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Directive on the Merger, Division, Conversion and Dissolution of Organizations (Directive No. 936/2022)

Authority for Civil Society Organizations936/2022

Summary

This directive outlines the procedures for the merger, division, conversion, and dissolution of Civil Society Organizations (CSOs) in Ethiopia, as mandated by Proclamation No. 1113/2019. It details the requirements for each process, including registration, documentation, and the transfer of rights and obligations.

Who's affected

Civil Society Organizations operating in Ethiopia.

Action required

Civil Society Organizations must review and comply with the specified procedures for merger, division, conversion, or dissolution.

Key points

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  • This directive governs the merger, division, conversion, and dissolution of Civil Society Organizations.
  • Specific documentation is required for each process.
  • The interests of creditors and employees are considered during these changes.
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    • Public notification is mandatory for decisions on merger, division, or conversion.
    • Dissolution procedures include asset inspection, debt payment, and asset transfer.
    • The Authority for Civil Society Organizations oversees these processes.
    • The directive provides for transitional arrangements for ongoing processes.

Requirements

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  • Submission of specific documents for registration after merger, division, or conversion.
  • Merger agreements must be made with the decision of the governing body.
  • Division decisions require the consent of creditors if the organization is unable to fulfill its obligations.
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    • Organizations undergoing merger, division, or conversion must inform the public through media and their website.
    • Dissolved organizations must notify the Authority and submit operational and financial reports.
    • Dissolved organizations must pay their legal debts and transfer remaining assets as per bylaws or Authority decision.
    • Merger, division, or conversion processes initiated before this directive are to be handled as initiated.

Rights and permissions

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  • Organizations may merge under a new name or the name of one of the merging organizations.
  • An organization may be divided into two or more organizations by the decision of its governing body.
  • An organization may be transformed into another type of organization.
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    • In case of division, each new organization is an equal participant in the obligations and rights of the previous organization.
    • The existence of the former organization ends when the new organizations are issued a certificate of registration.
    • With full agreement, one of the new organizations may continue with the name of the previous organization.
    • The property of a dissolved organization is inspected under the responsibility of an auditor appointed by the Authority.
    • When an organization is dissolved, it shall pay its legal debt and the remaining property shall be transferred as per bylaws or Authority decision.
    • Investors in a charitable organization established for a specific period have the right to mortgage the property upon dissolution.

Restrictions

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  • Mergers involving foreign and local companies must adhere to specific conditions for conversion.
  • Debts transferred to a merged company cannot prejudice the rights of creditors.
  • Invoices used by companies before merger, division, or conversion cannot be used for more than 30 working days after the change.
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    • Dissolution due to non-reporting requires confirmation of existence within 30 days after public notice.
    • Dissolution due to violation of laws requires non-remedial action and a waiting period before board decision.
    • Dissolution due to deception or fraud requires verification by the Authority.
    • Dissolution due to criminal acts or inability to pay debts requires a court decision.
    • A dissolved organization must notify the Authority of its decision within fifteen days.

Objectives

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  • To ensure that the merger, division, and transformation of organizations achieve better benefits for society.
  • To protect the interests of users during organizational changes.
  • To provide a clear framework for the merger, division, conversion, and dissolution of CSOs.
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    • To ensure proper registration and accountability of CSOs undergoing these changes.

Organizations

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  • Federal Democratic Republic of Ethiopia Authority for Civil Society Organizations
  • Federal Ministry of Justice

Legal references

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  • Civil Society Organizations Proclamation No. 1113/2019
  • Article 80 of Civil Society Organizations Proclamation No. 1113/2019
  • Articles 81 and 82 of Civil Society Organizations Proclamation No. 1113/2019
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    • Article 83 and 84 of Civil Society Organizations Proclamation No. 1113/2019
    • Article 89(2) of Civil Society Organizations Proclamation No. 1113/2019
    • Article 2(1) of Civil Society Organizations Proclamation No. 1113/2019
    • Article 4 of Civil Society Organizations Proclamation No. 1113/2019
    • Decree No. 1263/2014
    • Article 70 of Civil Society Organizations Proclamation No. 1113/2019
    • Article 78 of Civil Society Organizations Proclamation No. 1113/2019
    • Article 59(7) of Civil Society Organizations Proclamation No. 1113/2019
    • Article 84 of Civil Society Organizations Proclamation No. 1113/2019
    • Article 45 of Civil Society Organizations Proclamation No. 1113/2019
Original sourcehttps://justice.gov.et/en/directives/directive-on-the-merger-division-conversion-and-dissolution-of-organizations-directive-no-936-2022/
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