What is the main source of law authorising this entity form?

The Companies Act (Cap 212: R.E 2002) .

The Companies (Forms) Rules, G.N. No. 41 of 2005

Give a brief summary of the entity form:

Does the entity possess separate legal personality?
The multiple member limited liability company (Company Limited by shares) has a separate legal personality.

Maximum period of existence
There is no maximum period of existence; the MMLLC (Company Limited by Shares) can be incorporated for an indefinite period.

Governing document(s)
The MMLLC is governed by its Memorandum and Articles of Association

Liability of incorporators/shareholders/members
Liability of members of the company is limited to the amount of shares that are unpaid: If the subscribers of shares pay for the shares they subscribed to in the Memorandum and Articles of Association, any other liability of the company cannot be imposed on their personal assets, unless there is sufficient reason to lift the veil of incorporation. A common reason for lifting the veil is fraud, tax evasion among others, or where the company has outstanding debts with the revenue authority

Governing body or bodies
The MMLLC is governed by its Board of Directors.

Other particularities of note
In Tanzania, a Multiple-Member Limited Liability Company (MMLLC) is classified as a company limited by shares and is restricted to a maximum of 50 members. Where an individual intends to have more than 50 members, the appropriate corporate structure is a Public Limited Company (PLC). The PLC must have a minimum of seven shareholders and at least two directors. Moreover, it must have a minimum of a paid up capital of Tanzania Shillings Two Hundred Millions (TZS. 200,000,000) and 25% of its shares must be issued to the public.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

The MMLLC can enter into international restructurings, however, it is only allowed subject to specific legislation of the country where the international restructuring would take place. For example, any merger or acquisition transaction with a combined market value, turnover, or asset threshold of Tanzania Shillings Three Billion Five Hundred Million (TZS 3.5 billion) or more must be notified to the Fair Competition Commission (FCC) for approval, in accordance with the Fair Competition Act.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

No, this type of entity cannot be publicly listed. Only a Public Limited Company (PLC) is eligible for public listing, and it must comply with the requirements of the Capital Markets and Securities Authority (CMSA) as well as the applicable rules of the stock exchange. However, member of an MMLLC [Private company Limited by Shares (LTD)].may resolve to convert the company into a PLC, subject to procedures set by the law. Once the company is converted into a PLC, it will be eligible for public listing

Can this type of entity be used for a non-profit or charitable organization?

No, this type of entity cannot be used for a charitable organisation. A person intending to conduct charitable activities as their sole business should register a Non-Governmental Organization (NGO), as it is the appropriate legal entity for such purposes

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Process of incorporating a company:

• Conducting a name clearance search through company registry online portal, to check availability of any of the three preferred company names.
• Applying for name reservation.
• Preparing a memorandum and articles tailored to suit the proposed business of the company and the required share capital structure.
• Preparing the consolidated form (to be signed by all directors and company secretary, this form includes personal details of directors and shareholders); and a declaration of one of the directors to abide by laws.
• Preparing a statement in a prescribed form containing accurate and up to date records of beneficial owners.
• Signing of BRELA Integrity Pledge Form.
• Uploading of signed documents and attachments such as passport copies for foreign directors and /or shareholders, on company registry online portal.
• Payment of prescribed government registration fees.
• After application has been approved the certificate of incorporation is issued.
• Main documents required for incorporating a local company are as follows:
• Memorandum and Articles of Association
• Form 14b (declaration of director to abide by the laws)
• Consolidated Form (contains personal information of directors and shareholders
• Ethics and Integrity form
• Passports of directors and shareholders who are foreigners
• Certificate of Incorporation for the company which intends to be a director or shareholder.
• Main documents for incorporating a foreign company are as follows:
• Certificate of incorporation from the country of origin.
• A certified memorandum and articles of association/constitution or charter from the country of origin.
• Register of directors, their residential addresses and copy of their passports.
• Certified copy of a most recent audited financial statements of the company
• Notice of situation of the registered office in the country of origin
• Person resident in Tanzania authorised to accept on behalf of the company service of any process and any notices required to be served on the company (if he/she is local then National Identification will be required; if he/she is a foreigner the passport will be required)
• Person resident in Tanzania authorised to represent the company as its permanent representative (if he/she is local then National Identification will be required; if he/she is a foreigner the passport will be required)

Involvement of notary, company register, governmental authorities

During incorporation of the company there must be involvement of the notary in attesting documents such as form 14b and Memorandum and Articles of Association.

Timing (estimate)

Time frame for the incorporating a foreign company is seven working days and for a local company is 14 working days.

Main costs, including registration and similar fees (excluding legal fees)

Costs for incorporating a company are as follows:

• Foreign company government fee is USD. 1190
• Local company government fee varies between USD 70 to USD 250 depending upon the share capital of the company.
• Legal fee to acquire certificate of incorporation or compliance is approximately USD 1000 to 2000. However, there are other post incorporation processes that must be put into account such as acquiring company identification number and business license.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The objectives of the company must be stated in the Memorandum and Articles of Association and consolidated form.

Minimum number of incorporators / shareholders and residency requirements

Two members are required to set up a MMLLC. There is no residency requirement for such members, however some specific sectors which enforce local content requirements require a certain percentum of shares to be allocated to a local resident. For example, Mining sector requires a minimum of 20% of shares of the company to be allocated to a local person.

Minimum number of directors (or other applicable officers) and residency requirements

The minimum number of directors is two. There is no residency requirement in the law, however for operational requirements, is advised to have a resident director. For example, in order to start tax filing there is a requirement to have a personal Tax identification number; this may impose a challenge especially for those foreign directors who are not to come to Tanzania immediately.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

Minimum share capital of the company is USD 12. However, there are companies operating in certain sectors whereby the minimum share capital depends upon the nature of business. For example: a company that operates a Bureau de Change must have a share capital of not less than TZS 1,000,000,000; a financial leasing company must have a minimum share capital of TZS 1,000,000,000;

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

It is not strictly required for the incorporators (i.e. directors or authorised representatives of the investor) to be present in the country for incorporation. The documents of incorporation may be signed at the place convenient to them. The actual submission of the application can be carried out by an authorised person. All documents that require to be signed may be signed electronically.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Yes, in order for a company to operate legally in Tanzania it must obtain a Tax Identification Number (TIN) from Tanzania Revenue Authority (TRA). Currently, the Business Registration and Licensing Agency (BRELA) is integrated with the Tanzania Revenue Authority (TRA). Therefore, once a company is registered, its details are automatically sent to the TRA. The applicant must then visit the TRA with the certificate of incorporation to print the Taxpayer Identification Number (TIN) certificate. If the company has no local directors, the physical presence of the foreign directors is required at the TRA for fingerprint registration. However, a Power of Attorney may be used to authorize someone to provide fingerprints on their behalf. To open a company file with the Revenue Authority, the following documents are required

• Memorandum and Articles of association of the company
• Certificate of Incorporation/Compliance
• Certified Lease Agreement or title deed proving office of the company
• Copy of passport for foreigners
• An introduction Letter from Local Government authority
• Power of attorneys if all directors are not residents of Tanzania

What is the title of the applicable company registry?

Business Registrations Licensing Agency (BRELA), it is a government agency.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

• Memorandum and Articles of Association or other constitutive formation document
• Personal information of shareholders
• Personal Information of Directors
• Personal Information of Company Secretary
• Registered office of the company
• Ownership identification (direct and/or indirect ownership, and/or beneficial owners)
• Shareholding Structure
• Directors and their nationality
• Insolvency, good-standing, liquidation
• Liens and encumbrances on the shares of the entity
• Other (e.g. litigation, tax matters)
  • Memorandum and Articles of Association.
  • Name and Identification number of the MMLLC.
  • Physical Address of the MMLLC.
  • Full name, permanent residence, nationality of Directors and Shareholder.
  • Company share capital.
  • Business Line
  • Contacts of the company such as email address, postal address, and mobile number
  • Name, enterprise identification number and address of headquarters of an organisation investor
  • Liens and encumbrances on assets and shares of the company.

NB: The only information treated as confidential is beneficial ownership information, which may only be disclosed in exceptional circumstances

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Board of Directors is the executive body; its members are directors.

Main duties, tasks and responsibilities of directors are:

• Duty to act in good faith and best interest of the company;
• Duty to exercise powers for proper purposes;
• Duty of care, skill, and diligence;
• Duty to avoid conflict of interest; and
• They have responsibility to run the day today activities of the company.

How are the members of the executive body appointed, dismissed and replaced?

Appointment is done through a resolution of the members/shareholders, followed by notification to the Registrar of Companies by filing the prescribed Form No. 210a along with the appointing resolution.

Dismissal is likewise effected through a resolution of the members/shareholders, with notification to the Registrar of Companies by filing the prescribed Form No. 210b along with the terminating resolution.

Is it possible to appoint corporate directors or must all directors be natural persons?

18.1 Yes, it is possible for an entity to be director of the company.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

19.1 There is no requirement to have non-executive Directors.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The title of the board of owners is shareholders/members

Their main responsibility is to contribute capital to the company and make key decisions that affect their interests including, appointing or terminating Directors, the Company Secretary and the Auditor, approving major transactions such as asset acquisition,, to change name of the company among others. They have the power to make core decisions of the company.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

There are no special governance requirements based on company size, especially for unlisted companies. The only specific governance requirements apply to listed companies. For example, publicly listed companies are required to establish a board of directors and have special committees such as an audit committee and a nominating committee. Additionally, the board of directors is required to disclose its annual report, including remuneration policies especially to the board. Furthermore, listed companies are required to have both a Chairman of the Board of Directors and a Chief Executive Officer.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Generally, at the end of an annual accounting period, the MMLLC (Company Limited by Shares) is required to prepare and submit Audited Financial Statements to the Tanzania Revenue Authority (TRA) and the Business Registration and Licensing Agency (BRELA). For a listed company, the statement need to be published in the company’s website.

Is the entity permitted to determine its own financial year?

Yes, but the entity must notify the Tanzania Revenue Authority (TRA) and Business Registration and Licensing Agency (BRELA)

Is the entity subject to any statutory (external) auditor obligations?

Yes, Audited Financial Statements must be audited by an independent auditing firm/auditor duly licensed to practice in Tanzania.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

The law requires the appointment of a company secretary and an auditor. The functions of the secretary are:

• Filling annual returns, auditor's report, and audited financial statements; to relevant authorities (BRELA and TRA)
• Filing of beneficial owner information
• Ensuring safe custody of the company seal;
• Processing share transfer documentation and recording and maintaining the register of members and minutes book; and
• Filing all changes of the company with the company registry.

The functions of Auditor are:

• To report to the members on the true and fair view of the Financial Statements.
• To consider whether the information in the directors’ report is consistent with the Financial Statements.
• To give the following detail if not in the Financial Statements.
• Director’s emoluments, pensions, and compensation for loss of office.
• Details of loans to officers
• Disclosure of transactions involving directors and other connected persons.
• To form an opinion as to whether: -
• Proper accounting record have been kept
• Proper returns have been received from a branch not visited by them.
• The Balance Sheet and the Income Statement or Profit and Loss account are in agreement with accounting records.
• Any information they think necessary.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes, there are different classes of shares such as ordinary shares and preferential shares. Ordinary shares carry no special rights or restrictions. They rank after preference shares as regards to dividends and return of capital but carry voting rights. Preferential shares are called preferred since they have a preferential right to receive a fixed amount of dividend every year and a preferential right in regard to payment of capital on winding up.

What documentation is required for the transfer of ownership interests?

• Deed of Transfer.
• Sale agreement.
• Recent Audited Financial Statement.
• Board Resolution.
• Current BRELA Report proving ownership of shares.
• Certified copy of Memorandum and Article of Association.
• Certified copies of Identification and their Tax Identification Number of transferor and Transferee.
• Share certificates of the transferor.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

Yes, all the documents mentioned in question 29 must be submitted to the Tanzania Revenue Authority for assessment and payment of necessary taxes. After approval of the same, tax clearance will be issued to the transferor together with a deed of transfer stamped by the authority and the company must notify the Registrar of companies (BRELA) to effect the said changes. Notarisation of all documents must be done by a Notary public.

Are there any applicable stamp duties imposed when transferring ownership interests?

Yes, stamp duty 1% of the value of shares.

How are shares issued? (including information on payment obligations, registration requirements)

Shares are issued through three methods:

• Subscribing during incorporation of the company, payment can be done immediately or a promise to pay agreement can be signed between the subscriber and the company.
• Through allotment of reserved shares or increase of share capital then a company can allot shares by filing a Board Resolution for allotment and a prescribed form of allotment. These are then required to be filed with the Registrar of Companies for registration. Payment obligation is on the company.
• Through transfer of shares after payment by the transferee is made, there is an obligation on the transferor of shares to pay capital gain tax at Revenue Authority and stamp duty has to be paid by the company, then the said transfer is registered at Revenue Authority and finally at the company registry.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Can there be non-cash payments on 'ownership interests' (e.g. shares, quotas, interests, membership units)? If so, how is the value of the non-cash payment established?

Yes. A registered valuer must assess the value of the property intended to be exchanged for shares. For example, if the property is land or a business, the valuer is required to conduct a valuation. Upon completion of the valuation, the property will be transferred to the company in exchange for shares, based on the assessed value of the property.

Can there be share premium contributions without the issuance of 'ownership interests' (e.g. shares, quotas, interests, membership units)?

Yes. However, the sum equal to the aggregate amount or value of the premium on those shares has to be transferred to the account named “Premium account’.

Are partially paid shares/ownership interests permitted and what are the restrictions on them?

Yes, they are, but the restriction is that they are non-transferrable, and partially paid-up shares cannot receive full dividends.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Yes – although there are no direct provisions in the Act on this, it is done in practice. The most important documents are members' resolutions authorising cancellations, statutory declarations, and any applicable contracts.

Under the Companies Act, a company limited by shares or a company limited by guarantee that has share capital may reduce its share capital, but only if two key conditions are met such as:

• The company's articles of association allow it; and
• The shareholders pass a special resolution approving the reduction.

The legal Procedures for share reduction are as follows;

• Passing of Special Resolution accompanied by certificate of Solvency signed by directors to the effect that the company is able to pay its debts as they fall due
• Auditor’s report verifying the solvency statement  
• Advertisement of the special Resolution in the Government Gazette (if the company is a public listed company, it has additionally be published in the Newspaper)
• After the expiration of thirty-five days from the date of passing and advertising the resolution, the same must be filed with the Registrar of Companies for notification purposes.

Any requirements with respect to distributions to shareholders?

Dividends are only paid to the fully paid-up shares. Dividends to the owner can be authorised by the owner from profits after fulfilment of tax obligations and other financial obligations of the company. Dividends are taxed.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, they can and they must state what prevails between the shareholders agreement and the memorandum and articles of association in case of conflict.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Filing annual return on anniversary date of incorporation, which is USD 10 annually, and USD 220 for a branch.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

Both local and foreign entities are subject to 30% corporate tax.

Summary of any specific matters, e.g. recent or prospective major legal developments

Yes. Currently, the filing of beneficial ownership information is strictly enforced. BRELA does not authorize any company-related transactions including share transfers, filing of annual returns, registration of charges, or changes to company particulars unless the company has submitted its beneficial owners’ information through the Online Registration System (ORS).

Beneficial owner is defined as a natural person who:
• Directly or indirectly ultimately owns or exercises substantial control over an entity or an arrangement;
• Has substantial economic interest in or receives substantial economic benefit from an entity or arrangement directly or indirectly whether acting alone or together with other persons;
• On whose behalf an arrangement is conducted; or
• Exercises significant control or influence over a person or arrangement through a formal or informal agreement.

Information required to file beneficial ownership with registrar of Companies includes –

1. full name (including any former or other name);
2. date and place of birth;
3. telephone number;
4. nationality;
5. national identity number, passport number or other appropriate identification;
6. residential, postal and email address (if any);
7. place of work and position held;
8. Nature and percentage of the interest (whether direct or indirect) ; and
9. information as to political exposure of the beneficial owner