Overview of corporate governance in Ethiopia: The role, composition and remuneration of boards of directors in share companies
AbstractGood corporate governance is an important pillar of the market economy and it enhances investor confidence. A strong and balanced board of directors is necessary as a supervising body for the executive management of a company with dispersed ownership. The Ethiopian company law does not have adequate legislative provisions on governance issues related to the separation of supervision and management responsibilities, and on the composition, independence and remuneration of board of directors in share companies. Besides, the draft Commercial Code has not yet been finalized. This article critically examines Ethiopia’s company law with specific reference to the powers, composition and remuneration of board of directors in light of internationally recognized best practices and principles of corporate governance. It argues that there is a need to distinguish between corporate governance and corporate management in Ethiopian company law, and that the board should be suitably composed of non-executive and truly independent members who should be professionally competent. Furthermore, directors’ remuneration should be incentive-oriented based on company and individual
best performance, subject to the caveat against excessive amounts of
remuneration that go beyond the achievement of this purpose.
a) Copyright of the content of the articles shall be retained by the author subject to the condition that it cannot be republished in another journal. The reproduction of the article as book chapter requires the acknowledgement of its prior publication in Mizan Law Review.
b) An author is entitled to deposit her/his published article in any Open Access repository subject to the condition that the format and layout shall not be changed. Depositing a post-publication version in any repository requires acknowledgement of the earlier version by indicating the Volume, Issue and page numbers of the version published in Mizan Law Review.
c) Articles published in Mizan Law Review are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs (CC BY-NC-ND)
a) Where the Editorial Team deems it necessary, the editors may remove precise reference to names of individuals in case comments.
b) The names and email addresses submitted to and published in Mizan Law Review shall not be made available for any other purpose or to any other party.
Opinions expressed in articles, comments, case comments and sharing thoughts do not necessarily reflect the views of the Editorial Team, or the publisher of the journal, i.e., Center for Law in Sustainable Development, St. Mary’s University.