~.....

r~:"f'*f t...l'.. I...'\ ,

&oY..~IA~104~.

- -- - ...~OF THE FEDERAL DEMO(

ht..""~ l}noT ct.1'C: 7:7-~.ctll h(}ll-ft)1:T 7:7: .,.; '-iun nh.,}r'*,r ~~ot.:1\~.-' .,- "" r i'h1'-f1 ,,'mt)f"":£- ~

O? (D«6liJ.

p~ ~1'C (!~r./lv.tj ').~.rl11;:J--A b,p 11./..." '}"l,f: P' I...1\tp~ 1X" i

h'P~ ct.1'C:fif.f./Iill1ft)'C:J--A iJ:J> h.t..f. "}"IY;Ft.. h'P~

nA~ A~ fh. "}ii'lI""no"},1. nolltt":£- t\no"'",,~ ~I\'Jo

""'''''Cj oo-,r (i~¥m- nt)'l;;1-A kr~"'- srotn,r"" no"}",,,,,

~:Fl\- 'It\U-fH.:f h"7t..trif.b f1"}1I-f1 h:"Cn..,- sro")~

~*sro fDIJ..rll"'r-AU-~:1-no~mC: hllt.I\1. If'i nno1'fi::Ir...'L~ 11A..:" On"'u~ """au~ -~'~. ~ as.

'Jo:f f..,.",.t\- If~ID- '1t\no1'f:1-¥ID-:

L.Tf"A'.r L.~t..I\~ ~quh/..II Pip .I.rollh h

,~Jt qoht.(t.fl£ ~T-oh.h

;JtT ,;JltlfJ}ARIT- GAZETAATIC REPUBLIC OF ETHIOPIA

41hYear No. 27It lfPht..t'1.,P«p.I.T-flt\.hDDIS ABABA - 51hMarch, 19'

'C:o.T mll~~T fmtlJ

CONTENTS

Proclamation No.1 03/1998Capital Goods Leasing BusinessProclamation.. Page 71

PROCLAMA nON NO.1 03/1998CAPITAL GOODS LEASING BUSINESS

PROCLAMA nONWHEREAS, for those investors who have the de:

knowledge and profession to participate in various invment activities but could not act due to lack of capitalnecessary to create an enabling environment for the establment of alternative sources of financing;

WHEREAS, it is believed that lessors of capital gc

.Uv1ULUllUIl1S,

WHEREAS, the existing laws concerning capital ging business are found incomplete;

1I..Tr\\lT "T'UDDDDADD :- J n.'LL A nO' . ,

1~ '!..~~,;t..,J!..t..A ".~k1' .~",f'J '1'} ~:"/.,o. 'f'.,II\" hflll.m/..CD-

Y''''+~ OJ1'} fflll:"'(1)''} f'1'f.:t'A/J,4>:

"'h/..f. U1'co(}'1 'I.IL (I)''''IJ' ,,'hc':I\" fflll..fA:"

(lf1-I\.,: (l)1ci'.}'. "'9"9"'1:" f'"co (1'1 tJtt:,f Uf'"(IJ(}'1 'UL UoP&,R9" ~ '})tm+9"U:" fflll..fh/.,

,f~U')':-fh./..fJ "'9"9"'11: R'}-t'. UfIII.4'>f.U:" 'UL

.{I)'il'.' hh/.,~ u'1',::"A /J.4>m' l\fJ tID.ft-ffll\o.:,,'1:" oP.,H, f.f' fflll,4'>fJU:'-c; ftL/.'f. JloP~

(}..fU,4> U-1\":9" co11j'1- h"''''"'/lID- +h/.,f.

ftn:."'A /J.4>OJ"} IL1" fflll:'rAfH- ftL/.'f.

'i,fJ'1'} '1m':

"f)',.U, ""Jr." OI/I\'} Ml/.,f.c; 'Nl/..fJ '11,/''''')-

"'9"9"'1'}' oP,PI.:" Ml/.,f. U'ND(}'11.IL fflll,Y,/.,? ntt:,f

"f'f'h&,I\CD- ~ ') .\'.' f,,'CO(1 '1 f'1'f.:t-A /J.4>'} 'f'h/..f..

~ '})tm+9"U:"fflll,&,:" .\'.'fH-: ~.f,}J;,},~ ftL/..f. ntt:,f

U1',(',1.1 h./.'f. ~f"'h&.l\m'~,}f:

1'h(,,~ ~1)t 11\1AU')' f"'l.,fh/.,~ (}a)' '1CD-:

"f\1'I::"A /J:J>" "'Il\'} Uo,'}O"':"oP'}:" J11'c; nrlu-

J1'" fl-l'(}mm. rAn)'} f~,,'}Ii"':"oP'}'r I1C)',. UfIII..fcofl)a), (lDoP/',f oP".!..} fflll,co"',} /J.4>'1(1)':

"h:"/..U," 01/1\:" hMl/.,f. mf.9" 'Hl/..f. I\.l\ rr':'

f'1'[:"/'\ /J.4>9":;''} UoPi'iIJ' '}..,,\'., P' /.' l\~ f.,. (1f111/..

(1(1)' .,co':

"f~,:Hi "")'oP'}.} tn"'" '1'/1\')' fh, '} Ii "':"oP'}:" ~\tp:~

4:'I'C I!)i,!:(!jhri, cofJ9" f~" '} Ii "':"oP'}.} fIIIU!.:t-Y:

f"'/.~i\:N~"f' 9"ne U.:,. ,l-':HI

1~ %fii~Y-..t.A~:MT :"'.11)

r 'f.(( 4..~t..A ., ;)/..1' ;JrLtIJ W' no,r.:"} f(/D"I'I-1-'i"

"..,o,w'"} "Y.1t ftll/,r:l'" ~I\&,~"" .fl\n"" (/DIn.

e/p"I\K' f.tfcn:"A::

J:' f p,.n, ..,.,,: il9"9"~;"") nO'/.(/DI\h-1-1

0) ".f"}P'"},~ fh.I...e hr.:.r O"'&'?\(/D 4:"'C I\htt:J'm-

".(/DtI}tI}:~ Ulf~ uP.y.;-l Ah ffH\o.'}'~'}- (/D...l-1-

,,"})tu-9" f(/D(J.1.l7im- fh.t,f. hr':.f ~") ".,.

&,?(/D w~..fW'~. fit-r.:"A 6."'w' (10'1\' fl}I\o.

;,.~,}. (/D...l"" I\'H1&.f. fO'/..,.I\I\tt:I\"" .erf'i"&\=

1\) il9°9°~'f: nO'/'i":t:w'9" tD1"} nl\1.fLW' 00'/.9: l

'I'U"" 'UL hil9°9"~": fD'l.(/D"6f.b ffl1\n.-1-~-1-

t'/p'O'f:.f'i" 't'.fc,:sp'.r. ',Afl-1- fO?..f11"n-1-"} u-~:t"

(1.1\'1: w1tf'.)'. nil9"9°.,-I: .fit-1-:t-I\':

eh) 'H1&.f. I\it'C:"A 6 m- (/Df;") f(/D"Ifl-1-'i"

"",O,ID'"} ~.e.lt ftll/,r:l'" ~l\k.,-1- .fl\n-1-(/Drf.,.

(/D.,I\;r .etfcn:"A::

h,t.f,") ill\I\t'/Pht,A'i" /\.i\"':;' ",~~.y.".'f

Ii' 'H1&.f. h.1..f."} uw;'f>.f: fl.ehtt:&\ OJ.e9" il9"9"~-I:"}

fO?:I'il /\.1\ ",~.}. n,&.?\'9" "'ht.f. f t,?\(/Dm- 't'~-1-

1\.(1J",f: fO?::;'A tun Oil9"9"~-I: (/DlPl-1- ~"})t

t,?\'9" 1\hl..f. f~~ "") '1.IL I\.(tmw, .e1fIA::

~. "'hl..f. (ULUt,"}",?\' "}o.il 1\"}.,.;r (Ii) (}of.tD(t"OJ'1.fL

(D'il'l' 'I'ck':") '1.filw",.r.: M1&.f. il9"9"~-I:"} (/D,vl1':

fit'C:"A 6."'w,") w.e. f,fl:"W' (/D(/DI\il'i" I\"l(tn-1-

".p,:,. '1'''1 t'/Pmf;'f> f.',}"I\A::

I:' 'H1&.f. ttl.,f.") nw;'f>.,: .fAht.I\ ,,"}'.In 't'~-I:f.,.tW,Y. OJf.9° .rA,,'w1Y. f1.rf"}9" ~"}\\ 1\ht..e

w'1,4."} h.I.,f. hwl\,r:ej it..., ;JC O?ilht,&\ .e".'fl\&\::

(1-I'hl..fOJ. fit1::t-A 6,'" I\.e ill\I\' ~f;I\.y.".'f

Ii' il9°9°.,.,: U''''.l1n.)-OJ;'f>-1-n.,.ht.f. I\:t"w'"

fit.C:"&\ 6.'" 1.,f:I\'}' 1\hl..f. ~I\t.~.}. fl\n-1-9"::

~,

(b) the agreement shall be a full pay-out and non-

cancelable agreement;(c) the lessee may, by mutual agreement, have an

option to buy or return the capital goods to the

lessor on the termination of the lease agreement

(d) a statement that the lessee undertakes to insure

and maintain the capital goods.

2) In the case of an operating lease agreement:(a) the capital goods leased shall remain the property

of the lessor to whom the lessee shall return on

the termination of the agreement\ unless

otherwise the parties agree that the lease be

further renewed or the leased capital good bepurchased by the lessee;

(b) the lessee or the lessor shall have the right to

cancel the agreement provided that. the party

causing dam~ge to the other by early ter-

mination of the agreement shall pay compen-

sation;(c) a statement that the lessor undertakes to insure

and maintain the capital goods.

3) In the case of a hire-purchase agreement:(a) an equal percentage ofthe ownership, with each

installment payment, shall be transferred to the

lessee and, upon effecting of the .last payment,

the ownership of the capital goods shallautomatically be transferred to the lessee;

(b) the p~rties shall provide, in the agreement, for

the manner by which ownership rights and

c1aims arising form the agreement shall be

settled between the lessor and the lessee in case

of early termination of the lease agreement by

either party;

(c) a statement that the lessee undertakes to insure

and-maintain the capital goods.

6. Defaults in Payment of Rent and OthersI) Where the lessee defaults in the payment of the rent,

or commits another fault which may breach theagreement, the lessor shall grant him a period of 30

days for remedying the d~fault so far as the default

may be remedied.

2) Where the lessee does not remedy the default within

the period specified in sub-Article (1) of this Article,

the lessor may rescind the agreement, repossess the

leased capital goods and claim related damages.

3) Where the lessee defaults in the payment of the rent,

the lessor may recover accrued unpaid rent together

with interest and damages, whether the default is

remedied or not.

7. Defects on the Leased Capital GoodI) The lessor may not warrant against a defect which

was made known to the lessee on the making of the

agreement.

1K' "i/I.Hi t..1.I..A .,;Jt.-1- ;Jti"l +'1'C ~ fili:'-" ?;'%.,., n!£1 q.S/".Federal Negarit Gazet~ - No. 27 5[hMarch, I 998-Page 711

". "ht..~ ft}1::h~~ ".4>(1)01""'ht..~ f1it~hnn"" w:""".fW"'(I)o1 Wf,1JO ft..fm..,.dJo f"7.1'1(1)o1 .,.y:"..,.

t\ .,.h t.. (t ".fit (1)0'"(1)0"'C.,. n t) 1:;r A"

:1>(1)0.,. Y:"..,.

9"h1.f"" n"'ht.,~ "f.. ""7.J.'..Cit",lJT(I)o9".,.~..,. t}Pffooht.A ..,Yo;r ""n""::

f.' nh.t..~ il9"9'"'11:nl\." "\\:\1 t}A"'W(&~nit.,..,.c:"'ht.,~ n(&m(l)ol'Cl'C foo9"~6Ii ooitt.C:" OOlP~""

htll.',e. ftt1:;rA ,,:JoW-1 hhh1t, Y:~it ":"(1)0 ""'t.iYIw- '}"",

"1A °"'.."" t\00 itm"" .,.Y:t\"" .t'" n""

W~9u f"'~h"'''' 1ft; 1l.1~ n~"&.'1"" "~mf:"9"::

~. 'NIl..f. f"'ht..fw.'} ftt'C:rA ".'" (nlt..~ it9"9"'11:

oou'~,'" w~9" "''''Il~~'''' .f"(1)01 FC'}"" W~9u

"m."''''9'' nooh.,.A foa/~~t\1An"" tunr; f"'ht..~

"m."''''9'' ntt1:;rA "."'(1)0,,~.,.~..,. flPJ..ff.Cit hln

"tM.f. ""'h~.~ :,.Y..'lPJ..f ",itm1.,.ct.f nooitm""

it9"9u~1:1 "oou'~l,ci f"ht..f(l)o1 ftt'r;;t'A ".'" wy,

~t';t-W- t\oooot\it 001}"" ""(1)0::

t. itt\ooh(&C

fi' nt1.t..~ it9"9"~.t: oou'~'1' "'ht..f. 0,.e..:J'(I)o1hith.,'wn) Y..'~it hht..f. ~,~!.h(&~ nc':CY..' fl."" (lOJ(&1

h1\\1fh(&~(1)01 "ttA nJi.., flPJ..,.tt "ttA nit9"9"')": "'Yo;r~"flJ rJ-).:r?J"f OOlP~"" ~"'ClJA::

~. f.,.ht..f. ooh(&C nCJ:cY: fl."" o.W(&19" n"'ht..f(l)o

ftt1:.+A "."'",e. MIl..f. .f"(1)01 ff1"fl.""~"" 0011""

h!VaCIJlD-9'"ff"'mn'" 'f.rriiA::

it. il""'.c;:" ttPfli' "'9"9"'1-1:O"'ht.f. n"7.lP~lH1""lott "'ht..~ f'''ht..

f(l)o1 ft't1:;rA ".4> "hht.f. h 1JtooAit '''10.(1)0

"'''(&fl..f "'(&,,"'+tt"it~hn hht.f. ftt1:;rA ".4>(1)01WJt.ffl)o}. mY.,e.)I;rWo foPoo"itlJ "f.~(&n"" .,.~..,.

ttPf foomf"" 0011"" ""(1)0::

~. f"'.ht..f(l)o fty1:;rA ".4> h"ht.~ wJ.'.."'ht.~

hoo"'''t\+- nk:" n'''ht.~ 1'4."" 9"h1.f"" n"ht..~"f.. U'Jc.':t:(I)o9".,.~...,. O.J.'..Ci'l{l"'""ht".~ n:"1 A(llJhilht.RoolJ n"'ht.~ 1'.fm.,,~ 0011"" ""~ nlPJ""" nY'it.,.~

w11 f"7."'Cl1lPJ1~W'9" hit n"ht.~"~ 00:"~11

""n.1'::

2) The lessor shall make good any damage which the

lessee has suffered owing to the defect of the capital

goods where the lessor knew or should have known

of the defect on delivering the capital goods to the

lessee and failed to inform the latter accordingly.3) Unless otherwise provided in the lease agreement,

the lessor shall not be liable for defects in and for

unfitness for intended use of the capital goods h~purchases in conformity with the specifications

given by the lessee.4) The lessor has the right to rescind the agreement,

with prior notice, and to repossess the leased capital

goods, where the lessee does not make use of the

capital goods in accordance with the lease agreement

or accepted norm or usage and such use entails risk

of irreparable damage to the capital goods leased.

8. BankruptcyI) The obligations and conditions of the agreement

shall continue with an organ legally subrogated to

the judicially bankrupt lessor as long as the lessee

performs his obligations in accordance with the

terms of the lease agreement.2) The lessor shall not lose his ownership right on the

capital goods leased eventhough the lessee is

judicially bankrupt.

9. DamagesI) Where the agreement is rescinded by the lessee, and

the lessee does not deliver the capital goods after

having been given due notice to surrender the capital

goods to the lessor, the lessor has the right to

repossess the leased capital goods immediately and

claim damages.2) Where the lessor suffers any damage owing to

default on the part of the lessee prior to the transfer of

the leased capital goods from the lessor to the lessee,

the latter shall make good such damage to the former

so long as the lessor acted in good faith and costs

were incurred by him for purchase of the capital

goods at the request of the lessee.3) Where, in the case of financial lease or operating

lease agreement, the lessee fails to return the capital

goods on the expiry of the agreement, the lessor has

the right to repossess the leased capital goods and

claim related damages unless otherwise provided in

the agreement.

10. Transfer of Right

The lessor has the unilateral right to assign his rights

under the lease agreement to third parties, but without

infrigement of the lessee's right to the quiet enjoyment

of the capital goods leased.

11. Claim by Third PartiesI) Any action by a third party claiming a right on the

capital goods shall be brought against the lessor.

r'1~ %f(!{ &".~"t.A .,;It.} ;m,'" 'IvrC '6% f'l'f:'} ?}'j.4'1 Bin q.9". Federal Negarit Gazeta - No. 27 5lhMarch, 1998-:-page 712

~.

[.

f"'hl..('!.'} itO~/'9':')" (;1.},9°(~Iblt"':;. Y'i\'f'~ m1tj~

O'1'C;"A ":p(lJ' I'\,e hll'l..rCO--r 'I'.r

'IX' 1;(0: t..Y../'.A '1:)/.:" :J//J'I '/:'I'C: 'I;''!; fl)";:,, '1,'1;""} :OH::i. '}.9"'Federal Negarit Gazeta - No. 27 5thMarch, I998-Page 713

)j. l\t\ ~\C:f'; ,}";'{j'; 11'1(1.I\J', l\t\tI'l.flJA "11)C

f!' f4.,rS'}l\ h./..W} ~\(; fi\61!'C VI. tIPmcf>"".J'

h./..W} U"".tIPt\h:,' MI/..g, ft}'C:"A 11:"(1).I)t\{},'}

Uar'I1"} fll't;;"A 11."'9):': f~\C:~'I' ,},';'{j h"".1'f(l)'

fh./..J', '1(1. I\J', "",";'{j J',,