Directive No. SBB/47/2010 on Time Limit for Reduction and/or Relinquishing Shareholdings

LICENSING AND SUPERVISION OF BANKING BUSINESS TIME LIMIT FOR REDUCTION AND/OR RELINQUISHING SHAREHOLDINGS DIRECTIVE No. SBB /47/ 2010 WHEREAS, the Proclamation prohibits: 1) any person other than the Federal Government of Ethiopia to hold more than 5% of subscribed capital in a bank, and 2) any influential shareholder of a bank to hold shares in any other bank; WHEREAS, it is necessary to issue this directive for the implementation of the Proclamation; NOW, THEREFORE, the National Bank of Ethiopia has issued this directive in accordance with powers vested in it by articles 11(6) and 59(2) of the Proclamation.

1. Short Title This directive may be cited as “time limit for reduction and/or relinquishing shareholding No. SBB/47/2010.”
2. Definition

In this directive, unless the context requires other wise:

1. “bank” means a company licensed by the National Bank of Ethiopia to undertake banking business;
2. “influential shareholder” means a person who holds directly or indirectly two percent or more of the total subscribed capital of a bank;
3. “person” means any natural or juridical person;
4. “Proclamation” means Banking Business Proclamation No. 592/2008; and
5. provisions of this directive set out in the masculine gender shall also apply to the feminine gender.

3. Time Limit for Reduction of Excess Shares Within 36 months from the effective date of this directive, a person who:

1. holds shares in a bank, either on his own or jointly with his spouse or with a person who is below the age of 18 years and related to him by consanguinity to the first degree, in excess of 5% of total subscribed capital of the bank shall reduce such holding to 5% or less;
2. is influential shareholder in a bank shall relinquish his share holdings in another bank.

4. Penalty A person who fails to comply with the provisions of this directive shall be penalized in accordance with article 58(7) of Proclamation number 592/2008.

5. Effective Date This Directive shall enter into force as of 16th day of August 2010.