Can our board remove the CEO in Ethiopia without a shareholder meeting, and what steps are required?

The dismissal of PLC's manager by its board under the revised Ethiopian commercial code, and the steps to follow

Ethiopia's Revised Commercial Code (Proclamation No. 1243/2021) makes governance of a private limited company by a board of directors optional. It means it is up to the PLC to have such a type of corporate governance. See Article 513 of the revised commercial code.

If the private limited company is to be governed by a board of directors, the detailed provisions governing the Board of Directors of Share Companies (Articles 296, 297, 298, 300-312, and 314-330) apply to the PLC's board.

Election and dismissal of the manager of the PLC (Articles 514-517)

The manager of the PLC is considered an employee of the PLC.

Where the PLC has a board, it is the board itself that has the power to elect and dismiss the manager. The manager of the company can also be dismissed by the court if there is a good cause such as breach of duty. This legal action has to be initiated by shareholder of the PLC.

Steps of dismissal

1. Ordinary meeting of the board

Manager of PLC may be dismissed by an ordinary general meeting irrespective of whether he is appointed in the memorandum of association or by an ordinary general meeting. Shareholders vote is not a requirement here to initiate the process of the dismissal. Board of directors do it on their behalf.

2. Valid ground of dismissal

There should be a proven reason to dismiss the manager of the company. Breach of duty, lack of competency, and conflict of interest are some examples of good cause to remove the manager.

3. Compliance with the procedures of dismissal

The decision to be undertaken should be compliant with the right to be heard of the manager, employment contract, documentation with the commercial registry, etc.