One-Man Company in Ethiopia: Legal Framework, Benefits & Challenges
A One-Man Company (OMC) in Ethiopia offers full control and limited liability but comes with legal formalities and capital limitations. Learn about the pros and cons of starting an OMC under Ethiopia’s Commercial Code and whether it’s the right business structure for you
One Man Company
A One-Man Company (OMC) under the Ethiopian Commercial Code is a private limited company with a single shareholder. Here are the advantages and disadvantages:
Advantages
Limited Liability – The owner’s liability is limited to their capital contribution, protecting personal assets.
Full Control – The single shareholder makes all decisions without needing approval from partners or a board.
Separate Legal Entity – The company is distinct from the owner, allowing it to enter contracts, sue, and be sued.
Perpetual Existence – The company can continue to exist even if the owner changes or passes away (subject to legal processes).
Easier Management – No need for shareholder meetings, voting, or extensive corporate governance procedures.
Business Credibility – Compared to sole proprietorships, an OMC may gain more trust from banks and investors.
Disadvantages
Higher Administrative Costs – Must comply with company registration, accounting, and auditing requirements.
Legal Formalities – Requires fulfilling statutory obligations such as filing financial reports.
Capital Limitations – Raising capital is harder since only one person provides funds, unlike partnerships or share companies.
Risk of Mismanagement – Since one person makes all decisions, poor judgment could severely affect the company.
Conversion Restrictions – Transitioning from an OMC to another company type may involve complex legal procedures.
