Emerging Separation of Ownership and Control in Ethiopian Share Companies: Legal and Policy Implications

Abstract

Ownership and control are often concurring attributes in the ordinary situation of property ownership. In the context of publicly held companies, a phenomenon occurs whereby the persons who own the company are precluded from controlling it. The reason for this is that as the number of shareholders rises, control is delegated to managers, and shareholders are limited to ineffective control via shareholder general meetings. This article posits that the separation between ownership and control is growing in Ethiopia, and submits some empirical evidence in support of this claim. Relying on the data and literature on corporate governance, the article attempts to show the deficiency of the Commercial Code in protecting the rights of minority shareholders in the context of such publicly held companies. Key words: Corporate governance, corporate control, minority shareholder rights, ownership & control, share companies