Prior to the 1st of March earlier this year, the main legislation relating to companies in Tanzania was the Companies Act Cap. 212 which was enacted in 1929. This legislation regulated trading companies and other associations including the imposition tax on nominal capital, regulation of dividends and surpluses and related matters. This legislation was in force for over 77 years which period covered not only the tail end of the colonial period but also the period of state-planned economy through to liberalisation in the 1990s. Clearly it was time for reform to cover an increasingly sophisticated market and the dramatic changes to the Tanzanian economy.
The new reforms are contained in the Companies Act 2002 (the “CA 2002”), an act on the shelf for almost three years which came into force as from the 1st of March, 2006.
The CA 2002 introduced significant reforms to Tanzanian company law. Its full title alone imparts some of the significance of the act, stating that it is an act to repeal and replace law relating to companies and other associations, to provide for more comprehensive provisions for regulation and control of companies, associations and related matters. The question then is how far reaching are these reforms, and how difficult compliance. The short answer is that the new legislation introduces substantial changes but is intended primarily to clarify existing legislation regarded by many as unclear. Given the intention therefore of the new legislation is simply clarification, compliance should be relatively straightforward. The key reforms brought in by the CA 2002 are as follows.
The CA 2002 was drafted and enacted in order to take into consideration developments in corporate governance and directors' duties. Directors previously had various common law duties which have now been enshrined in the CA 2002, and are now statutory duties. These duties include a duty to act in...