Regulation of Directors Non-Competition Obligation under Ethiopia Commercial Code: A Lesson from Turkish Legal Experiences

Abstract

Ethiopia Commercial Code (ECC) obligated the directors to do activities that bolstered corporate economic activities. It also prohibited corporate directors not to do activities that infringe the interest of companies such as not to compete against their companies while also retaining the directorships chair. Unlike the Turkish legal framework that tried to include important insiders under the scope of non-competition obligation, ECC only prohibited corporate directors not to compete against the company’s business transaction without general assembly approval. Except Corporate directors and general partner, managers of private limited companies, and other remaining partners of business organization are not also under obligation of non-competition. The scope of the business activities prohibited by the Turkish Commercial code is also clearly comprehensible and clear enough to delineate the boundaries of transactions far more than ECC. Additionally, the given legal remedies for breach of the non-competition obligation under ECC and Turkish Commercial Code are different in terms of the option, procedural easiness to execute, offered legal countermeasures, and building investor trust on corporate governance system. This work is intended to grasp helpful experiences of the Turkish legal system regulation of the non-competition obligation of corporate management for Ethiopia legislative further consideration.

Keywords: Director, Non-competition Obligation, Corporate Activities, Scope, Remedies.

DOI: 10.7176/JLPG/101-04

Publication date:September 30^th 2020