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Manner of Relinquishing Shareholdings of Foreign Nationals of Ethiopian Origin in a Bank or an Insurer (Directive No. 194/2021)

National Bank Of Ethiopia194/2021

Summary

This directive outlines the procedures for foreign nationals of Ethiopian origin to relinquish their shareholdings in Ethiopian banks and insurance companies. It specifies the timeline for surrendering shares, the valuation method (par value), dividend payments, and the process for selling the relinquished shares through public auction. The directive also details reporting requirements for financial institutions to the National Bank of Ethiopia.

Who's affected

Foreign nationals of Ethiopian origin holding shares in privately owned Ethiopian banks and insurers, and the banks and insurers themselves.

Action required

Foreign nationals of Ethiopian origin who hold shares in Ethiopian banks or insurers must surrender their share certificates to the issuing institution at par value within 60 calendar days from the first notice publication, and banks/insurers must facilitate this process and sell the shares.

Key points

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  • Directive No. 194/2021 addresses the relinquishment of shareholdings by foreign nationals of Ethiopian origin in Ethiopian banks and insurers.
  • Shareholders must surrender shares at par value within 60 days of notice.
  • Dividends are payable only until June 30, 2016.
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    • Relinquished shares will be sold via public auction at not less than par value.
    • Banks and insurers must report extensively to the National Bank of Ethiopia.
    • The directive is effective from October 28, 2016.

Requirements

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  • Banks and insurers must publish notices weekly for four consecutive weeks, requesting shareholders of foreign national of Ethiopian origin to collect their investment by surrendering shares at par value.
  • Shareholders of foreign national of Ethiopian origin must surrender their shareholding at par value by submitting share certificates within 60 calendar days from the first notice appearance.
  • Banks and insurers must pay the par value of shares upon receiving share certificates.
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    • Shares not surrendered with certificates after the deadline are deemed surrendered.
    • The par value of all relinquished shares must be transferred to a specific account within two working days after the surrender deadline.
    • Banks and insurers must sell the relinquished shares through open public auction within 60 calendar days after their transfer to the resale account, ensuring the selling price is not less than par value.
    • Banks and insurers must open a temporary asset account titled 'shares for resale' for each person who surrendered shares or whose shares were cancelled.
    • Banks and insurers must report on dividends paid, shares relinquished, amounts debited, and funds transferred to the National Bank within five working days after the sales process is completed.
    • Banks and insurers must pay dividends to shareholders of foreign national of Ethiopian origin only until June 30, 2016.
    • Dividends accrued after June 30, 2016, shall be paid to the Ministry of Finance and Economic Cooperation's Central Treasury account.
    • Banks and insurers must notify the public about cancelled shares if not surrendered after the deadline.

Rights and permissions

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  • Foreign nationals of Ethiopian origin have the right to receive the par value of their shares upon surrender.
  • Foreign nationals of Ethiopian origin have the right to collect the par value of shares and accrued dividends (until June 30, 2016) even if their shares were cancelled after the deadline.
  • Banks and insurers have the right to sell relinquished shares through open public auction.
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    • The Ministry of Finance and Economic Cooperation has the right to receive dividends accrued after June 30, 2016, and funds from the sale of shares exceeding par value.

Restrictions

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  • Non-Ethiopian citizens are prohibited from investing in Ethiopian financial institutions.
  • No dividend shall be paid to foreign national of Ethiopian origin shareholders after June 30, 2016.
  • The selling price of shares through open auction shall not be less than their par value.
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    • Shareholders who intentionally disguise their change of Ethiopian nationality may not be entitled to receive par value reimbursement and accrued dividends.
    • Foreign nationals of Ethiopian origin must surrender shares at par value, not at market value.

Penalties

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  • A shareholder of foreign national of Ethiopian origin who intentionally disguises the change of his Ethiopian nationality may not be entitled to receive the par value reimbursement of his share(s) and the dividend accrued there from.
  • Banks and insurers that become aware of intentional disguising efforts by a shareholder must report the fact to the National Bank within five working days with all appropriate evidences.

Objectives

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  • To implement the government's decision to relinquish shares held by foreign nationals of Ethiopian origin in banks and insurers.
  • To ensure that shares held by foreign nationals of Ethiopian origin are relinquished at par value.
  • To establish a clear process for banks and insurers to manage the relinquishment and subsequent sale of these shares.
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    • To account for dividends on these shares until June 30, 2016.
    • To transfer proceeds from the sale of shares to the Ministry of Finance and Economic Cooperation.

Organizations

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  • National Bank of Ethiopia
  • Ministry of Finance and Economic Cooperation

Legal references

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  • Banking Business Proclamation No. 592/2008
  • Insurance Business Proclamation No. 746/2012
Original sourcehttps://justice.gov.et/en/directives/manner-of-relinquishing-shareholdings-of-foreign-nationals-of-ethiopian-origin-in-a-bank-or-an-insurer-directive-no-194-2021/
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