There
are various ways by which companies may be classified. Companies may be
classified on the basis of ownership or
members, on the basis of liability,
on the basis of control and on the basis of incorporation
On
basis of ownership/members: Public and Private Companies
1.) Public Company
means a company, which is not a private company.
Basic Characteristics
a. The general public is
allowed to subscribe for membership on fulfilling of few general conditions.
The minimum number of members is seven.
b.
It can not commence business unless it obtains a certificate of commencement of
business] c. The memorandum of public company shall state that it is a public
company
d.
Transfer of shares is free.
Under the Companies Act a public company is
the company limited by shares or guarantee and having a share capital, being a
company the memorandum of which states that it is to be a public company.
2.) Private Company
This
is normally what Americans call a close corporation. A private company
(sometimes refereed as to quasi- partnership company) is in nature of a
partnership of persons with mutual confidence in each other and its articles
place positive restrictions on absolute transfer of shares. See S. 27 of Cap 212.
Basic characteristics
a.
Restricted membership. Section 27(1) (b) of Cap 212 limits the number of its
members to fifty. In determining this number of 50, employee-members and
ex-employee members are not to be considered.
b.
Restricts the right of members to transfer its shares S. 27(1) (a) of Cap 212
c. Prohibits any invitation to the public to subscribe to any shares in or the
debentures of the company. S. 27(1) (c) of Cap 212. The Companies Act, 2002
creates an offence for a private company which is not a private company limited
by guarantee and not having a share capital to offer to the public (whether for
cash or otherwise) any shares in or debentures of a company.
S
28 of the Act states that if a private company alters its articles such that
they no longer include the provisions required for a private company (s.27),
the company shall on the date of the alteration, cease to be a private company
and shall amend its memorandum to state that it is a public company. The
company should, within 14 days send notification to the registrar who shall
issue a certificate to the effect that the company is the public company.
On the basis of
liability: Limited and Unlimited companies
Companies may be limited or unlimited
companies. Company may be limited by shares or limited by guarantee. "Limited Liability" - this refers
to the liability of the members, not the liability of the company. The company
will always be liable to the full extent of its debts.
(a) Company
limited by shares (s.3(2)(a) of Cap 212
(i)
The most common kind of registered company.
(ii)
Members of the company take shares issued by the company. Each share is
assigned a nominal value - the amount that must be paid to the company for the
share.
(iii)
When the company is registered, its memorandum must state the total nominal
value of all the shares it is going to issue (called the registered capital, or
nominal capital or authorized share capital). The memorandum also states the
number of shares to be issued: e.g. 10,000 shares of Tshs. 100 each =
registered capital of Tshs. 1,000,000.
(iv)
Liability of a member (shareholder),
when the company is wound up is limited to the amount, if any, on the nominal
value of his shares that has not been paid. No member of company limited by shares
can be called upon to pay more than the face value of shares or so much of it
as is remaining unpaid.
(v)
Shares are normally partly or fully paid for when issued, so company will have
a contributed capital.
b)
Company limited by the guarantee.
S.
3(2)(b) of Cap 212 A company limited by guarantee is a registered company
having the liability of its members limited by its memorandum of association to
such amount as the members may respectively thereby undertake to pay if necessary
on liquidation of the company. Members agree to contribute a specified amount
to the company’s assets in the event of the company being wound up. (Total
amount payable by all members is called the "guarantee fund").
Companies limited by guarantee are not usually formed for business ventures
The
liability of members to pay the guaranteed amount arises only when the company
has gone into liquidation and not when it is a going concern. Members,
therefore, do not have to pay anything as long as company is a going concern -
so company has no contributed capital.
C.
Unlimited Company: S.3(2)(c)
The
liability of members of an unlimited company is unlimited. Therefore their
liability is similar to that of the liability of the partners of a partnership
firm. The following are basic characteristics of unlimited companies
I. Members have unlimited liability (If
company is being wound up, members can be made to contribute to the company’s
assets without limit to enable it to pay its debts.)
II. Cannot be public companies. III. Can be set up
with or without a share capital.
III. Not subject to the same restrictions on
alteration of capital as other types of company, and do not normally have to
file annual accounts.
On the basis of control
(Holding and Subsidiary companies)
When
a company has control over another company it is known as a holding company.
The company so controlled is known as a subsidiary company. A company shall be
deemed to be subsidiary of another company if: -
1.
That other company controls the composition of its board of directors; or
2.
That other company holds more than half in face value of its equity share
capital
3.
Subsidiary of another subsidiary. Where the company is a subsidiary of another
company which is itself a subsidiary of the controlling company, the former
becomes the subsidiary of the controlling company e.g. Company B is subsidiary
of the Company A and Company C is subsidiary of Company B, therefore Company C
is subsidiary of Company A.
The
control of the composition of the Board of Directors of the company means that
the holding company has the power at its discretion to appoint or remove
majority of directors of the subsidiary company without consent or concurrence
of any other person. In determination whether one company is subsidiary of
another, shares held or powers exercisable in the following cases shall not be
taken into account.
a)
Any shares held or power exercisable by the other company in fiduciary capacity
b)
Where shares are held or power is exercisable by any person by virtue of the
provisions of any debenture or of a trust deed for securing any issue of such
debentures; and
c)
Where shares are held or power is exercisable by lending company by way of
security only for the purpose of a transaction entered into in the ordinary
course of that business You may also refer to section 487 of the Companies Act.
On the basis of
incorporation
(1) Statutory:
These are companies created by special Act of
the legislature. Such companies are generally formed to carry out some special
undertakings. These companies are owned by the government and the main
objectives of these companies are to provide some necessary services for the
benefit of the entire country. The provisions of companies Act may apply if not
inconsistent with the special Act.
S.2
of the Companies Act defines Statutory Corporation as the meaning given in the
public corporations Act: ''public corporation'' means any corporation
established under the Public Corporation Act or any other law and in which the
Government or its agent owns fifty one percent or more of the shares but does
not include an institution of learning, a district development corporation, a
research institution or a sports institution;
(2) Registered:
These
are Companies formed and registered under Companies Act 2002, Cap 212. Such
companies come into operation only when they are registered under the Act and
the certificate of incorporation has been issued by the registrar. Such
companies derive their powers from the Companies Act, memorandum and articles
of associations.
(3)
Unregistered Companies – S.425 of
Companies Act, 2002
(4) Foreign Companies means a company
incorporated in a country other than Tanzania under the law of that other
country and has established the place of business in Tanzania. According to
S.433 of the Companies Act, foreign companies are companies incorporated
outside Tanzania, which, after the appointed day, establish a place of business
within Tanzania and companies incorporated outside Tanzania which have, before
the appointed day, established a place of business within Tanzania and continue
to have a-place of business within Tanzania on and after the appointed day.
A
foreign company shall not be deemed to have a place of business in Tanzania
solely on account of its doing business through an agent in Tanzania at the
place of business of the agent. According to section 434 of the Companies Act,
Foreign companies which, after the appointed day, establish a place of business
within Tanzania shall, within thirty days of the establishment of the place of
business, deliver to the Registrar for registration –
(a)
a certified copy of the charter, statutes or memorandum and articles of the
company or other instrument constituting or defining the constitution of the
company, and, if the instrument is not written in the English language, a
certified translation thereof,
(b)
a list of the directors and Secretary of the company containing the following
particulars; his present name and surname and any former name or surname, his
usual address, his nationality and his business occupation, if any; Provided
that, where all the partners in a firm are joint secretaries of the company,
the name and principal office of the firm may be stated instead of the
particulars mentioned
(c)
a statement of all subsisting charges created by the company, being charges of
the kinds set out in section 99 and not being charges comprising solely
property situate outside Tanzania;
(d)
The names and addresses of one or more persons resident in Tanzania authorised –
(i)
To accept on behalf of the company service of process and any notices required
to be served on the company, and
(ii)
To represent the company as its permanent representative for the place of
business, including a statement as to the extent of the authority of the
permanent representative, including whether he is authorized to act alone or
jointly.
(e)
the full address of the registered or principal office of the company, and the
full address of the place of business in Tanzania;
(f)
a statutory declaration made by a director or Secretary of the company stating
the date on which the company's place of business on Tanzania was established,
the business that is to be carried on and, if different from the registered
name of the company, the name under which that business is to be carried on;
(g)
a copy of the most recent accounts and related reports of the company
including, where such are not in English, a translation of the same. On the
registration of the documents specified above, the Registrar shall certify
under his hand that the company has complied with the provisions of that
section and such certificate shall be conclusive evidence that the company is
registered as a foreign company. This certificate is commonly known as
“Certificate of Compliance”.
