ECMA: Ethiopian CIS Operation Directive 1150/2026 Implemented

• The Ethiopian Capital Market Authority (ECMA) has issued Collective Investment Schemes Operation Directive No. 1150/2026.
• Approved on September 23, 2026, this 227-page directive establishes a comprehensive legal framework for collective investment schemes in Ethiopia.
• It mandates ECMA registration for all schemes, requires independent operators and custodians, and outlines duties for various professional parties.
• The directive recognizes six types of schemes and aims to channel Ethiopian savings into productive investments while ensuring strong investor protection.

This comprehensive legal framework is designed to channel the savings of Ethiopians into productive investments through professional management, ensuring robust investor protection and broadening access to the capital market.

The Ethiopian Capital Market Authority (ECMA) recently announced the implementation of a comprehensive legal framework designed to govern collective investment schemes (CIS) across the nation. This significant development, formalized by the Collective Investment Schemes Operation Directive No. 1150/2026, received official registration and approval from the Ministry of Justice on September 23, 2026. The directive's issuance follows more than a year of public consultations on its draft rules, indicating a considered approach to its finalization.

Operating under the authority granted by Capital Market Proclamation No. 1248/2021, this new directive establishes the foundational rules for the establishment, registration, operation, and administration of all collective investment schemes within Ethiopia. Its introduction marks a pivotal moment for the country's nascent capital market, aiming to provide clarity and structure for both market participants and investors.

Spanning 227 pages and organized into 12 distinct chapters, the Ethiopian CIS Operation Directive 1150/2026 meticulously details the obligations of various professional parties involved in collective investment schemes. This includes specific duties for scheme operators, custodians, and other service providers, ensuring a robust operational environment. The directive explicitly recognizes six distinct categories of schemes: Money Market Funds, Mutual Funds, Real Estate Investment Funds, Exchange Traded Funds (ETFs), Alternative Investment Funds, and Special Designation Funds, accommodating a broad spectrum of investment strategies.

A central tenet of this ECMA Collective Investment Schemes legal framework is the mandatory registration requirement; no scheme may be offered to the public without prior registration by the Capital Market Authority. Furthermore, the directive stipulates that every scheme must continuously have an operator, and critically, all scheme assets must be held by an independent Custodian, distinct from the Operator, to safeguard investor interests. Both operators and custodians are required to obtain appropriate licenses under the Capital Market Service Providers Licensing and Supervision Directive No. 980/2024, reinforcing the regulatory oversight. Additionally, schemes are obligated to provide ongoing disclosures, ensuring transparency for investors.

ECMA Director General Hana Tehelku underscored the transformative potential of the Collective Investment Schemes Operation Directive 2026, highlighting its role in channeling the savings of Ethiopians into productive investments. She emphasized that this comprehensive legal framework is designed to channel the savings of Ethiopians into productive investments through professional management, ensuring robust investor protection and broadening access to the capital market, thereby enabling wider public participation in the nation's economic growth. This Ethiopia investment funds regulation is poised to foster a more dynamic and inclusive financial landscape.

The Ethiopian Capital Market Authority will assume the responsibility of supervising all registered schemes and their associated service providers, ensuring adherence to the new regulations. The ECMA has also publicly affirmed its commitment to collaborate closely with scheme operators, custodians, investors, and all other stakeholders. This cooperative approach aims to cultivate a sound and trusted collective investment scheme market in Ethiopia, building confidence and facilitating sustainable growth.

Lawyers and compliance officers must review Collective Investment Schemes Operation Directive No. 1150/2026 to understand the new comprehensive legal framework governing CIS in Ethiopia, including registration requirements, operator/custodian duties, and disclosure obligations, to ensure client compliance and advise on market participation.

Source: Original reporting via Ethiopian Monitor