inform investors of the suitability, adequacy, producing capacity and the extent of utilization of the land, property or relevant rights which are material to the Issuer and its subsidiaries.📋Copy Citation
(b) be prepared in accordance with the standards appropriate for the specific nature of the operations or the planned activities of the Issuer.📋Copy Citation

3)Where a Special Valuation Report is required, such valuation shall be undertaken by an Appraiser who is duly licensed by the Authority or an appropriately qualified Expert approved by the Authority to provide the services required.📋Copy Citation

Article 100. Corporate Governance

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1)The Prospectus shall include a statement as to the corporate governance regime which the Issuer applies or proposes to follow, if applicable, and state whether or not the Issuer complies with such corporate governance regime(s).📋Copy Citation

2)Disclosure required under Sub Article 1 of this Article, shall include:📋Copy Citation
(a) Information about the management and the board as stated under Article 101;📋Copy Citation
(b) code of conduct and other ethics related arrangements;📋Copy Citation
(c) information on stakeholder management including employees, and affected communities;📋Copy Citation
(d) environmental considerations and sustainability related matters;📋Copy Citation
(e) information on to the internal control environment of the Issuer; and📋Copy Citation
(f) formation on the Issuer’s risk management arrangements.📋Copy Citation

3)Potential material impacts on corporate governance, including future changes in the board and committees’ composition (in so far as this has already been decided by the Board of Directors or shareholders meeting).📋Copy Citation

Article 101. Management and Board of Directors

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1)A brief profile of each of the following persons shall be included in the Prospectus, including their full names, nationality, function in the issuer or group, educational qualifications, skills, and experience for at least the preceding five years, relevant business interests and activities, and any other information the Authority may require from time to time:📋Copy Citation
(a) the Board of Directors, alternate Directors, and proposed Directors of the Issuer, including the date of appointment and expiration of the current term of office of members of the Board of Directors and the period during which the person has served in that office;📋Copy Citation
(b) Details of existing or proposed Board of Directors’ service contracts with the Issuer or any of its subsidiaries providing for benefits upon termination of employment, or an appropriate statement to the effect that no such benefits exist.📋Copy Citation
(c) the senior management of the Issuer, including the chief executive, and finance director, with details of professional qualifications and periods of employment with the issuer for each such person; and📋Copy Citation
(d) founders or promoters where the company is under formation.📋Copy Citation

2)The details of the nature of any family relationship between any of the persons referred to in Sub Article 1 of this Article shall be disclosed.📋Copy Citation

3)Detailed disclosure of the chief executive or other senior management changes planned or expected for twelve (12) months following the issue or listing of the security shall be provided or the appropriate negative statement with regards to the same.📋Copy Citation

4)Information on whether or not any shareholder, Board of Directors or key management personnel and, where applicable, its key technical personnel are or have been involved in any of the following (whether in or outside Ethiopia) shall be provided:📋Copy Citation
(a) a petition under any bankruptcy or insolvency laws filed (and not struck-out) against such person or any partnership in which he was a partner or any company of which he was a director or key personnel;📋Copy Citation
(b) a conviction in a criminal proceeding or is named subject of pending criminal proceedings relating to fraud or dishonesty; and📋Copy Citation
(c) the subject of any order, judgment or ruling of any court of competent jurisdiction or regulatory body relating to fraud or dishonesty, restraining him from acting as an investment adviser, dealer in securities, director or employee of a financial institution and engaging in any type of business practice or activity. If there is no such information required to be disclosed, a statement to that effect shall be made.📋Copy Citation

5)All relevant information regarding the nature and extent of any interests of the Board of Directors of the Issuer in transactions which are or were unusual in their nature or conditions or significant to the business of the group; and which were affected by the Issuer during the current or immediately preceding financial period; or an earlier financial period and remain in any respect outstanding or unperformed, shall be disclosed or an appropriate negative statement of the same shall be provided.📋Copy Citation

Article 102. Board Committees and Practices

Information about the issuer’s audit committee, remuneration committee, and other board committees, including the names of committee members and a summary of the terms of reference under which the committee operates.📋Copy Citation

Article 103. Remuneration

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1)The total amount of remuneration paid (including any contingent or deferred compensation) and benefits in kind granted to the Board of Directors of the issuer and its subsidiaries for services in all capacities to the Issuer and its subsidiaries by any person.📋Copy Citation

2)An estimate of the amounts payable to named Executive Officers, the Board of Directors of the issuer, including proposed Board of Directors, by any member of the group for the current financial year under the arrangements in force at the date of the Prospectus.📋Copy Citation

Article 104. Promoters

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1)Details any Promoter(s) and the amount of any cash, securities, or benefits paid, issued, or given within the three years immediately preceding the date of publication of the Prospectus, or proposed to be paid, issued, or given to any such Promoter(s) in his capacity as a Promoter, and the consideration for the contractual exchange such payment, issue, or benefit, if applicable.📋Copy Citation

2)Where the interest of any Promoter(s) consists in being a member of a partnership, company or other association of Persons, the nature and extent of the Promoter(s) interest of such partnership, company, or other association shall be disclosed.📋Copy Citation

Article 105. Share Capital

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1)A history of share capital, highlighting information about any changes, for the period covered by the historical financial information.📋Copy Citation

2)As of the date of the most recent balance sheet, the amount of issued capital, and for each class of share capital:📋Copy Citation
(a) the total of the Issuer’s share capital;📋Copy Citation
(b) the number of shares issued and fully paid and issued but not fully paid;📋Copy Citation
(c) the par value per share,; and📋Copy Citation
(d) a reconciliation of the number of shares outstanding at the beginning and end of the year.📋Copy Citation

3)If the capital has been paid for with assets other than cash within the period covered by the historical financial information, a statement to this fact.📋Copy Citation

4)If there are shares not representing capital, state the number and main characteristics of such shares.📋Copy Citation

5)Where there are more than one class of existing shares, a description of the rights, preferences, and restrictions attached to each class.📋Copy Citation

6)The number, book value and face value of shares in the Issuer held by or on behalf of the Issuer itself or by subsidiaries of the Issuer.📋Copy Citation

7)A statement indicating whether the Issuer currently has equity shares that are Publicly Traded on a Licensed Securities Exchange or Over- The-Counter Market, and either the most recent price at which those Securities were traded, or a statement indicating that the shares being offered do not currently have an established market price.📋Copy Citation

Article 106. Other Securities

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1)If applicable, information about and the terms of any acquisition rights or obligations registered but unissued share capital should be provided including any options or warrants outstanding.📋Copy Citation

2)If applicable, the amount of any convertible Securities or exchangeable Securities outstanding, with an indication of the conditions governing and the procedures for conversion, exchange, or subscription.📋Copy Citation

Article 107. Dividend Policy

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1)A description of the issuer’s policy on dividend distributions and any restrictions thereon.📋Copy Citation

2)The dividend per share for the last three financial years shall be disclosed and where the amount of dividend per share has been adjusted, where the number of shares in the issuer has changed, to make it comparable.📋Copy Citation

Article 108. Board of Directors Interest

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1)The Prospectus shall disclose the aggregate of the direct and indirect interests of the Board of Directors of the Issuer distinguishing between beneficial and non-beneficial interest or an appropriate negative statement.📋Copy Citation

2)Any outstanding loans granted by the Issuer or its subsidiaries to any member of the Board of Directors and any guarantees provided for their benefit shall be disclosed in the Prospectus.📋Copy Citation

3)A statement of all sums paid or agreed to be paid, directly or indirectly, to any member of the Board of Directors.📋Copy Citation

4)The statement of amounts referenced in Sub Article 3 of this Article shall cover the threeyear period immediately preceding the date of publication of the prospectus.📋Copy Citation

Article 109. Major Shareholders and Interested Persons

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1)The name of any person other than a member of the Board of Directors who, directly or indirectly, has an interest in the issuer’s capital or voting rights of 5% and above, together with the amount of each such person’s interest, as of the date of the prospectus or, if there are no such persons, an appropriate statement to that effect that no such person exists.📋Copy Citation

2)Whether the Issuer’s major shareholders have different voting rights, or an appropriate statement to the effect that no such voting rights exist.📋Copy Citation

3)Disclosure of whether there is an agreement in place to govern the relationship between a controlling shareholder, another Interested Person and the Issuer.📋Copy Citation

4)A description of any arrangements known to the issuer, the operation of which may, at a subsequent date, result in a change in control of the Issuer.📋Copy Citation

Article 110. Related Party Transactions

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1)Information on any related-party transactions that the Issuer has entered into since the date of the last financial statement.📋Copy Citation

2)The amount or percentage to which related party transactions form part of the turnover of the Issuer.📋Copy Citation

3)The required related party disclosures shall adhere to the requirements of the Commercial Code, IFRS standards and any other standards specifically applicable to the Issuer.📋Copy Citation

4)Any related party arrangements continuing in the future financial periods shall be disclosed.📋Copy Citation

Article 111. Operations and Financial Results

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1)The Prospectus shall include a comprehensive analysis of the development and performance of the Issuer’s business and of its financial condition for each year and the interim period for which financial information is required in the Prospectus.📋Copy Citation

2)The analysis shall explain the causes of material changes to the Issuer’s results of operation or financial position during the period covered by the financial statements.📋Copy Citation

3)Information on any interruptions in the Issuer’s business that may have or have had a significant effect during the recent past (covering at least the previous twelve months) on the Issuer.📋Copy Citation

4)Significant factors, including unusual or infrequent events or new developments, materially affecting the Issuer’s income from operations shall be specified and the extent to which the Issuer’s income was so affected shall be disclosed.📋Copy Citation

5)Where there is a material change to the Issuer’s net sales or revenues, the reasons for such changes shall be disclosed.📋Copy Citation

6)Any comparative data or financial information for two or more periods shall be clear, concise, and complete.📋Copy Citation

7)The analysis included in the Prospectus shall include both financial and, where appropriate, non-financial key performance indicators relevant to the Issuer’s business.📋Copy Citation

8)The discussion shall include information on any known trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on the Issuer’s prospects for at least the current financial year.📋Copy Citation

Article 112. Capital Resources and Liquidity

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1)Information regarding the Issuer’s ability to generate and obtain adequate amounts of capital to meet its requirements and its plans for cash shall be provided.📋Copy Citation

2)An explanation of the Issuer’s capital funding structure including the amounts and sources of Issuer's cash flows and its anticipated sources of capital or borrowing shall be provided.📋Copy Citation

3)The Issuer shall provide information on:📋Copy Citation
(a) any material cash requirements it has from contractual obligations; and📋Copy Citation
(b) commitments, and any material restrictions it may have on the use of the available resources.📋Copy Citation

4)The disclosures shall specify the type of obligations and commitments and the relevant time period for the related cash requirements.📋Copy Citation

5)Any known trends or demands, or any event that could result in the Issuer’s liquidity increasing or decreasing in any material way shall be disclosed.📋Copy Citation

Article 113. Working Capital Statement

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1)A statement by the Issuer as to the sufficiency of its working capital for the Issuer’s present requirements shall be provided.📋Copy Citation

2)Where the Issuer cannot provide an affirmative statement for purposes of Sub Article 1 of this Article, an explanation of how the Issuer proposes to obtain the additional working capital shall be included.📋Copy Citation

Article 114. Capitalization and Indebtedness

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1)A statement of capitalization and indebtedness position of the Issuer and its subsidiaries, that distinguishes between guaranteed and unguaranteed and secured and unsecured indebtedness and includes indirect and contingent indebtedness, shall be provided.📋Copy Citation

2)The statement referenced in Sub Article 1 of this Article shall be of a date no earlier than days prior to the date of the Prospectus.📋Copy Citation

3)Where there are material changes in the capitalization and indebtedness position of the Issuer within the 90- day period referenced in Sub Article 2 of this Article, additional information shall be given either by a narrative description of such changes or by updating the figures therein.📋Copy Citation

Article 115. Going Concern

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1)The Board of Directors of an Issuer and the External Auditor shall make a declaration in the Prospectus as to whether or not the company will continue in operation in the foreseeable future.📋Copy Citation

2)This declaration shall not be required of a Company Under Formation.📋Copy Citation

Article 116. Legal and Arbitration Proceedings

The Prospectus shall provide information on any governmental, legal, or arbitration proceedings including any proceedings which are pending or threatened of which the Issuer is aware during a period covering at least the previous 12 months that may have had or have had in the recent past significant effects on the financial position or profitability of the Issuer and its subsidiary or state that there is none.📋Copy Citation

Article 117. Information Concerning the Securities Being Offered

The following information concerning the Securities being offered shall be included in the Prospectus:📋Copy Citation

1)a description of the type and class of the securities being offered;📋Copy Citation

2)the legal basis of the issuance;📋Copy Citation

3)the name and address of the persons in charge of keeping the records of the securities issued ;📋Copy Citation

4)a description of the rights attached to the securities, including any limitations of those rights and procedures for the exercise of those rights, including:📋Copy Citation
(a) dividend rights;📋Copy Citation
(b) voting rights;📋Copy Citation
(c) pre-emption📋Copy Citation
(d) rights to share in any surplus in the event of liquidation; and📋Copy Citation
(e) redemption provisions;📋Copy Citation

5)whether the securities have been or will be created or issued and the expected issue date of the securities;📋Copy Citation

6)information on the tax treatment of the securities where the proposed investment attracts a tax regime specific to that type of investment;📋Copy Citation

7)a description of any restrictions on the transferability of the securities; and📋Copy Citation

8)an indication of public takeover bids by third parties in respect of the Issuer’s equity that have occurred during the last financial year and the current financial year, for which the price or exchange terms attaching to such offers and the outcome thereof must be stated.📋Copy Citation

Article 118. Terms and Conditions of the Offer of Securities

The following information regarding the terms and conditions of the Offer of Securities shall be included in the Prospectus:📋Copy Citation

1)conditions, offer statistics, expected timetable and action required to apply for the Offer;📋Copy Citation

2)the total amount of the offer, distinguishing the securities Offered for Sale and those Offered for Subscription (where applicable);📋Copy Citation

3)a description of the application process including:📋Copy Citation
(a) the application form to be completed📋Copy Citation
(b) the identification documents required to apply📋Copy Citation
(c) the permitted modes of payment for subscription; and📋Copy Citation
(d) the details of the designated receiving bank to which the subscription amount is paid;📋Copy Citation

4)The allotment policy including a description of any possibility to reduce subscriptions and the manner for refunding amounts paid in excess by applicants;📋Copy Citation

5)the plan of distribution including details of persons and processes designated to facilitate the offer or sale, if any📋Copy Citation

6)details of the minimum and maximum amount of application (whether in number of securities or aggregate amount to invest), including whether or not multiple subscriptions are permitted or not and how any multiple subscriptions will be handled;📋Copy Citation

7)an indication of the period during which an application may be withdrawn, where investors are allowed to withdraw their subscription;📋Copy Citation

8)the method and time limits for paying up the securities and for delivery of the Securities;📋Copy Citation

9)a description of the manner and date on which results of the Offer are to be made public;📋Copy Citation

10)the various categories of potential investors to which the Securities are offered; and📋Copy Citation

11)to the extent known to the Issuer, an indication of whether Major Shareholders, Interested Persons or members of the Issuer’s Board of Directors or management, intend to subscribe in the Offer or whether any Person intends to subscribe for more than five (5) per cent of the Offer;📋Copy Citation

Article 119. Pricing

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1)The price at which the Securities are being offered and the basis for the issue price, which shall be supported by the Valuation Report from the Transaction Advisor.📋Copy Citation

2)Where the price is not known or where the Book Build process will be undertaken:📋Copy Citation
(a) the price range or minimum bid price;📋Copy Citation
(b) the valuation methods, criteria, and conditions in accordance with which the final Offer price will be determined and an explanation of any valuation methods used; and📋Copy Citation
(c) the process for the determination of the Offer price.📋Copy Citation

Article 120. Reasons for the Offer and Use of Proceeds

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1)The minimum subscription amount that, in the opinion of the Board of Directors or the Promoters, as the case may be, must be raised by the Offer of Securities in order to provide the required amount to implement the business plan or undertake the proposed activities indicated in the Prospectus shall be provided.📋Copy Citation

2)The reasons for the Offer and the estimated net amount of the proceeds broken down into each principal intended use and presented in order of priority for such uses shall be disclosed in the Prospectus.📋Copy Citation

3)Where the anticipated proceeds will not be sufficient to fund all the proposed uses, the Issuer shall state the amount and sources of other funds needed.📋Copy Citation

4)The details about the use of the proceeds when proceeds are being used to acquire assets, other than in the ordinary course of business, to finance announced acquisitions of other businesses, or to discharge, reduce, or retire indebtedness shall be provided.📋Copy Citation

5)If the assets will be acquired from affiliates of the Issuer or associates, the person from whom they will be acquired and how the cost to the Issuer will be determined shall be disclosed📋Copy Citation

Article 121. Distribution and Underwriting

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1)The name and address of all relevant parties involved in the process of distributing the securities including any paid agents, Underwriters and sub-underwriters.📋Copy Citation

2)Where the Offer is underwritten, the following shall be included:📋Copy Citation
(a) Date of entry or expected entry into an Underwriting Agreement;📋Copy Citation
(b) The terms of such Underwriting including whether on a firm commitment basis or under “best efforts” arrangement;📋Copy Citation
(c) a description of the material features of the Underwriting arrangement, including the quotas and discounts or commissions payable to the Underwriter; and📋Copy Citation
(d) an indication of the overall amount of the Underwriting commission.📋Copy Citation

3)Where not all of the issuance of Securities is Underwritten, a statement of the portion, which is not covered shall be provided, in addition to the information provided under Sub Article 2 of this Article.📋Copy Citation

4)Where the Offer is not Underwritten, a clear statement to that effect shall be provided.📋Copy Citation

Article 122. Expense of the Offer

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1)The total amount of the discounts or commissions agreed upon by the Underwriters or other placement or selling agents and the Issuer shall be disclosed, as well as the percentage such commissions represent of the total amount of the offering and the amount of discounts or commissions per share or security.📋Copy Citation

2)An itemized statement of the major categories of expenses incurred in connection with the issuance and distribution of the securities to be offered or listed and by whom the expenses are payable, if other than the Issuer shall be provided. The following expenses shall be disclosed separately, as applicable:📋Copy Citation
(a) Advertisement;📋Copy Citation
(b) printing of Prospectus;📋Copy Citation
(c) application, registration and listing fees;📋Copy Citation
(d) Transaction Advisor fee;📋Copy Citation
(e) brokerage commission;📋Copy Citation
(f) financial advisory fees;📋Copy Citation
(g) legal fees;📋Copy Citation
(h) Underwriting fees; and📋Copy Citation

(i) payments to any other professional parties.📋Copy Citation

3)If any of the Securities are to be Offered for the account of a security holder, meaning where the offeror of securities is not the Issuer, the Prospectus shall indicate the portion of such expenses to be borne by such security holder.📋Copy Citation

4)If the amounts of any items are not known, estimates which are to be identified as such, shall be given.📋Copy Citation

Article 123. Professional Parties

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1)The Prospectus shall include a summary of all Professional Parties including Experts named in the Prospectus.📋Copy Citation

2)Any interest in the Issuer held by the Persons named in Sub Article 1 of this Article, shall be disclosed with details on the nature of the interest.📋Copy Citation

3)Any conflict of interest that is material to the issue or Offer of Securities shall also be disclosed.📋Copy Citation

Article 124. Risk Factors

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1)The Prospectus shall have a section titled ‘Risk Factors' wherein a description of the material risks that are specific and relevant to the Issuer and its business or industry, the Securities and the Offer.📋Copy Citation

2)The disclosure in the risk factor section should be specific and should establish a clear and direct link between the risk factor and the Issuer and its business or industry, the Securities or the Offer, as the case may be.📋Copy Citation

3)The risk factors shall be presented in a clear, focused, and concise form, and the presentation of risk factors across categories (depending on their nature) should aid investors in navigating the section.📋Copy Citation
(a) Categories should be identified through the use of appropriate headings. The number of categories must be proportionate to the size and complexity of the transaction and the risk to the Issuer and its subsidiaries or guarantor in the case of a Debt Security, where relevant. Categories should be further divided into sub-categories in cases where subcategorization can be justified on the basis of the particular Prospectus, but not if there is no obvious need for subcategories and it compromises comprehensibility.📋Copy Citation
(b) In each category, the most material risks, considering the negative impact on the Issuer, the Securities and the Offer, and the probability of such risk materializing shall be set out first followed by other risks.📋Copy Citation

4)Each risk factor shall state the material risks, with a clear indication of the materiality of the risks and the potential negative impact or implication. The disclosure shall appropriately consider the probability of the occurrence of risk disclosed and the expected magnitude of negative impact; however, materiality should not be compromised by mitigating language.📋Copy Citation

5)The disclosure of risks, including the materiality and specificity of the risk factor, shall be corroborated by the overall picture presented by the Prospectus. This means a risk factor cannot be included if it relates to matters not disclosed elsewhere in the Prospectus.📋Copy Citation

6)Inclusion of disclaimers or mitigants in the risk factor disclosures shall not be permitted.📋Copy Citation

7)The risk factors in the summary shall be consistent with the standards of disclosure and presentation of the risk factors section in a Prospectus.📋Copy Citation

Article 125. Trading Arrangements

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1)Where the relevant Securities are to be Listed, the Prospectus shall indicate the Securities Exchange and the market segment, if relevant, where the Listing is intended, and if known, the earliest dates on which it is expected to occur.📋Copy Citation

2)Where the relevant securities are not intended for Listing at the time of the Offer of Securities, the Prospectus shall specify, and the disclosure shall further specify that the dealing in the securities shall be through a Capital Market Service Provider who is duly licensed by the Authority.📋Copy Citation

Article 126. Documents Made Available to the Public

A statement where documents and information provided as part of the Registration Statement can be found shall be provided in the Prospectus.📋Copy Citation

Article 127. Applicable Articles

A Prospectus relating to Debt Securities shall be subject to all the information requirements in Sections 1 to 11 of this Chapter, except as indicated herein.📋Copy Citation

Article 128. An Issuer other than a Share Company

An Issuer of Debt Securities which is not a Share Company, shall provide information on the issuing entity in line with the general duty of disclosures.📋Copy Citation

Article 129. Summary Information for Debt Securities

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1)The summary of a Prospectus relating to a Debt Security shall be provided as set out in Article of this Directive, except as indicated herein.📋Copy Citation

2)Where the Issuer is not a share company, the summary of the key information on the Issuer shall be in accordance with Article 84 of this Directive.📋Copy Citation

3)The summary of the key information on the Debt Securities shall include:📋Copy Citation
(a) the terms of the Debt Securities including currency, denomination, and the number of Securities issued;📋Copy Citation
(b) the rights attached to the Debt Securities;📋Copy Citation
(c) where there is a guarantee attached to the Debt Securities, information about the guarantor and a brief description of the nature and scope of the guarantee;📋Copy Citation
(d) credit rating and name of credit rating agency that assigned the rating, if applicable;📋Copy Citation
(e) information on where the Debt Securities are to be traded; and📋Copy Citation
(f) the potential impact on the investment in the Debt Securities📋Copy Citation

Article 130. General Information on the Debt Securities Being Offered

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1)The Prospectus shall include a description of the type of Debt Securities being offered, including a description of the rights attached to the Securities such as conversion or exchange rights, including any limitations of those rights and procedures for the exercise of those rights.📋Copy Citation

2)The information disclosed for purposes of Sub Article (1) of this Article shall include:📋Copy Citation
(a) the legal authority pursuant to which the Debt Securities have been created, or the relevant resolutions, authorizations, and approvals by which the Debt Securities are to be issued;📋Copy Citation
(b) A description of any restrictions on the transferability of the securities; and📋Copy Citation
(c) the relative seniority of the Debt Securities in the Issuer’s capital structure in the event of insolvency, if any subordination provisions on the Debt Securities📋Copy Citation

Article 131. Terms and Conditions of the Debt Securities Being Offered

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1)The Prospectus shall state the total number of Debt Securities to be offered to the public and the expected issue date of the Debt Securities.📋Copy Citation

2)The Prospectus shall include a clear description of the following in relation to the Debt Securities being offered:📋Copy Citation
(a) the nominal interest rate;📋Copy Citation
(b) the provisions relating to interest payable;📋Copy Citation
(c) the date from which interest becomes payable;📋Copy Citation
(d) the due dates for interest;📋Copy Citation
(e) the time limit on the validity of claims to interest and repayment of principal;📋Copy Citation
(f) maturity date or if the issue matures severally, brief information on the serial maturities; and📋Copy Citation
(g) details of the arrangements for the amortization of the Debt Securities, including the repayment procedures. Where advance amortization is contemplated, on the initiative of the Issuer or of the holder, it shall be described, stipulating the amortization terms and conditions.📋Copy Citation

Article 132. Feasibility Report

Where the Debt Securities to be issued relate to a Project, a Feasibility Report prepared by an expert shall be provided to the Authority and a description of such Feasibility Report shall be included in the Prospectus.📋Copy Citation

Article 133. Applicable Articles

A Prospectus relating to an offer by a Preferred Right of Subscription shall be subject to all the information requirements in Section 1 to 11 of this Chapter, except as indicated herein.📋Copy Citation

Article 134. Securities Offered by a Preferred Right of Subscription

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1)Disclosure in the Prospectus shall address both the Preferred Right of Subscription and the new shares to be issued pursuant to the exercise of such right.📋Copy Citation

2)Disclosures for purposes of Sub Article (1) of this Article shall provide information on the price and the trading of the Preferred Right of Subscription, in addition to the new shares that are to be issued pursuant to the Offer.📋Copy Citation

3)If another Offer or issuance of Securities is concurrently undertaken with the offer by a Preferred Right of Subscription, the key terms, conditions and relevant details of such Offer or issuance shall also be included in the disclosures in the Prospectus.📋Copy Citation

4)The impact to existing shareholders of the issuance of the offer, the Preferred Right of Subscription and failure to exercise such right shall also be disclosed.📋Copy Citation

CHAPTER FIVE: ONGOING INFORMATION DISCLOSURE OBLIGATIONS

Article 135. Applicability

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1)The Issuer of the Securities which are the subject of a Public Offer or which are Publicly Held shall be required to comply with the ongoing information disclosure obligations as set out in this Directive📋Copy Citation

2)The required ongoing information disclosures consist of:📋Copy Citation
(a) Current disclosures; and📋Copy Citation
(b) Periodic disclosures.📋Copy Citation

3)Ongoing information disclosures shall be fairly presented, not be misleading or deceptive, and contain no material omission of information📋Copy Citation

Article 136. General requirements

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1)Issuers who are subject to the ongoing information disclosure requirements shall adopt systems and procedures in place for determining the information which requires disclosure pursuant to this Directive.📋Copy Citation

2)Every Public Company shall designate an officer(s) who shall ensure compliance with all requirements set out in this Directive.📋Copy Citation

Article 137. Method of Disclosure

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1)An Issuer shall make required information disclosures available to the public on its website.📋Copy Citation

2)The Issuer shall also provide required information disclosure to the Authority and the Securities Exchange where the securities are Listed.📋Copy Citation

3)The Authority may make such information disclosures available to the public on its website or may specify through a notice to Issuers and to the public how required ongoing information disclosures should be made public.📋Copy Citation

Article 138. Current Disclosure

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1)An Issuer who is subject to ongoing information disclosure requirements shall be required to provide current information to keep the public informed of the following information:-📋Copy Citation
(a) that is necessary to enable security holders and the public to appraise the position of the Issuer and its subsidiaries;📋Copy Citation
(b) that is necessary to avoid the establishment of a False Market in the securities of the Issuer; or📋Copy Citation
(c) that might reasonably be expected to have a material effect on the Issuer and all matters that affect the value of the securities.📋Copy Citation

2)The information referenced in Sub Article (1) of this Article shall be disclosed within twenty four (24) hours of the occurrence or identification of an event or information.📋Copy Citation

3)Notwithstanding Sub Article (2) of this Article, financial statements, Annual Reports, and Earnings Forecasts shall be disclosed within the time specified in Section 3 of this Chapter. Although such information may be filed earlier to satisfy other required information disclosures.📋Copy Citation

Article 139. Required Information

Required Information📋Copy Citation

1)The required current information disclosures shall address the Issuer and its subsidiaries and it shall include matters referenced in Sub Article (2) of this Article.📋Copy Citation

2)The matters which require disclosure include:📋Copy Citation
(a) Matters relating to management and corporate governance such as:📋Copy Citation

(a) (i) appointment, resignation, dismissal or death of a member of the Board of Directors or key management or personnel;📋Copy Citation

(a) (ii) changes in control or ownership of a Company;📋Copy Citation

(a) (iii) relevant information relating to significant shareholders;📋Copy Citation

(a) (iv) material modifications to rights of holders of the company’s securities; or📋Copy Citation

(a) (v) any changes to the Issuer’s Articles of Association or other governing documents;📋Copy Citation
(b) matters impacting the assets and liabilities of the Issuer and its subsidiaries such as:📋Copy Citation

(b) (i) giving or receiving a notice of intention to undertake a takeover, a merger, acquisitions, tender offers or divestments;📋Copy Citation

(b) (ii) entering the Company into a major credit commitment; or📋Copy Citation

(b) (iii) the bankruptcy or insolvency of the Company, a major creditor or client;📋Copy Citation
(c) matters pertaining to the Issuer’s business, operations and performance or expectation of performance of the business such as:📋Copy Citation

(c) (i) entry into or termination of a material contract not in the ordinary course of business;📋Copy Citation

(c) (ii) new legislation or regulations that materially impact on the business of the Issuer;📋Copy Citation

(c) (iii) findings or breakthroughs in research and development relating to the company’s products or services;📋Copy Citation

(c) (iv) significant disruptions in operations and functions of the business;📋Copy Citation

(c) (v) the bankruptcy, insolvency or receivership of a supplier or customer; or📋Copy Citation

(c) (vi) any other major development in the Issuer’s business or activities;📋Copy Citation
(d) changes in the credit arrangements of the Issuer such as;📋Copy Citation

(d) (i) default under any debt obligation;📋Copy Citation

(d) (ii) agreements to restructure debt or warnings or enforcement action by creditors or banks; or📋Copy Citation

(d) (iii) any significant changes to the Issuer’s debt position;📋Copy Citation
(e) matters pertaining to the External Auditors or financial statements of the Issuer, such as:📋Copy Citation

(e) (i) changes to the Issuer’s External Auditor and the reasons for such changes; or📋Copy Citation

(e) (ii) changes in significant accounting practices;📋Copy Citation
(f) matters pertaining to the Issuer’s capital structure and ownership, including but not limited to:📋Copy Citation

(f) (i) unregistered sales of securities by the Issuer;📋Copy Citation

(f) (ii) issuance of new securities by the Issuer or its subsidiaries;📋Copy Citation

(f) (iii) any change in the rights attaching to any class of securities, to loan terms or in the rate of interest carried by a debt security;📋Copy Citation

(f) (iv) the exercise of conversion or exchange rights of convertible debt securities; or📋Copy Citation

(f) (v) any proposed changes to the Issuer’s capital structure, including the structure of its debt securities.📋Copy Citation

3)In addition to Sub Article (2) of this Article, an Issuers of Debt Securities shall provide disclosures that include the following:📋Copy Citation
(a) an issuance of a new tranche or series of Debt Securities;📋Copy Citation
(b) any change in the terms and conditions of Debt Securities;📋Copy Citation
(c) any redemption or cancellation of Debt Securities;📋Copy Citation
(d) any occurrence of an event of default on any Debt Securities; and📋Copy Citation
(e) any event that requires immediate notification to securities holders under the terms of the debt agreement or bond indenture.📋Copy Citation

4)Relevant information required by and provided in confidence to, and for the purposes of a government department, the National Bank of Ethiopia, the Authority, or any other statutory or regulatory body need not be published but shall be reported to the Authority.📋Copy Citation

5)Where the Issuer’s securities are listed in more than one jurisdiction, the Issuer must ensure that equivalent information is released on an identical basis and simultaneously to the Authority and Securities Exchange where it is Listed.📋Copy Citation

Article 140. Filing of Financial Statements

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1)An Issuer who is required to provide ongoing information disclosures as per this Directive shall submit consolidated semi-annual financial statements and audited annual financial statements in accordance with this Directive.📋Copy Citation

2)Notwithstanding Sub Article (1) of this Article, the rules of the Securities Exchange on which the Issuer’s securities are Listed may require more frequent filing of the financial statements. Any such filing shall be made in accordance with the method of disclosure established in Article of this Directive and as required by the Securities Exchange.📋Copy Citation

3)The financial statements referenced in Sub Articles (1) and (2) of this Article, shall adhere to the Financial Reporting Standards set out in Article 42 of this Directive.📋Copy Citation

Article 141. Semi-Annual Financial Statements

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1)The semi-annual financial statements of an Issuer shall be submitted not later than 45 (forty-five) calendar days after the end of half-year (semi- annual) period of the Issuer’s financial year.📋Copy Citation

2)An Issuer shall disclose the following in the explanatory notes to the financial statements:📋Copy Citation
(a) a description of the nature and effect of any change in its accounting policies and estimates compared to the most recent annual financial statements, if applicable;📋Copy Citation
(b) explanatory comments about the seasonality or cyclicality of its business or operations;📋Copy Citation
(c) the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence;📋Copy Citation
(d) contingent liabilities or assets;📋Copy Citation
(e) any events or transactions that are material to an understanding of the current period; and📋Copy Citation
(f) any other statement the Authority may require from time to time.📋Copy Citation

Article 142. Annual Audited Financial Statement

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1)An Issuer shall submit its annual audited financial statements not later than 90 (ninety) Calendar days after the end of its financial year.📋Copy Citation

2)Issuers are required to disclose the following information in their audited financial statements:📋Copy Citation
(a) information on Directors’ direct and indirect interest in the issuer’s shares;📋Copy Citation
(b) a description of the nature and purpose of each reserve within owner's equity;📋Copy Citation
(c) when dividends have been proposed but not formally approved for payment, the amount included (or not included) in liabilities;📋Copy Citation
(d) where applicable, a report on how the proceeds from previous Public Offer of securities have been applied in line with the disclosure contained in the Prospectus on the use of proceeds until the full utilization of the offer proceeds; and📋Copy Citation
(e) any other statement the Authority may require from time to time.📋Copy Citation

Article 143. Annual Report

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1)In addition to the submission of annual audited financial statements, every Issuer is required to submit its Annual Report to the Authority not later than 4 (four) months after the end of its financial year end.📋Copy Citation

2)The Annual Report shall, at a minimum, include the following:📋Copy Citation
(a) The management discussion on the audited financial statements;📋Copy Citation
(b) the minute of the annual general meeting;📋Copy Citation
(c) a statement from the Chairman of the Board of Directors;📋Copy Citation
(d) a responsibility statement by Board of Directors;📋Copy Citation
(e) a management update as described in this Sub Article (3) of this Article;📋Copy Citation
(f) an Internal Control and corporate governance report as described in this Sub Article (4) of this Article; and📋Copy Citation
(g) any other information the Authority may require from time to time.📋Copy Citation

3)The management update referenced in Sub Article (2) (e) of this Article shall contain:📋Copy Citation
(a) the legal form of the Issuer, its country of incorporation and the main and any other business addresses;📋Copy Citation
(b) where applicable, the name of the issuer’s parent company;📋Copy Citation
(c) a fair and balanced review of the Issuer’s business including:📋Copy Citation

(c) (i) a description of the nature of the issuer's operations and its principal activities;📋Copy Citation

(c) (ii) comprehensive analysis of the development and performance of the Issuer’s business for the year-ended;📋Copy Citation

(c) (iii) a description of the issuer’s risks ; and📋Copy Citation

(c) (iv) the average number of employees during the period covered by the financial statements;📋Copy Citation
(d) information on the Issuer’s capital structure including:📋Copy Citation

(d) (i) the issued and paid-up capital, the issued but not fully paid capital, each class of share capital and their par values;📋Copy Citation

(d) (ii) details of the issuance of shares and share buybacks during the year and the reasons thereof ; and📋Copy Citation

(d) (iii) summary report of any unclaimed dividends;📋Copy Citation
(e) Ownership and interest held by members of the Board of Directors, substantial shareholders and executive management including:📋Copy Citation

(e) (i) interest and details of direct and indirect interests in the share capital of the Issuer; and📋Copy Citation

(e) (ii) Any remuneration or benefits effected;📋Copy Citation
(f) information in relation to the Issuer’s risk management arrangements including:📋Copy Citation

(f) (i) its exposure to price, credit, liquidity and cash flow risks; and📋Copy Citation

(f) (ii) its policy for hedging major risks;📋Copy Citation
(g) details of related party transactions; and📋Copy Citation
(h) any other information the Authority may require from time to time.📋Copy Citation

4)The Issuer shall provide an Internal Control report from the Board of Directors and the External Auditor in accordance with the standard it has adopted and applicable to the Issuer; or explicitly state in its Annual Report that these reports have not been provided, indicating the reasons why it has not been provided.📋Copy Citation

5)The Issuer shall provide a corporate governance report from the Board of Directors which provides information on the Issuer’s corporate governance arrangements in accordance with the standards it has adopted and applicable to the Issuer addressing matters including:📋Copy Citation
(a) the composition, functions, and responsibilities of the Board of Directors;📋Copy Citation
(b) an explanation of the committee structure adopted by the Board of Directors;📋Copy Citation
(c) the audit and internal control arrangements of the Issuer; and📋Copy Citation
(d) matters pertaining to the Issuer's code of conduct, stakeholder management, or adopted sustainability principles.📋Copy Citation

Article 144. Earnings Forecast

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1)A public company may submit an Earnings Forecast to the Authority and relevant securities exchange, twenty (20) days prior to the commencement of a financial period.📋Copy Citation

2)Where a company opts to submit its Earnings Forecast, the following shall apply:📋Copy Citation
(a) The Earnings Forecast shall be in line with the company’s adopted accounting policy.📋Copy Citation
(b) The underlying assumptions that formed the basis of the forecast shall also be disclosed; and📋Copy Citation
(c) The forecast shall be certified by the chief executive officer and chief financial officer or by officers or persons performing similar functions at the Company issuing the forecast.📋Copy Citation

3)Where the issuer becomes aware of its inability to meet the previously provided earnings forecast it shall immediately disclose to the public and notify the relevant securities exchange that the forecast will not be realized and provide the reasons for the non-realization.📋Copy Citation

CHAPTER SIX: EXEMPTION FROM REGISTRATION

Article 145. Applicability

The Issuers of Securities exempted from registration in accordance with Article 5 (1) (b) of this Directive shall comply with the provisions set out in this Section as applicable.📋Copy Citation

Article 146. Issuance Through Private Placement

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1)A Private Placement shall be conducted only through an invitation addressed to predetermined investors who shall not be more than 50 (fifty) persons, and the aggregate amount to be raised in a private placement shall not exceed Birr 100,000,000 (Birr One hundred Million).📋Copy Citation

2)The Offer or sale of securities through Private Placement shall not be advertised.📋Copy Citation

3)Securities issued through a Private Placement shall not be publicly traded except through private placement, or subsequent to registration of the securities by the Authority as set out in this Directive.📋Copy Citation

Article 147. Issuance to Qualified Investors

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1)Investors in an Offer or sale to Qualified Investors shall be limited to not more than (one hundred) Qualified Investors, unless prior approval is obtained from the Authority to exceed 100 (one hundred) Qualified Investors.📋Copy Citation

2)An Issuer relying on the Qualified Investors exemption shall clearly state in the Offer Documents that the Securities are offered only to Qualified Investors.📋Copy Citation

3)The Issuer shall be required to verify that each investor is a Qualified Investor.📋Copy Citation

4)The Issuer shall have each investor sign a statement confirming their designation as a Qualified Investor, and that they understand the implication of such designation and accept the risk associated with the relevant investment.📋Copy Citation

5)The Issuer shall keep the information and statements received from investors pursuant to Sub Article (3 and 4) of this Article for a period of 10 (Ten) years following the date of receipt.📋Copy Citation

6)Securities issued to Qualified Investors shall not be transferable except to other Qualified Investors, or subsequent to the registration of securities by the Authority as set out in this Directive.📋Copy Citation

7)The Offer or sale of securities to qualified investors could be advertised. However, such an advertisement shall only be made to qualified investors and a statement to that effect has to be included in the advertisement.📋Copy Citation

8)The advertisement prepared under Sub Article (7) of this Article shall comply with the requirements of Article 53 of this directive.📋Copy Citation

Article 148. Small Offering

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1)An offer or sale of securities shall constitute a Small Offering which is exempt from registration if the total amount to be raised by the Issuer is not more than Birr 10,000,000 (ten million).📋Copy Citation

2)A small offering shall not be advertised.📋Copy Citation

3)Securities purchased pursuant to a Small Offering exemption are restricted shares and shall not be transferable except to Qualified Investors or subsequent to registration of the securities by the Authority as set out in this Directive.📋Copy Citation

Article 149. Notification Requirements

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1)Any Issuer which undertakes an issuance of Securities relying on exemptions under Articles 146, 147, and 148 shall be required to file a notification with the Authority.📋Copy Citation

2)The notification on the Offer to be filed with the Authority under article 149 (1) shall be submitted within 10 (ten) business days of the close of an Offer and it shall clearly state the exemption upon which the Offer was made and shall be accompanied by:📋Copy Citation
(a) a copy of the Offer Document and the form used for the subscription, if applicable;📋Copy Citation
(b) a Certified extract of the resolution of shareholders and the Board of Directors that authorized the issue, if applicable;📋Copy Citation
(c) names and addresses of all subscribers to securities and the category of the investor;📋Copy Citation
(d) amount subscribed by each investor, date, and mode of payment; and📋Copy Citation
(e) total amount raised by the Issuer📋Copy Citation
(f) If the offer is made for qualified investors, the signed statement as required under article 147 (4) of this Directive.📋Copy Citation

CHAPTER SEVEN – TRADING IN SECURITIES

Article 150. Trading on Licensed Market

Dealing in Securities that are the subject of a Public Offer or that are Publicly Held shall be prohibited other than through a Licensed Securities Exchange or Over-the-Counter Market.📋Copy Citation

Article 151. Suspension and Delisting

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1)No Security shall be suspended or delisted by a Securities Exchange without the prior approval of the Authority.📋Copy Citation

2)The Authority may order the suspension or delisting of an Issuer’s Securities to protect the interests of the investors or in furtherance of its principal objectives as set out in Article 5 of the Proclamation.📋Copy Citation

3)Where a Security has been suspended or delisted the Issuer and the Securities Exchange where the Security is listed or traded shall publish such information on their respective websites.📋Copy Citation

CHAPTER EIGHT: ENFORCEMENT, ADMINISTRATIVE MEASURE AND PENALTIES

Article 152. Compliance

The Authority shall monitor and may impose administrative measures and penalties any Person for contravention of the provisions of the Proclamation, this Directive.📋Copy Citation

Article 153. Administrative Measures

The Authority shall have powers to impose any or a combination of the following administrative measures for non-compliance with or violation of any provisions of this Directive:📋Copy Citation
(a) issue a public or private warnings;📋Copy Citation
(b) impose fine;📋Copy Citation
(c) suspension or revocation of securities registration;📋Copy Citation
(d) temporary or permanent restrain to make a Public Offering;📋Copy Citation
(e) suspension or prohibition of trading;📋Copy Citation
(f) order to stop actions that violate the Directive;📋Copy Citation
(g) order for a corrective measure;📋Copy Citation
(h) blacklist Issuer, senior management, representative, promoter, or anyone responsible for violation of this Directive;📋Copy Citation

(i) or any other measure the Authority prescribes from time to time.📋Copy Citation

Article 154. Unauthorized Publication

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1)Unauthorized publications in relation to the Public Offer of securities shall be prohibited.📋Copy Citation

2)Unauthorized publications in this regard include, but are not limited to, the following:📋Copy Citation
(a) publishing a Prospectus without the approval of the Authority;📋Copy Citation
(b) publication of Advertisement relating to a Public Offer in any form including notices, posters, or any documents without the prior approval of the Authority;📋Copy Citation
(c) publishing of allotment result without approval by the Authority; or📋Copy Citation
(d) commencement of road show or distribution of preliminary Prospectus without prior approval of the Authority.📋Copy Citation

3)Depending on the circumstances and gravity of the case and by whom the violation is committed, the Authority may, in combination or separately, impose the following administrative measures as it deems appropriate:📋Copy Citation
(a) A fine of:📋Copy Citation

(a) (i) % to 25 % of the total to be paid in the agreement if it is a Transaction Advisor, and📋Copy Citation

(a) (ii) from 0.1% to 1% of the total capital raised or to be raised by the publication if it is an issuer.📋Copy Citation
(b) Other penalties may include, but is not limited to:📋Copy Citation

(b) (i) Public or private warning;📋Copy Citation

(b) (ii) Issuer or Transaction Advisor to issue publication to recall or rescind the unauthorized publication as may be required by the Authority from time to time; or📋Copy Citation

(b) (iii) cancellation of offer.📋Copy Citation

Article 155. Unauthorized Activities

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1)Unauthorized Activities in relation to the Public Offer of securities shall be prohibited.📋Copy Citation

2)Unauthorized Activities in this regard include, but are not limited to the following:📋Copy Citation
(a) public trading of unregistered securities;📋Copy Citation
(b) Listing of securities without registering the securities with the Authority;📋Copy Citation
(c) offering exempted securities in violation of the required thresholds; and📋Copy Citation
(d) issuance of Debt Securities by a Company Under Formation.📋Copy Citation

3)Depending on the circumstances and gravity of the case and by whom the violation is committed, the Authority may, in combination or separately, impose the following administrative measures as it deems appropriate:📋Copy Citation
(a) A fine of:📋Copy Citation

(a) (i) 15% to 25 % of the total to be paid in the agreement if it is a Transaction Advisor;📋Copy Citation

(a) (ii) from 10% to 20% of the total money raised or to be raised through the trading, issuing or listing if it is an issuer; and📋Copy Citation

(a) (iii) 15% to 25 % of the total gained or to be gained from the listing and trading if it is an exchange that lists unregistered securities.📋Copy Citation
(b) Other penalties may include, but are not limited to:📋Copy Citation

(b) (i) Public or private warning; and📋Copy Citation

(b) (ii) Cancellation of the offer.📋Copy Citation

Article 156. Late Filing in Relation to a Public Offer

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1)Supplementary prospectus and Reports that are required in relation to the Public Offer shall be submitted within the timeline stipulated by the provisions of this Directive.📋Copy Citation

2)Depending on the circumstance and gravity of the case and by whom the late report is filed, the Authority may, separately or in combination with other administrative measures, impose the following sanctions as it deems appropriate: a) A fine of Birr 1,000,000 (one million) – 3,000,000 (three million) if it is by the lead Transaction Advisor; or b) A fine of Birr 100,000 (one hundred thousand) if it is by other Transaction Advisors who are not named as the lead Transaction Advisor.📋Copy Citation

Article 157. Late filing of Ongoing Information Disclosures

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1)Disclosures required in relation to an Issuer’s ongoing information disclosure requirements shall be submitted within the timeline stipulated by the provision of this Directive.📋Copy Citation

2)Depending on the circumstances and gravity of the case, the Authority may, separately or in combination with other administrative measures, impose on the issuer the following sanctions as it deems appropriate:📋Copy Citation
(a) A fine of Birr 10,000 (Birr ten thousand) - 20,000 (twenty thousand), with an additional 1,000 Birr for every day of default;📋Copy Citation
(b) Public or private warning.📋Copy Citation

Article 158. Other Violations

Unless stipulated in this part, any violation of the provision of this Directive resulting in a fine shall be subject to a fine of not less than Birr 10,000 (ten thousand).📋Copy Citation

CHAPTER NINE: MISCELLANEOUS PROVISIONS

Article 159. Transitional Provision

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1)Issuers that are required, under Article 29 of this Directive, to register securities that are held by their shareholders prior to the issuance of this directive shall be required to file their application within 12 (twelve) months following the effective date of this Directive.📋Copy Citation

2)A Public Offer of Securities initiated prior to the effective date of this Directive, and which has not been completed as of the effective date of this Directive, shall be required to register the securities within 12 (twelve) months following the effective date of this Directive.📋Copy Citation

Article 160. Waiver

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1)Notwithstanding the provisions of this Directive, the Authority may provide for interim arrangements that vary from the specific provisions of this Directive.📋Copy Citation

2)Transitional provisions issued under Sub Article (1) of this Article may not provide for arrangements that impose more stringent obligations than those prescribed by this Directive.📋Copy Citation

Article 161. Inapplicable Laws

No law or customary practice inconsistent with this Directive shall have an effect with respect to matters governed by this Directive.📋Copy Citation

Article 162. Effective Date

This Directive shall come into force on the date of its registration with the Ministry of Justice and its uploading on the official website of the Authority. DONE IN ADDIS ABABA ON THE 13th DAY OF NOVEMBER HANA TEHELKU DIRECTOR GENERAL ETHIOPIAN CAPITAL MARKET AUTHORITY📋Copy Citation

Legal Documents

Public Offering and Trading of Securities Directive No 1030/2024

PREAMBLE

Article . Preamble

CHAPTER ONE – GENERAL PROVISIONS

Article 1. Short Title

Article 2. Definitions

Article 3. Scope of Application

CHAPTER TWO - REGISTRATION OF SECURITIES

Article 4. Prohibition

Article 5. Securities Exempted from Registration

Article 6. Eligibility of the Issuer

Article 7. Application Procedure

Article 8. Registration Statement Requirements

Article 9. General Requirements

Article 10. Application for Registration

Article 11. Publication of Notice of Subscription

Article 12. Waiver of Preferred Right of Subscription

Article 13. General Requirements

Article 14. Requirement of a Compliance Advisor

Article 15. Application to Register the Public Offering

Article 16. Offer Period for Companies Under Formation

Article 17. Obligation of Promoters and Founders

Article 18. Filing of Report after the Formation of the Company

Article 19. Eligibility to Issue Debt Securities

Article 20. General Requirements

Article 21. Conditions

Article 22. Credit Rating Requirements

Article 23. Registration Requirements for Debt Securities

Article 24. Other Related Requirements

Article 25. Eligibility for Shelf Registration

Article 26. Validity of a Shelf Registration

Article 27. Application for a Shelf Registration

Article 28. Publication of Shelf Prospectus

Article 29. Registration of Shares Without Concurrently Raising Capital

Article 30. Registration of Offers Not Requiring a Prospectus

Article 31. Registration Requirements for Bonus Shares

Article 32. Registration Requirement for Convertible Debt Securities

CHAPTER THREE - OFFER OF SECURITIES

Article 33. Appointment of a Transaction Advisor

Article 34. Prospectus Requirement

Article 35. Exemption from Obligation to Issue a Prospectus

Article 36. Form and Content of a Prospectus

Article 37. Incorporation by Reference

Article 38. Persons Responsible for Prospectus

Article 39. Expert Statement in a Prospectus

Article 40. Omission from Prospectus

Article 41. Amendment to the Prospectus Prior to Approval

Article 42. Financial Reporting Requirements

Article 43. Equity Valuation Report

Article 44. External Independent Legal Opinion

Article 45. Review of registration statement

Article 46. Timeline and Processing of Application

Article 47. Approval of Registration Statement

Article 48. Certificate of Registration of Securities

Article 49. Registration with the Central Securities Depository

Article 50. Rejection or Refusal of Registration Statement

Article 51. Access to Documents Submitted in a Registration Statement

Article 52. Publication of a Prospectus

Article 53. Advertisement

Article 54. Underwriting of Public Offers

Article 55. Underwriting Commission

Article 56. Effective Date of Prospectus

Article 57. Offer Period

Article 58. Material Changes to Prospectus

Article 59. Withdrawal Rights

Article 60. Authority’s Power to Suspend or Cancel Offer

Article 61. Under-Subscription

Article 62. Over-Subscription

Article 63. Notice of Completion or Termination of an Offer

Article 64. Document Retention Obligation

Article 65. Condition for Approval of Subsequent Public Offers

Article 66. General

Article 67. Preliminary Prospectus

Article 68. Book Runner

Article 69. Book Building Process and Book Runner Responsibilities

Article 70. Allotment of Securities Offered in the Book Building Process

Article 71. Updated Prospectus

Article 72. Offer for the Fixed Price Portion

Article 73. Allotment Principles and Requirements