Introduction
Any
person wishing to incorporate a company in Tanzania may wish to follow the
following procedure stipulated herein below.
A. CHOICE OF TYPE
The
first thing to consider in formation of a company is choice of type. The promoters will first have to make up their
minds which of the several types of Registered Company they wish to form, since
this may make a difference to the number
and types of documents required, and will certainly affect their content.
First,
they must choose between a limited and an unlimited company. The disadvantage
of the latter is that its members will ultimately be personally liable for its
debts and for this reason they are likely to be wary of it if the company intends
to trade, see section 3 (2) (c) of Cap
212 R.E 2002.
According
to section 10 (1) of Cap. 212, a
company having an unlimited liability, the
articles must state the number of
members with which the company proposes to be registered and, if the
company has a share capital, the amount
of share capital with which the company proposes to be registered.
Where an unlimited company or a company limited by
guarantee has increased the number of its members beyond the registered number,
it shall, within fourteen (14) days after
the increase was resolved on or took place, give to the Registrar notice of the increase, and the Registrar shall record
the increase. If default is made in complying with this subsection, the company
and every officer of the company who is in default shall be liable to a default
fine. See section 10(3) Cap. 212
R.E. 2002.
v If they
decide upon a limited company they must then make up their minds whether it is
to be limited by shares or by guarantee. This is to be decided by them by
the purpose which the company is to perform. Only if it is to be a non- profit
making concern are they likely to form a guarantee company which is especially
suited to a body of that type.
A Company
limited by Share is a company having the liability of its members limited
by the memorandum to the amount, if any, unpaid on the shares re- spectively
held by them while a company having the liability of its members limited by the
memorandum to such amount as the members may respectively thereby undertake to
contribute to the assets of the company in the event of its being wound up a company limited by guarantee, see section 3(1) & (2) of Cap 212.
Overlapping these distinctions, but closely bound
up with them, is the further point of whether or not the company is to be
limited by share capital. If, as in most probable, the company is to be limited
by shares this question does not arise. Likewise if it is to be limited by
guarantee. But if the company is unlimited it may or may not have its capital
divided by shares. Once more, the decision is dependent on the company’s
purpose; if the company is intending to make and distribute profits a share
capital will be appropriate.
They will further have to make up their minds
whether the company is to be public or private company. Public and private company fulfil different
economic purposes; the former to raise capital from the public to run the
corporate enterprise, the latter to confer a separate legal personality on the
business of a single trader or a partnership.
Once again, therefore, the choice will in practice
be clear-cut and normally it will be to form a private company.
The incorporator may have the ultimate ambition of going public in this regard they must
form a public company. The Memorandum must state that it is a public company
and special requirements as to its registration will have to be complied with
see section 3(3), 4, 15, 114 of Cap. 212
R.E. 2002
As
provided under section 114, where a
public company having a share capital has issued an offer document inviting the
public to subscribe for its shares, the company shall not commence any business
or exercise any borrowing powers unless it has complied with the requirements
as included from time to time in regulations made by the Minister for the time
being re- possible for finance, or the Capital Markets and Securities Authority
or such other authority as may be designated for the purpose.
If any public company commences business or
exercises borrow-ing powers in contravention of this section, every person who
is responsible for the contravention shall, without prejudice to any other
liability, be liable to a default fine.
Theoretically therefore, the incorporators will
have a choice of five types:
i.
A public company limited by
shares
ii.
A private company limited by
shares
iii.
A private company limited by
guarantee and without a share capital
iv.
A private unlimited company
having a share capital
v.
A private unlimited company not
having a share capital.
In practice the choice, however is likely to be
between (ii) and (iii) and will be determined by them according to whether they
want the company to trade for the profit of the members or to perform some
charitable or quasi- charitable purpose.
B.
NAME OF A COMPANY
The
Second thing, the incorporator must next decide on a suitable name. The Act
requires the name to be started in the memorandum of association, on a company
seal, on a business letters, negotiatable instruments and order forms and must
be affixed outside every office or place of business.
Section 30 of Cap. 212 R.E. 2002, the registrar
may, on written application (here application is for name clearance) reserve a
name pending registration of a company or a change of name by a company. Any
such reservation shall remain in force for a period of thirty days or such longer period not exceeding sixty days, as the
registrar may, for special reasons, allow, and during such period no other
company shall be entitled to be registered with that name.
NOTE: Currently, BRELA established ONLINE BUSINESS NAMES REGISTRATION SYSTEM including
company name clearance and official search. Person wishing to register a
company must visit BRELA website and establish OBNRS account. After establish
account then provide email address/mobile phone number and your
OBRS password to in order to login in into the OBRS system.
The next step is to type the intended name of the company and wait for
two hours. You will be notified as to whether you can proceed or not.
Before
establishment of Online Business Names Registration
System, a person wishing to establish a company was supposed to apply via Form
1 as shown here in below
THE
UNITED REPUBLIC OF TANZANIA
JAMHURI YA MUUNGANO YA TANZANIA
BUSINESS
NAME (REGISTRATION) ACT (Cap.213)
(SHERIA
YA KUANDIKISHA MAJINA YA BIHASHARA (Sura 213)
Statement of
Particulars in case of a Corporation
(Fomu
Kama Mmiliki ni Shina/ Kamuni)
NOTE
(Angalizo) This statement must be signed by a Director or Secretary of the
Corporation (Taarifa hii isaiiniwe na Mkurugenzi au Katibu wa Shirika/Kampuni)
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1.
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Business Name to be registered
(Jina la Bihashara linalopendekezwa)
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2.
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Nature of Business
(Biashara
utakayokuwa unafanya)
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3.
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(a) Postal address
(anwani
ya Posta)
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(b) Business address
(
Mahali ilipo biashara)
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Number
(Namba)
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Street(Mtaa)
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District(Wilaya)
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Region (Mkoa)
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(c) Phone numbers( Namba za simu)
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(d) Email (Barua pepe)
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4.
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Corporation Name
Jina la Kampuni
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6.
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Situation of the Registered or principal office
of the Corporation
(Anwani ya mahali ofisi za Shilika/Kampuni zilipo
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Number
(Namba)
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Street( Mtaa)
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District(Wilaya)
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Region( Mkoa)
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7.
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Other Business of the Corporation (if any)
Shirika/Kampuni linafanya shughuli/kazi gani
nyingine?)
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8.
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Have you ever used this Business name before? (Je
jina hili la Biashara limeshaanza kutumkika?)
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a.
YES ( state the date that you
have started using it)
NDIYO (andika tarehe uliyoanza
kulitumia)
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b.
NO (write the date that you are
applying)
HAPANA( andika tarehe ya
kuletwa ombi hili)
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9
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Application date ( Tarehe ya kuleta ombi hili)
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10
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Signature, Seal/Stamp of the Corporation
(Saini na Mhuri wa Shirika/Kampuni)
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The use
of general terms e.g wholesale and retail must be avoided. Particulars
sufficient to identify the type of business carried on must be given (Epuka
amtumizi ya maneno ya jumla kama vile “Biashara ya jumla’’
Then, the registry clears establish:-
- The availability or non availability of the
applied name
- Desirability of such name.
As
provided by section 9 of the Business Names
(Registration) Act Cap. 213 Registrar
shall refuse to register any firm, individual or corporation carrying on
business under a business name–
1. which contains any word, which in
the opinion of the Registrar, is likely to
mislead the public as to nationality, race or religion of the persons by
whom the business is wholly or mainly
owned or controlled;
2. which includes any of the words
"Imperial", "Royal", "Empire", "Commonwealth",
"Government", "Municipal", or any other word, in such a
context as, in the opinion of the Registrar, imports or suggests that the business
enjoys the patronage of Her Majesty or of any member of the Royal Family or as
to import any connection with or recognition by the Government of any part of
Her Majesty's dominions or a local authority;
3. which includes the words
"building society" or "co-operative" or their equivalent in
any other language or any abbreviation thereof;
4. which is identical with or is similar to that
under which any firm, individual or corporation is registered under this Act,
or under the Companies Act or under the Co-operative Societies Act if in the
opinion of the Registrar such registration
would be likely to mislead the public.
Note: Private
limited company must contain the word limited at the end of its name. Section
32 of Cap. 212 provide an exemption in relation to a company limited by
guarantee. The object of it is to promoting commerce, art, science, education,
religion, charity or any other useful or social object, and intends to apply
its profits, if any, or other income in promoting its objects, and to prohibit
the payment of any dividend to its members.
Section 3
of Cap 212, any two or more persons, associated for any lawful purpose may, by
subscribing their names to a memorandum of association and otherwise complying
with the requirements of this Act in respect of registration, form an
incorporated company, with or without limited liability
C.
The MEMARTS
The next step is to prepare the memorandum and
articles. The Companies Act provides that a regards each of the various types
of companies, these documents shall be in the form specified by regulation.
The
present Regulations contain five Tables( A, B, C, D & E) of which table A,
prescribing model articles for a company (whether public or private) limited by
shares, is the most important and differs in its effect from the others. Such a
company does not have to register articles and if does not, Table A becomes its
articles. Even if it does register articles, in so far as these do not exclude
or modify Table A, its provision will apply. Section 11(2) of Cap.212 provides
In the case of a company limited
by shares and registered after the commencement of this Act, if articles are
not registered, or, if articles are registered, in so far as the articles do
not exclude or modify the regulations contained in Table A, Table A shall, so
far as applicable, constitute the articles of the company in the same manner
and to the same extent as if articles in the form of Table A had been duly
registered
In other hands, it, and any other type of company (which will have to
register articles) may, in them, adopt by reference any provisions of Table A,
see section 11(1) of Cap.212 R.E 2002.
In contrast, the model article in Table C (relating to a company limited
by Guarantee without a share capital), Table D (relating to a company limited
by Guarantee and with a share capital) and Table E (relating to an unlimited
company having a share capital) are merely models which cannot be adopted by
reference and will not apply for fill lacunae in the registered articles. Tables C and D also include model forms of
memorandum for the types of company to which they relate as does Table B (for a
public limited company).
Before preparing the memorandum and articles of association, the
draftsmen will need to obtain, from the promoters, information on matters such
as the followings:
1.
The
nature of the business- this will be required in
connection with the objects clauses of the memorandum unless the promoters are
content to adopt the general purpose formula in section 7
2. The amount of nominal capital and
the denomination of the shares into which it is to be divided
3. Any other special requirements
which deviate from the normal as exemplified by the appropriate Tables.
How to Adopt Table A
The main question for consideration is the extent to which Table A is to
be adopted. The option of not registering any articles, which is permissible
when the company is limited by shares, is rarely chosen because most such
companies on initial registration will be private ones and the incorporators
will wish to include the sort of restrictions on freedom to transfer shares
which were a pre- condition for qualifying as a private company.
The restrictions in Table A are limited to giving the directors a right
to refuse to register a transfer when 1. The shares are partly paid or 2. The
company has lien upon them. See Table A art.22 provides
“The director may refuse to
register the transfer of a share which is not fully paid to a person of whom
they do not approve and they may refuse to register the transfer of a share on
which the company has a lien’’.
When the
incorporation is a partnership or family business what will be wanted is an
absolute discretion to reject transfers and probably, provisions requiring the
shares to be offered to the existing shareholders if a member wishes to sell. A
common practice is to register articles which substitute alternative provisions
for certain Table A provisions but adopt the rest. This reduces the length of
the documents and the printing costs, see section 9 of Cap. 212 R.E 2002.
D.
LODGMENT OF DOCUMENTS
The final
step is to lodge certain documents at the companies’ Registry. The First of
these documents- the Memorandum and articles- must each have been signed by
each subscriber in the presence of at least one attesting witness, See section
5(1) Cap.212 R.E 2002.
If the company as share capital each
subscriber to the memorandum must write opposite his name the number of shares
he takes and must not take less than one. On lodging the memorandum and
articles of association they must be accompanied by two documents in the forms
prescribed i.e. Statement of Particulars
of the Directors and Secretary and Situation of Registered office and the
Declaration of Compliance. The first of these is required by section 14 of
Cap 212 R.E 2002. The relevant form is Form. 14 a.
The Second of the two documents, the
Declaration of Compliance, is required by section 14 and consist of a statutory
declaration by an advocate of the High Court engaged in the formation of the
company, or by a person named in the articles as a director or secretary of the
company, of compliance with all or any of the said requirements shall be
produced to the registrar, and the registrar may accept such a declaration as
sufficient evidence of compliance. The relevant form is Form. 14b
Normally
these will be the only documents required and all that will be needed in
addition is payment of the registration fees. All
payments are payable to the Registrar of Companies against which receipts are
issued. Applicants are advised to desist from making payments for which no
receipts are issued. Any demands or request by any officer in the Registry for
money which is not within the payment schedule stated, should forthwith be
reported to phone no. 2180113, 2181344, and 2180141 for necessary action.
Currently the fees are
as shown below
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SNO
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FEE DESCRIPTION
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FEE AMOUNT
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1
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Company whose nominal share capital is:
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- More than Tshs. 20,000/= but not more than
Tshs. 1,000,000/=
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TSHS 95,000 /=
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- More than Tshs. 1,000,000/= but not more than
Tshs. 5,000,000/=
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TSHS 175,000 /=
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- More than Tshs. 5,000,000/= but not more than
Tshs. 20,000,000/=
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TSHS 260,000 /=
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- More than Tshs. 20,000,000/= but not more than
Tshs. 50,000,000/=
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TSHS 290,000 /=
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- More than Tshs. 50,000,000/=
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TSHS 440,000 /=
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2
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For registration of a company not having a share
capital where the number of members as stated in the Articles of Association:
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TSHS 300,000 /=
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3
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Filling fee for the application, meaning shs.
22,000/= for each document i.e Memorandum and Articles of Association, Forms
no. 14a and 14b.
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TSHS 66,000 /=
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4
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Each Stamp duty for each copy of the Memorandum
and Articles of Association is charged
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TSHS 5,000 /=
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5
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Stamp duty for Form no. 14b is charged
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TSHS 1,200 /=
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6
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For reservation of a company name
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TSHS 50,000 /=
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7
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For company name change
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TSHS 22,000 /=
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8
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For the receipt and/or registration by Registrar
of any document which under the Act is to be delivered to him
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TSHS 22,000 /=
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9
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For the late filing/registration fee to be paid
to the Registrar of any document delivered to him (per month or part thereof)
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TSHS 2,500 /=
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10
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For filing of Annual Returns
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TSHS 22,000 /=
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11
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For certification of any document, per page
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TSHS 3,000 /=
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12
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For making search in any file/perusal
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TSHS 3,000 /=
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13
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For obtaining a written search report per file
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TSHS 22,000 /=
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14
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Fees payable by a company to which Part XII of
the Act applies
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- For the registration of certified copy of a
charter, statute or memorandum and articles of the company, or other
instrument constituting or defining the constitution of the company
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USD 750 /=
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- For registration of filling any document
required to be delivered to the Registrar under Part XII of the Act/other
than the balance sheet
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USD 220 /=
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- For filling of Balance Sheet
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USD 220 /=
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- For late filing/registration fee to be paid to
the Registrar of any document delivered to him out of time (per month or part
thereof)
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USD 25 /=
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15
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For obtaining a copy of Certificate of
Incorporation
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TSHS 4,000 /=
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However, as we
have seen, a second declaration may be needed if the company is a guarantee
company which wishes to dispense with “Limited”,
See section 32(1) & (2) Cap.
212 R.E 2002
Purchase of a Shelf- Company
If
the incorporators have no immediate special requirements regarding the
company’s constitution or name, but want their business to be incorporated as
rapidly as possible as a private company limited by shares, an alternative to
registering a new company is to buy one off-the- shelf from one of the agencies
which provide this service. This alternative is increasingly being adopted,
somewhat to the horror of traditional company Lawyers.
Its great
advantage is spread because all the incorporators have to do is to pay the
agency and to take transfers of the subscribers’ shares and custody of the
company’s registers. They will, of course, then have to send to the Registrar
notices of changes of the directors and secretary (with the required consent)
and of the situation of the registered office.
Any
other change such as alteration of articles or change of name can be affected
at leisure. The main disadvantage is that until they make changes, company’s
name is unlikely to bear any relationship to them or to the business being
carried on.
Registration
and Certificate of Incorporation
If
the registrar is satisfied that the requirements for registration are met and
that the purpose for which incorporators are associated is lawful he issue a
certificate of incorporation signed by him or authenticated under his official
seal.
Section 15 of Cap 212 R.E 2002 states that on the
registration of the memorandum of a company the Registrar shall certify under
his hand that the company is incorporated and, in the case of a limited
company, that the company is limited, and, in the case of a public company,
that the company is a public company
Section 16 of
Cap 212 declares that the certificate is conclusive evidence
a. that all
the requirements of this Act in respect of registration and of matters precedent
and incidental thereto have been complied with and
b. that the association is a company authorised
to be registered and duly registered under the Act.
The
functions of the Registrar in deciding whether or not to register the company
are administrative, rather than judicial, but refusal to register can be
challenge by judicial review, although with slight hope of success. However,
normally, the registration of a company cannot be challenged because of the
conclusive effect of the certificate.
However
this immunity is not complete. In R. V.
Registrar of Companies, ex p. H.M.’S Attorney- General (1991) BCLC 476, a
prostitute had succeeded in incorporating her business under the name of Lindi St Claire (Personal Service) Ltd” (the
Registrar having rejected her first preference of Prostitutes Ltd or Hookers
Ltd” and shown no enthusiasm for Lindi
St Claire (French Lessons ) Ltd”) and, with scrupulous frankness, she specified
its primary object in the memorandum as “ to carry on the business of
prostitution”. The court on judicial review at the instance of the Attorney -General
quashed the registration on the ground that the stated business was unlawful as
contrary to public policy.
Commencement
of Business
From
the date of registration mentioned in the certificate of incorporation, the
company, if it is a private company, becomes capable forthwith of exercising
all the functions of an incorporated company. But when it is registered as a
public company this is subject ... to section 114 (additional certificate as
the amount of allotted share capital).
The company
shall not commence any business or exercise any borrowing powers until the
Registrar has issued it with a certificate (commonly known as a Certificate of
Commencement or Trading Certificate). If any public company commences
business or exercises borrowing powers in contravention of this section, every
person who is responsible for the contravention shall, without prejudice to any
other liability, be liable to a default fine.
One condition for incorporating
these type of companies is the issuance of aoffer
document which prior to its registration must be approved by the capital
Markets and Securities Authority. A an offer document is in essence an
invitation to the general public to subscribe for shares
In the
word of section 44 of Cap. 212, an offer
document issued by or on behalf of a company or in relation to an intended
company shall be dated, and that date shall, unless the contrary is proved, be
taken as the date of publication of the offer document. As to what should be
contained in the offer document section 47 (1) of Cap. 212 is clear as every
offer document issued by or on behalf of a company, or by or on behalf of any
person who is or has been engaged or interested in the formation of the
company, must state the matters specified and contain the reports required to
be included from time to time in regulations made by the Minister for the time
being responsible for finance, or by the Capital Markets and Securities
Authority or such other authority as may be designated by that Minister for the
purpose.
Contractual
Effects of Memorandum and Articles of Association
Section
18 of Cap 212 provides that the memorandum and articles shall, when registered,
bind the company and the members thereof to the same extent as if they
respectively had been signed and sealed by each member, and contained covenants
on the part of each member to observe all the provisions of the memorandum and
of the articles
From that
provision, the following principles can be determined:
a.
The
memorandum and articles of association constitute a contract between the
company and each member. But it is a contract with
various special characteristics. Section 18 it provides that it is Subject
to the provisions of this Act (companies Act). Those provisions include section
which permits of alteration of memorandum and articles of association by means
of special resolution. Thus a member inter into a contract on terms which are
alterable by other party
b. The contract is enforceable among
the members inter se. The
principle occasions on which this question is likely to be important arise when
the articles confer on a member’s a right of pre-emption or first refusal when
another member wishes to sell his shares or mere rarely, impose a duty on the
remaining members or the directors to buy the shares of a retiring member.
c. The section is important in
relation to the rights of members to restrain corporate irregularities and to
the so called rule in Foss v.
Harbottle. (principle of proper plaintiff).
RE- REGISTRATION OF AN EXISTING
COMPANY
A company may wish, at some stage, to convert
itself into a company of a different type. This, in most cases, it may d*o
without the expense of affecting a complete re-organisation of the type
referred above and without having to form a brand new company.
1.
Private
Company becoming public
Under Cap 212 there are two situations in which a
private company can become a public company.
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By choice
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By Default
a. By choice.
Under section 8(b) of Cap 212 a private company can
become re-registered as a public company by passing a special resolution that
it should be so re-registered and applying to the Registrar in the prescribed
form (Form. 29) signed by a director
or the secretary, accompanying the application by a number of documents
designed to enable the Registrar to satisfy himself that the minimum capital
requirements for a public company are complied with.
The special resolution must alter the memorandum of
association to state that the company is to be a public company and must make
such further alterations as are necessary to comply with the provisions of the
Act in relation to public companies (including the change of the suffix to its
name from LTD to PLC) and must also make any needed alterations to its articles
of association.
Then, it
shall send notification to the Registrar in the prescribed form within a period
of fourteen (14) days as provided under section 29(1) of Cap 212 R.E 2002.
The documents that must accompany the application
are copies of:
a. The altered memorandum and
articles
b. Balance sheet dated not more than
seven months before the application and the auditors’ report theron,which must
be unqualified
c. A written statement by the
auditors that the balance sheet showed that at its date the company’s net
assets were not less than the aggregate of its called up share capital and
undistributable reserves
d d. If, since the balance sheet date,
shares have been allotted otherwise than for cash, the valuation report
e. Special resolution passed by the
general meeting
f.
Board of directors
resolution confirming that the special
resolution has been passed
If the Registrar is satisfied that the company may
be re- registered as a public company, he issues a new certificate of
incorporation which is conclusive evidence that the requirements have been
meet.
b. By Default
A private
company is required to:
1. restricts the right to transfer
its shares; and
2. limits the number of its members to fifty, not
including persons who are in the employment of the company and persons who,
having been formerly in the employment of the company, were while in that
employment, and have continued after the deter commi+-nation of that employment
to be, members of the company, and
3. prohibits any invitation to the public to
subscribe for any shares or debentures of the company.
If fails,
then, the company shall cease to be entitled to any privilege or exemption
conferred on private companies under any of the provisions of the Act, and
thereupon the provisions of the Act shall apply to the company as if it were a
public company, see section 28 Cap 212 R.E 2002.
It is the
High court of Tanzania, on being satisfied that the failure to comply with the
conditions was accidental or due to inadvertence or to some other sufficient
cause, or that on other grounds it is just and equitable to grant relief, may
on the application of the company or any other person interested and on such
terms and conditions as seem to the court just and expedient, order that the
company be relieved from such consequences as aforesaid.
The
application to the court must be by way of chamber summons supported by
affidavity of the company.
2.
Public
company becoming private
Public company
seeking to become a private company alters the company's memorandum including
by way of the deletion of a statement that the company is to be a public
company.
The
procedures are as follows:
a a. Convene Board meeting, in which
the proposed intention of going to private will be discussed by the Board of
Directors. When they agree together they will come up with a resolution
b. Issue the notice for summoning
the General meeting of the company where the resolution passed by the Board of
Directors will be presented and discussed and hence special resolution will be
passed
- Advertise special resolution passed to change
the company to private. This is to be published in the news paper which
circulates within the areas where the company operates like Tanzania Mainland.
c. Delisting the process of removing
shares in the stock exchange has to be made. The company has to apply for
removal of its security/ shares from the stock exchange. This will be governed
by rules of that particular stock exchange
d. Obtain the necessary approval
from the Registrar of Companies for registration process; this is done by
application where the company has to give reasons for change.
Documents Required
-
Notice of changing the company
-
Resolution passed by the Board of
Directors
-
Resolution passed by the General
Meeting
-
Certified copies of the extract
of the special resolution
-
Copies of advertisement made to
the public
-
Affidavit by the directors of the
company that the company is no longer listed in the stock exchange
-
Financial Annual return of the
three consecutive years
If the Registrar is satisfied that the company may
be re- registered as a private company, he issues a new certificate of
incorporation which is conclusive evidence that the requirements have been
meet.
3.
Unlimited
company becoming limited
A company registered as unlimited may register as
limited, but the registration of an unlimited company as a limited company
shall not affect the rights or liabilities of the company in respect of any
debt or obligation incurred, or any contract entered into, by, to, with, or on
behalf of the company before the registration. But it is subject to the
provisions of the Companies Act.
On
registration in pursuance of this section, the Registrar shall close the former
registration of the company, and may dispense with the delivery to him of
copies of any documents with copies of which he was furnished on the occasion
of the original registration of the company, but save
as above, the registration shall take place in the same manner and shall have
effect as if it were the first registration of the company
The procedures are;
a. Passing of a special resolution
b. Making necessary alteration to
its memorandum and articles ( a copy of these must be forwarded to the
registrar
c. An application must be made in a
prescribed form, signed by a directors or the secretary.
