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MODEL ARTICLES OF ASSOCIATION OF A SHARE COMPANY

This Articles of Association, which form part of the Memorandum of

Association, shall govern the operations of the Company.

ARTICLE 1
RIGHTS AND OBLIGATIONS OF SHAREHOLDERS

Each Shareholder has the right to:

a) participate in all meetings of the shareholders and to vote in

proportion to the number of shares held by him;

b) participate in the annual net profits and to share in net

proceeds on a winding-up in proportion to his shares;

c) compete to the position of Director in the Company;

d) have a copy of the decisions of Shareholders Meetings;

e) have priority right in case there is an increase of capital or

when there is transfer of shares;

f) inspect and to copy the inventory, the balance sheet and the
auditors' report;

g) enjoy all other rights granted by the appropriate law, the

Memorandum of Association and this Articles of Association.

ARTICLE 2
TRANSFER OF SHARES

1. A transfer of share outside the company shall be approved by a

______ vote of the shareholders.

2. The Company or the remaining shareholders shall have right of pre-

emption to buy the share of the member who is selling his share in
the Company.

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ARTICLE 3
JOINT OWNERSHIP OF SHARES AND PLEDGE

1. Where several persons hold shares jointly, they shall appoint a

representative to exercise the Shareholder’s rights. They shall
register the name and address of the representative in the shares
register of the Company. The Company shall send all notices and
declarations to this representative.

2. Where a share is pledged or subject to a usufruct, the right to vote

at meetings shall, unless otherwise agreed, be exercised by the
plegdee or the usufructuary.

ARTICLE 4
REGISTER OF SHAREHOLDERS

1. The Company shall keep at its head office a register of

Shareholders. The General Manager shall make sure that the
register contains the details required by the relevant law, the
Memorandum of Association and the Articles of Association.

2. The General Manager shall, within 30 days of finding out that there
is an error, make corrections on the information stated in the
register.

3. The register may be inspected by any shareholder without charge;

it may also be inspected by any other person upon payment of the
prescribed fee. The Board of Directors shall decide the fee to be
paid for inspection and/or taking a copy of documents.

ARTICLE 5
SHAREHOLDERS WITH UNPAID CAPITAL

1. Shareholders who have not paid on time the subscribed capital of

the Company shall pay 9% interest on the unpaid amount.

2. The Company shall notify in writing a shareholder who has not paid
the subscribed capital of his share on time. If the shareholder does
not make all the payments due on him within _________ days from
the receipt of the notification, the Company may sell the share of
that shareholder with an auction.

ARTICLE 6
MEETINGS

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1. Unless the Board of Directors decides otherwise, the General

Meeting of Shareholders shall be held once in a year at the Head
office of the Company in the first month of the financial year. But
extraordinary meetings may be called at any time.

2. Notice calling the Ordinary or Extraordinary Meeting of a first

meeting shall be 15 days (fifteen days) and for a second and
subsequent meeting called for lack of quorum at the first meeting
shall be 8 days (eight days), irrespective of the mode of calling.

3. Notices of meetings shall contain the Company’s name, the nature,

capital and head office of the Company and the place where and the
time within which bearer shares (if any) are to be deposited.

ARTICLE 7
CALLING MEETINGS

1. General Meetings are called by the Directors, the auditors, the

liquidator or where appropriate by an officer of the court.

2. Notices calling meetings shall be published in a newspaper

authorized to publish legal notices and circulating in the area where
the head office is situated or, where all the Shareholders are
registered; they shall be notified by registered letter sent to the
address of each Shareholder.

ARTICLE 8
SECRETARY

The Board of Directors shall appoint a secretary who is going to

prepare and distribute attendance list, and write the minutes of the
meetings.

ARTICLE 9
ATTENDANCE ON MEETINGS AND MINUTES

1. The Secretary shall keep an attendance sheet for each meeting

containing the names of Shareholders present or represented by
proxy and the number of shares and votes held by each
Shareholder and Shareholders not present as per Article 403 of the
Commercial Code.

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2. The Secretary shall reduce the discussion at the meeting to minutes

entered in a minute book and shall include the details stated under
Article 411 of the Commercial Code.

ARTICLE 10
PROXY

A shareholder may nominate one proxy only to attend meetings.

Where a shareholder has appointed a proxy, he may not vote in
person.

ARTICLE 11
AGENDA

1. The Agenda shall be sent to shareholders together with the notices

calling the meeting.

2. Unless otherwise provided, only items on the agenda may be

discussed. However, the meeting may at anytime revoke the
appointment of Directors and appointment of new Directors in their
place.

ARTICLE 12
MAJORITY AND QUORUM IN ORDINARY GENERAL MEETINGS

1. When first called, General Meetings shall be composed of that

number of shareholders which represent either in person or by
proxy at least one-quarter of the voting shares.

2. When called for a second time, the meeting may be held and
discussions made without regard to the number of voting shares
represented.

3. Decisions shall be taken by a simple majority, abstentions and

blank ballots (if any) being disregarded.

ARTICLE 13
APPOINTMENT OF DIRECTORS

1. Without prejudice to the right to be re-elected, Directors shall be

appointed for a term of three years.

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2. When, during a financial year, one or more directors have left the
Board, the provisions of Article 351 of the Commercial Code shall
apply.

ARTICLE 14
POWERS AND DUTIES OF BOARD OF DIRECTORS

1. The Board of Directors shall have the powers and duties stated in
the Memorandum of Association, Articles of Association and the
Commercial Code.

2. The Board of Directors shall have, in particular, the following

powers and duties:

a) Manage the Affairs of the Company;

b) Implement the decisions of the General Meeting of
Shareholders;
c) Appoint the General Manager of the Company;
d) Employ and dismiss workers of the Company, determine their
salaries, bonus and other conditions attached to employment
and termination;
e) Own and dispose of movables and immovable properties of
the Company as per the decision of the General Meeting of
Shareholders;
f) Decide whether to open branches in Ethiopia;
g) Prepare amendment to these Memorandum of Association and
Articles of Association of the Company and submit the same
for the approval of the General Meeting of Shareholders;
h) develop other ideas that the Board thinks important to
enhance the activities of the Company and propose them to
the General Meeting of Shareholders for approval;
i) Exercise other powers and duties related to the
aforementioned.

ARTICLE 15
REGISTER OF DIRECTORS AND SHARES HELD BY DIRECTORS

1. The Company shall keep at its head office a register of its Directors
and managers with particulars as to their civil status, profession,
and any directorship held in other companies and where the
director is a company, the name of the company and the address of
the head office.

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2. The Company shall keep at its head office a register showing the
number and value of shares held by each director in the Company,
in subsidiary companies or in any holding company of which the
Company is a subsidiary.

ARTICLE 16
MEETINGS OF BOARD OF DIRECTORS

Unless otherwise agreed, the meeting of the Board of Directors shall

be held within ____ days of every month in the head office of the
Company.

ARTICLE 17
LIABILITY OF DIRECTORS

1. Directors shall be responsible for exercising the duties imposed on

them by law, the memorandum of Association or this Articles of
Association and resolution of meetings, with the care due from an
agent.

2. Directors shall be jointly and severally liable to the Company for

damage caused by failure to carry out their duties.

3. Directors who are jointly and severally liable shall have a general
duty to act with due care in relation to the General Management.

4. Directors shall be jointly and severally liable when they fail to take
all steps within their power to prevent or to mitigate acts prejudicial
to the Company which is with in their knowledge.

ARTICLE 18
MANAGEMENT OF THE COMPANY

1. The Board of Directors shall appoint a General Manager.

2. The General manager shall have the following powers and duties to
achieve the purpose and goals of the Company:

a) implement the decisions of the Board of Directors;

b) manage, control and follow up the overall activities of
the Company;
c) prepare the annual financial reports of the Company
and submit the same to the Board as per the
Memorandum of Association of the Company;

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d) open, manage and control branch offices of the

Company;
e) employ, promote, and manage employees of the
Company, decide on their salary and conditions of work,
and recommend nominees for the position of Assistant
General Managers for appointment by the Board;
f) take disciplinary measures on employees as per this
Articles of Association and the relevant labour laws of
the country;
g) approve expenditures of the Company based on the
decisions of the Board of Directors;
h) take other necessary actions related to the powers and
duties given above.

ARTICLE 19
AUDITORS

1. The General meeting of the Company shall elect one or more

auditors and one or more assistant auditors.

2. Shareholders representing not less than 20% of the capital may

appoint an auditor selected by them.

3. Where there are more than one auditors, they may exercise their
duties jointly or separately.

4. Without prejudice to the Provisions of Article 374 of the Commercial

Code, the Auditor/Auditors shall have the following powers and
duties:

a) Inspect the documents of the Company;

b) Check the report of the Board of Directors;
c) Participate in the General Meeting of Shareholders and
other meetings;
d) Inspect documents and minutes that he thinks
necessary for the performance of its actions
e) Perform other duties;

ARTICLE 20
LEGAL RESERVE OF THE COMPANY

Five percent (5%) of the net profit shall be transferred to the

reserve fund every year until it amounts 20% of the capital as laid
down in the Commercial Code of Ethiopia.

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ARTICLE 21
ACCOUNT OF THE COMPANY

1. At the end of each financial year, the directors shall prepare a

detailed inventory and valuation of assets and liabilities.

2. They shall draw up a balance sheet and a profit and loss account
and prepare report on the state of the Company’s activities and
affairs during the last financial year.

ARTICLE 22
FINANCIAL YEAR

3. The financial year of the Company starts at July 7(Hamle 1 E.C) and
ends at July 7 (Sene 30 E.C).

ARTICLE 23
DISTRIBUTION OF PROFIT AND LOSS

1. Distribution of profit shall be effected after transfer to the legal

reserve.

2. Unless the Shareholders agree otherwise, the annual profit of the

Company shall be distributed among the shareholders proportional
to the number of their shares. Accordingly, if there is a loss, it shall
be distributed among themselves. In any case the shareholders
shall not be made liable beyond the value of their shares in the
Company.
ARTICLE 24
Dispute Resolution

1. Any dispute which may arise between partners/share holders

shall, if possible, be settled amicably.
2. If any such dispute cannot be settled amicably within two
months following the date on which the dispute has been raised
by the partner through written notification to the other partner,
it shall at the request of either parties, be submitted to an
arbitration tribunal for resolution, without prejudice to the
parties right to submit a dispute to a competent federal court of
Ethiopia, to one of the following fora:

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a. A competent arbitration institute registered in Ethiopia

(like the Addis Ababa Chamber of Commerce and Sectoral
Associations Arbitration Institute, Ethiopian Conciliation
and Arbitration Center); and
b. An ad-hoc tribunal of arbitration to be set up by the
consent of the disputing parties.
3. Any arbitral award rendered pursuant to this Article shall be
binding on the parties to the dispute.
4. If the parties to the dispute choose to submit their case to an
ad-hoc tribunal as provided for in sub-article (2)(b) of this
Article, the tribunal shall be set up as follows:
a. The arbitration tribunal shall be set up from case to case,
each party appointing one member. These two members
shall then agree upon a neutral member as their
chairperson, to be appointed by the parties to the dispute.
The members shall be appointed within one month, and
the chairperson within two months, from the date either
party to the dispute, has advised the other party of its
wish to submit the dispute to an arbitration tribunal.
b. If within the periods specified in sub-article (4) (a) of this
Article the necessary appointments have not been made,
either party may, in the absence of any other agreement,
involve the head of one of the arbitration institute
registered in Ethiopia (like the Director of the Addis Ababa
Chamber of Commerce and Sectoral Associations
Arbitration Institute, Ethiopian Conciliation and Arbitration
Center) to make the necessary appointments.
c. Unless the parties to the dispute decide otherwise, the
Arbitral Tribunal shall lay down its own procedure.

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d. The arbitration tribunal shall reach its decision by a

majority of votes, the decision being binding on the
parties. Each party shall bear the cost of the member
appointed by the party as well as the costs for its
representation in the arbitration proceedings; the cost of
the chairperson as well as any other costs shall be born (in
equal parts by the two parties) or(by the party in whose
disfavor the award is made).
e. The arbitration shall be based on the provisions of the
Memorandum and Articles of Associations of the company
in which the parties are member and the relevant laws of
Ethiopia.

ARTICLE 25
DISSOLUTION OF THE COMPANY

The Company may be dissolved on reasonable grounds stated under

Article 217,218 and 495 of the Commercial Code.

ARTICLE 26
APPLICABLE LAW

For matters not covered in this Articles of Association, the relevant

provisions of the Commercial Code shall apply.

Shareholder’s Name Signature Date

1. _______________ __________ ________

2. _______________ __________ ________
3. _______________ __________ ________
4. _______________ __________ ________
5. _______________ __________ ________

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