TANZANIA: COMPANIES ACT AMENDMENT
A bill supplement for the proposed Written Laws (Miscellaneous Amendments) Act, 2021 (Bill) was published in the official Gazette on 17 January 2021 as part of the process for preparing the Bill to be introduced in the National Assembly.
The Bill proposes amendments to a number of laws, including the Companies Act, CAP. 212 (Companies Act) which is the focus of this newsflash. The main proposed amendments to the Companies Act are outlined below:
Requirements for the incorporation of a company
The Bill proposes to amend section 3 of the Companies Act to introduce the requirement for a person to provide certain particulars when seeking to incorporate a company, and these include:
- date of birth or date of incorporation or registration;
- nationality or nationalities;
- country of residence or country of incorporation or registration;
- residential address or an address of registered office;
- national identity number, registration or incorporation number;
- taxpayer identification number (TIN), where applicable; and
- any other information as may be prescribed in the regulations.
This requirement existed in practice following the introduction of the online registration system (ORS) by the Business Registrations and Licensing Agency (BRELA) in January 2018. The Bill will therefore incorporate it into law.
Further, the Bill seeks to add a subsection 3(5) that intends to prohibit the registering of companies by persons reported by competent authorities to have been convicted or associated with instances of, or related to, money laundering, terrorism financing, human trafficking, drug trafficking or any other related offence as may be prescribed by the Minister of Industry and Trade (Minister).
Notifications of transfer and transmission of shares
The Bill proposes to add a section 83A which covers the requirement for a company that has either transferred or transmitted its shares to notify the Registrar of Companies (Registrar) at BRELA within 28 days from the date of such transfer or transmission. In addition to this, a copy of a tax clearance certificate must be attached when notifying the Registrar of the transfer or transmission. Similarly, this was the requirement in practice and the Bill will therefore incorporate it into law.
Disclosure of details of beneficial owner
The previous amendments to the Companies Act through the Finance Act, 2020 (FA) which came into effect on 1 July 2020, introduced the concept of beneficial owner. Pursuant to the amended section 2 of the Companies Act, the beneficial owner is defined as a natural person:
- who directly or indirectly ultimately owns or exercises substantial control over an entity or an arrangement;
- who has a substantial economic interest in or receives substantial economic benefit from an entity or an arrangement directly or indirectly whether acting alone or together with other persons;
- on whose behalf an arrangement is conducted; or
- who exercises significant control or influence over a person or arrangement through a formal or informal agreement.
As amended by the FA, section 14 of the Companies Act required a company to include accurate and up-to-date records of beneficial owners of the company in the memorandum during the incorporation of the company, in the register of members pursuant to section 115 and in the annual return as provided in section 129(f).
The Bill proposes to amend this requirement by deleting subsection (f) of section 129 and removing the requirement to disclose the information of beneficial owners in the annual return. It is proposed that information on beneficial ownership be submitted in a different mode as may be prescribed in regulations instead of the annual return. The reason for this change is broadly because annual returns are essentially filed as public records and would, potentially, have confidentiality implications on beneficial owner information.
Section 35 of the Bill seeks to amend section 187 by introducing some requirements for the company sectary in respect to both public and private companies. For public companies, the directors will be required to take all reasonable steps to secure a secretary or joint secretaries who is/are each qualified as an advocate, certified public accountant, auditor or such other qualifications as may be set by the Minister. For private companies, it is the duty of the directors to take all reasonable steps to secure a secretary or joint secretaries who each appear to them to have the requisite knowledge and experience of discharging the functions of the secretary of a private company.
Age of directors
Pursuant to section 36 of the Bill, it is proposed that the retirement age for directors be removed. As currently drafted, section 194 of the Companies Act disqualifies a person who has attained the age of 70 years from being a director in a company. Once the Bill is passed into law with this proposed amendment there will be no retirement age for directors. The Bill further proposes to lower the eligibility age of a director from 21 years to 18 years under section 37.
Waiver of late filing fee
Section 38 of the Bill proposes an additional section 452A which provides that Minister in consultation with the Minister of Finance may, for the purpose of enabling effective and smooth operation of the online registration system, by notice published in the Gazette, waive fees associated with late filing of documents payable under the Companies Act. Following the introduction of BRELA ORS, companies were required to regularise all corporate records by correcting all anomalies in respect of defective or incomplete filings made prior to the ORS. This resulted to the requirement to pay late filing fees and accrued penalties for the entire period of such anomalies. This proposed amendment will therefore ease the burden for such fees and penalties and encourage companies to regularise their records onto the ORS.
Keeping of documents
An additional section 455A has been proposed under section 39 of the Bill covering record keeping requirements. The proposed change is for companies to keep original filed documents for a period of not less than 30 years. Previously, the Companies Act was silent on the period for which company records must be maintained.
Verification of documents
Lastly, section 40 of the Bill proposes an additional section 458A which provides that the Registrar may for purposes of ascertaining the authenticity of facts lodged by a company, require verification of the facts in such manner as he or she may consider appropriate. This requirement comes following the digitalisation of the companies’ registry at BRELA, thereby giving the Registrar the power and mandate to verify or request the verification of electronic documents lodged through BRELA ORS.