Foreign Portfolio investment under Ethiopian Law final paper (original) (raw)
Foreign investment can be either in Foreign direct investment or in Foreign portfolio investment form. Non-direct investment - also referred to as ‘foreign portfolio investment’/FPI - takes place when companies, financial institutions or individuals buy stakes in companies on a foreign stock exchange, which help to strengthen the domestic capital markets by enhancing liquidity and contribute to improving their functioning. Among common law and civil law legal system common law is more protective of portfolio investment and it’s better for Ethiopia to proceed towards predominance of common law legal system to be more protective of FPI. Under Investment regime it’s pivotal to define investment in different approaches because it forms the spinal column of applicability of Bilateral Investment Treaty/BIT and jurisdiction under the BIT. The investment laws generally envisage one of the two approaches to defining ‘investment’ they are either asset-based or enterprise-based approaches. Currently, these two Approaches are being applied on definition of “investment” in the over 3000 investment treaties, while the asset based approach is more inclusive of portfolio investment, the enterprise based approach is more exclusive of FPI, it more encourages foreign direct investment. When we intrusively look at the Ethiopian legal regime on FPI there is BIT and Domestic laws which is expected to be analyzed. The aim of this paper is to doctrinally assess portfolio investment under Ethiopian legal framework. For this purpose, the secondary data from law books, law articles, law journal, newspaper etc. have been used. While Most of the Ethiopia BIT Provides recognition and protection for foreign portfolio investment by following asset based approach of investment, Even though they are not currently in force the Ethiopian BIT with Brazil - Ethiopia BIT (2018), Ethiopia - Qatar BIT (2017) and Ethiopia - South Africa BIT (2008) expressly makes foreign portfolio investment out of protection. So we see that the Ethiopian BIT stands both sides i.e. protecting and unprotecting PFI. Again while some BIT contains host state law requirement some of them does not contain it, this creates discrimination among foreign investors. When we see domestic laws the Ethiopian Investment proclamation no 1180/2020 with the regulation enacted following it the Ethiopian Domestic Investment laws defines investment in enterprise based approach, which is mainly exclusive of Foreign portfolio investment. However there is implied protection for portfolio investment within Ethiopian domestic investment laws, especially jointly reading of Newly enacted investment proclamation number 1180/2020 and Ethiopian capital market proclamation number 1248/2021 tip-off there is implied protection for Portfolio investments Even if it is not express and has its own defect.
Sign up for access to the world's latest research.
checkGet notified about relevant papers
checkSave papers to use in your research
checkJoin the discussion with peers
checkTrack your impact
Loading Preview
Sorry, preview is currently unavailable. You can download the paper by clicking the button above.