Nature of Procedure (2005)

Procedure

Duration (days)

US$ Cost

Check the company name

1

1

0.00

The applicants submit document for authentication

2

3

0.00

Sign the documents

3

1

42.13

Register with the Commercial Registry

4

20

9.04

Obtain a business license

5

2

9.21

Make a company seal

6

3

11.23

Register with the Inland Revenue Authority

7

2

0.00

Totals:

7

32

$71.61

Procedure 1.  Check the company name for uniqueness

Time to complete: 1 day

Cost to complete: no charge

Comment:            Evidence of capital deposit is not required for private limited companies. However, the Memorandum of Association should show that the capital is fully paid in cash or in kind. For this, the normal practice is to open a blocked account in the name of the company in a local bank and upon registration such presented to the Registrar of Companies. In practice, as long as the MA indicates that the capital is fully paid demonstration of actual payment is not insisted.

Procedure 2.  Applicants submit document to Acts and Documents Registration
 Department, City Administration of Addis Ababa for authentication

Time to complete: 3 days

Cost to complete: no charge

Comment:           The main function of the department is to act as notary public. In the past the authentication and registration of documents was carried out in one office but this task has recently been devolved to the 10 subdivisions of the City Administration. The applicants submit in triplicate the Memorandum and Articles of Association and the department usually takes 3 days to examine the document.

Procedure 3.  Sign the Memorandum and Articles of Association in front of an  
 officer and pay the stamp duty

Time to complete: 1 day

Cost to complete: Birr 375

Comment:           The applicants appear in person at the appointed date, with an original copy of their letter of appointment (power of attorney) and a valid identity card. Various officers check the validity of the documents, the authenticity of the signatures and the genuineness of the ID's. The Memorandum and Articles of Association is ready for signature and while the applicants do so in front of an officer, stamp duty worth Birr 350 is affixed on the original, and a Birr 5 stamp duty on the other copies.

Procedure 4.  Register the memorandum and articles of association in the
 Commercial Register at the Ministry of Trade and Industry

Time to complete: 20 days

Cost to complete: Birr 80 + Birr0.5 for the certificate of registration

Comment:           The fees depends on the company's registered capital, i.e. if the company has a registered capital of Birr 15,000 then the registration fee would be Birr 15, licensing fee would be Birr 35, forms & cards would be Birr 12 and stamps would be Birr 10; however, if the company's registered capital is Birr 200,000 the registration fee would be Birr 100, licensing would be Birr 200 but the costs of forms and cards and stamps would remain the same Birr 12 and 10, respectively.

Reforms in the civil service are being implemented in several government departments, including the Ministry of Trade and Industry. As a result, the efficiency is being improved.

Procedure 5.  Obtain a Business License with the Ministry of Trade and Industry

Time to complete: 2 days in all documents are in place

Cost to complete: Birr 80 +Birr 2 for the form

Procedure 6.  Make a company seal

Time to complete: 3 days

Cost to complete: Birr 100

Comment:            Having a seal is not obligatory, but is in practice required.

Procedure 7.  Register with the Inland Revenue Authority for income tax and
 withholding tax for employees

Time to complete: 2 days

Cost to complete: no charge

Comment:           A newly established firm needs to register for income tax purposes, payable at the end of the fiscal year of the company including municipal and license renewal fees, as well as withholding taxes on their employees.