Manner of Equity Investment by Foreign Nationals of Ethiopian Origin and Organizations in Payment Instrument Issuance & Payment System Operator (Directive No. 860/2021)
Summary
This directive outlines the procedures and conditions for equity investment by Foreign Nationals of Ethiopian Origin and Organizations in Payment Instrument Issuance and Payment System Operator businesses in Ethiopia. It specifies rules for share subscription, payment methods, location of transactions, and reporting requirements.
Who's affected
Foreign nationals of Ethiopian origin and organizations seeking to invest in Ethiopian payment instrument issuance and payment system operator businesses, as well as existing and prospective companies in these sectors.
Action required
Foreign nationals of Ethiopian origin or organizations intending to invest must ensure all share subscriptions and payments are made in acceptable foreign currency through the banking system within Ethiopia, adhering to the specific procedures outlined in the directive. Companies must develop and implement policies for handling such investments and submit required reports to the National Bank of Ethiopia.
Key points
6- Foreign investment in payment instrument issuance and payment system operator businesses is permitted for Foreign Nationals of Ethiopian Origin and Organizations.
- All share subscription activities must occur within Ethiopia.
- Investments must be paid for using acceptable foreign currency through the banking system.
- A 30% surrender of collected foreign currency to the National Bank is required.
- Dividends are paid in Birr and are non-repatriable but can be reinvested.
- Specific reporting obligations are in place for companies involved in these investments.
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Requirements
7- All share subscriptions must take place within Ethiopia.
- Payments for shares must be made in acceptable foreign currency through the banking system.
- Companies must submit written applications to open foreign currency escrow accounts for share payments.
- 30% of foreign currency collected from share subscriptions must be surrendered to the National Bank.
- Companies must develop comprehensive policies and procedures for handling share subscriptions by foreign investors.
- Companies must report share subscription details to the National Bank quarterly.
- Investors must hold valid identification and nationality documents.
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Rights and permissions
3- Foreign Nationals of Ethiopian Origin or Organizations are allowed to invest in payment instrument issuance and payment system operator businesses.
- Dividends earned from investments in other sectors, eligible for repatriation, can be used for share purchases in these businesses.
- Shares can be transferred from Ethiopian Nationals to Foreign Nationals of Ethiopian Origin through succession.
Restrictions
4- Share subscriptions must occur within the geographical territory of Ethiopia.
- Shares cannot be acquired through donation.
- Transfers via foreign payment cards, cash (declared or undeclared), or certain international money transfer organizations are not allowed.
- Dividends earned from these investments shall be paid in Ethiopian Birr and cannot be repatriated.
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Objectives
3- To establish an implementation modality for equity investment by Foreign Nationals of Ethiopian Origin and Organizations in the payment instrument issuance and payment system operator businesses.
- To regulate the process of share subscription, payment, and transfer for these investments.
- To ensure compliance with foreign exchange regulations and reporting requirements.
Organizations
1- National Bank of Ethiopia
Legal references
5- National Payment System Proclamation No.718/2011 (Article 4/2a, Article 37/2)
- Banking Business (as amended) Proclamation no.1159/2019 (Articles 9 (1&2), 58)
- National Bank of Ethiopia Establishment (as Amended) Proclamation No. 591/2008 (Articles 20 (2), 27 (2))
- Proclamation No. 270/2012 (for identification of Foreign National of Ethiopian Origin)
- Foreign Exchange Surrender Requirements of Banks (as amended) Directives No. FXD/54/2018