Examining the regulatory frameworks of corporate selfdealing transactions under the share company law of Ethiopia: with particular reference to financial sectors

Abstract

It is obvious that the problems of self-dealings or insider dealings that occurred often in the transactions of companies can create uncountable barriers on the overall development of the company itself and on other stakeholders’ interests in general as it essentially divert the asset of the company to the opportunistic self-dealers. However, it is hardly possible to get sufficient scholarly writings and detail provisions to solve the matters in share company laws of different countries especially in our country Ethiopia. The available literature mainly deal with the corporate governance in general leaving aside the issues of corporate self-dealing transactions. This shows us that the subject matter of self-dealing transactions receives lesser attentions despite the potential dangers that it will create. Besides, the Ethiopian share company law has no sufficient provisions to control corporate selfdealing transactions. There is only two articles which deals specifically with the concept of selfdealing without defining what it really mean self-dealing and what constitutes the acts of selfdealing transactions. Moreover, the articles regulate only directors, though not sufficiently, on how to engage in acts of self-dealing leaving other actors who can engage in acts of self-dealing and manipulate the asset of the companies. A close looking of international scholarly writings shows however that there are a lot of persons including the close relatives of the Directors, the managers of the company who are in the charge of day to day activities of the company and their relatives, the majority shareholders who owns the capacity to influence the decisions of the directors and managers, different officers of the company including accountants and legal advisers and other persons that has the opportunity to engage in the acts of the self-dealing transactions has to be regulated. Furthermore, the share company law provisions do not answer the necessary mechanisms for stakeholders including minority shareholders to challenge the abusive self-dealing transactions that would be committed by opportunistic self-dealers and to get adequate remedies by subjecting them to relevant applicable law which shows us that the Ethiopian share company law has failed to solve the aforementioned problems. Generally therefore, this thesis tries to explore some issues with regard to these and other gabs in the law and literatures.