PE/VC AND INVESTMENT MANAGERS/ADVISORS

The Proclamation contemplates various structures for CISs including investment

companies and limited partnerships. Assuming that investments in these structures
are offered to members of the public:

1. Should there be a distinction between open-ended (variable capital) and close-

ended structures (fixed capital)?
2. Should both structures be permitted?
3. If either or both are to be permitted, what restrictions if any should be placed
on them?
4. Should there be a minimum number of investors in each structure?
5. Should there be a minimum capital value for each structure at inception?
6. Should these structures be required to list on an exchange?
7. Who should be permitted to invest in either of both of these structures?

The Proclamation contemplates limited partnerships and other forms permitted

under the Commercial Code (“alternative structures”)
8. Should there be any restriction on the investments that alternative structures
can make?
9. Should there be any restriction on who can invest in alternative structures?
10. Should there be a minimum capital amount in an alternative structure?
11. Will a placement document (rather than a prospectus) suffice?

Electronic platforms: with the increasing dependence on technology, jurisdictions

are permitting investment products to be offered on these platforms.

12. Should these platforms be permitted in Ethiopia?

13. If so, should there be any restrictions?

Ethiopia has a large Muslim community.

14. Should Shariah compliant instruments be included in the definition of
“security”

CISs and alternative structures are managed by respective operators

15. Should there be any restriction on who can own an operator?

16. Can they be part of a financial services group?

17. Does Ethiopia have sufficient depth in the financial services sector to
preclude companies which are part of a group companies carrying out other
activities for the CIS/alternative structure e.g. custodian/depository?

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 18. If there is to be no preclusion, what conditions if any should be imposed?
Should foreign CIS operators be permitted?

Valuation of CIS assets (the standard measure being net asset value) is required to
be carried out from time to time, often on a daily basis.

19. Who should be permitted to perform valuations of CISs?

20. What methodology(ies) should be permitted for valuation?

Portfolios are composed in different ways

21. Should there be any specific restrictions on e.g.

a. The assets that a fund can invest in?

b. The exposure to any asset class?
c. Prospective investors?
d. Minimum investment?
e. Other?

22. Should investment in offshore assets be permitted?

23. Should foreign investors be permitted to invest in alternative structures in
Ethiopia?
24. Should there be a requirement for an alternative structure operator to invest
in the alternative structure that it promotes or manages?
25. If so, what amount or % of the fund/structure should it be required to hold?
Charges and Expenses

26. What type of fees and expenses should be permitted to be paid out of the
assets of an alternative structure?

Performance and measurement reporting

27. What specific requirements should there be with respect to performance and
measurement reporting?

Fit and proper requirements

28. What should be the eligibility criteria for operators, investment advisors and
asset/fund managers and their employees?
a. Qualifications;
b. Experience.

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 29. What fit and proper requirement should be imposed on operators, investment
advisors and investment/fund managers

Governance

30. Should there be any specific requirements for governance e.g.

a. Disclosure
b. Accountability
c. Reporting;
d. Management:
e. Meetings.

Amalgamation and reconstruction

31. Under what circumstances should amalgamation or reconstruction not be

permitted

Taxation often underpins investment

32. What amendments if any should be made to the tax legislation e.g. flow
through and other concessions including on income and capital gains tax?
Consumer/investor education
33. Should licensees be required to carry out a specific consumer/investor
education mandate?
34. If so, what should the mandate be?