TWO-TIER BOARD SYSTEM IN ETHIOPIA: LEGAL FRAMEWORK AND COMPARATIVE INSIGHT WITH GERMAN AND INDONESIAN COMPANY LAW

This study undertakes a critical comparison of the legal frameworks of the two-tier board system in Ethiopia with that of Germany and Indonesia to identify the strengths, Key gaps, and reform potential of Ethiopia’s developing corporate governance model. The work applies a doctrinal legal methodology by analyzing relevant statutory provisions, legal doctrines, and comparative law in assessing the structure, composition, independence requirements, powers, and enforcement mechanisms of boards in these jurisdictions. Findings suggest that Ethiopia’s two tier board system introduced by 2021 Commercial Code suffers from enormous gaps since there are no statutory requirements qualification of board member specially supervisory board and for the independence of the board, supervision board powers that are barely exercisable, and outside the financial sector, no dedicated regulatory body to enforce corporate governance standards. All these shortcomings dilute the capacity of a system to ensure accountability as well as protect minority shareholders and promote transparency. In contrast, robust German institutionalized mandatory codetermination provides strong oversight and stakeholder representation; meanwhile, Indonesia’s flexible approach allows local business realities to be balanced with international governance standards. The comparative analysis brings to the fore that aligning Ethiopia’s legal framework with international best practices by providing clear independence requirements, expanding regulatory oversight, and strengthening enforcement mechanisms is an imperative matter. This study concludes by issuing legislative reform recommendations that should enhance the authority of the supervisory board and allow for greater stakeholder inclusion, as well as effective channels of enforcement to realize the full potential of Ethiopia’s two-tier board system