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About OPC (the One-Person Company)

Dr. Taddese Lencho

First of all, an OPC is not a cement product, not exclusively anymore anyways. It’s a shorthand for one of the two new forms of business organizations added to a family of business organizations by the new Commercial Code of Ethiopia, the other being the limited liability partnership (“LLP”).

The legal recognition of OPC may give it a veneer of novelty but a two-person PLC had always effectively been a one-person company ever since a PLC was put in use as a commercial entity. The second member of PLC, as we all know, has been a ceremonial bride who appears on legal documents to fulfill formal appearances of the law but disappears from all consequential decisions affecting the company and its relationships with third parties. The ceremonial PLC member would not have known if her death had been pronounced right there in her presence. Those who have taken a “company” seriously have for a long time believed in the absurdity of 50 million worth capital investor needing a “100 br contributor” in order to provide a security of legal personality in the eyes of the law.

With OPC, the law has to catch up with the reality (as the law usually does, playing catch-up) and put an end to the pretence by formally recognizing an arms’ length OPC. In short, the OPC as a commercial vehicle removes the need for the superfluous “other”.

To incorporate an OPC, all that a person (the incorporator) has to do are two things (the rest are details for check-the-box-ers): 1) A charter (declaration) with a committed capital and nominee, and 2) a promise and commitment of staying one’s hands from mingling personal affairs with the affairs of the OPC. OPC incorporators that wish to manage an OPC as if it were their personal property should watch out as there are legal consequences to breach of the second promise above. Incorporators that dare to sneak out their long arms from behind the corporate veil in the management of an OPC should expect the long arm of the law to pull them out into the open and hold them to account. So, Caveat Incorporators!

I have read somewhere suggested that an OPC was intended by the lawmakers (the perennial alibis for lawyers) for natural persons only. No such limitation is placed in the Commercial Code. In fact, the OPC as a commercial vehicle was designed principally for foreign companies that desire to incorporate a 100% subsidiary in Ethiopia but had to go through the needless requirement of another member or affiliate for establishing a limited liability company in Ethiopia. An OPC may undoubtedly become an entity of choice for the relative-rich Ethiopians, but it is even more useful for foreign companies and foreign individual investors. No longer should foreign companies and investors be required to find a pair in order to incorporate a subsidiary in Ethiopia, and no longer should their affairs be thrown into legal uncertainties every time the “superfluous other” falls out with the company, disappears or dies. One less member means one less resolution, one less authentication and notarization, and the end of numerous uncertainties that come on the Achilles’ heel of the second member. That is in short what ease of doing business means or should mean.