Practice Areas > Company Formation
LawCastles provides services to new and existing businesses by acting as a company formation/incorporation agent. Our law firm provides company formation services as part of the general services of assisting foreign individuals and other business entities to set up their legal presence in Tanzania. Our specialist knowledge and vast experience enable us to provide fast and efficient company formation services. We can incorporate a company limited by shares; company limited by guarantee and register a foreign company in Tanzania through obtaining a certificate of compliance.
Incorporation
Generally, there are two major options which may be considered by a foreign company for establishing legal presence in Tanzania:
· The first option is to obtain a ‘Certificate of Compliance’. Under this option, a foreign company is allowed to conduct business in Tanzania after being certified by the Companies Office that, it has complied with the requirements of Tanzanian companies’ legislation. The documents required for obtaining certification are (i) audited financial statements which must be in English; (ii) copy of the charter/constitution or other instrument under which a foreign company was formed. This must be certified by the foreign ministry of a country where the company is incorporated and must be in English; (iii) names of directors of a company and the name of a company secretary; (iv) details of charges by lenders over the foreign company assets, if any; (v) names of resident individuals who are representing a foreign company in Tanzania; (vi) intended address of the foreign company in Tanzania; and (vii) statutory declaration by one of the directors or secretary confirming the nature of the business to be carried out in Tanzania.
· The second option is to incorporate a new company in a form of a subsidiary of a foreign company. A subsidiary is a new company, which in law a separate entity from a foreign company. The documents required for incorporation of a new company in Tanzania are (i) the name of the local company to be incorporated; (ii) names of the first shareholders (at least two); (iii) names and addresses of the first directors (at least two); (iv) address of the proposed registered office; and (v) memorandum and articles of association.
Once you have provided us with basic information, we are able to process company incorporation immediately. If some of the information is not immediately available, we can use our own nominee director, nominee secretary and nominee shareholders for initial formation purposes and then transfer the company to new individuals after incorporation. We act as nominee director and nominee secretary for formation purposes and use our address for the registered office, and then it all goes off to Company Registry for forming. Once the company's certificate of incorporation is issued by the Registrar of Companies, we resign as director and secretary and fill out all forms, ready for you to appoint your own director, company secretary and where you want the registered office to be.
Once you have filed the necessary forms to Companies Registry, the company is totally yours and we have nothing to do with the company unless you want us to be your registered office or company secretary. The two shares we issued for formation purposes will be transferred to you. With the company, you receive the original copy of the certificate of incorporation, one certified and bound copy of your Memorandum & Articles of Association, minutes of the first meeting of directors, stock transfer forms duly completed and signed by nominee subscribers and a declaration that we no longer have interest in the shares we held at the time of company formation. Basically, when you receive these documents you just need to fill the necessary forms to appoint your own director and secretary and to change your registered office. In additional to above services, we provide the service of full time nominees. This service is provided for signatory purposes only and is ideal for sole traders and foreign clients when a permanent Tanzanian based signatory is required to sign documents at short notice.
LawCastles has also designed a specialist service to provide our clients with anonymity from their limited liability company. By appointing our corporate nominee director and secretary you can remain anonymous from your company, as no personal details will be recorded at the Companies Registry. You will still be control the company as an authorised representative but it will not be possible for someone to search Companies Registry to identify you. If you combine the nominee director service with our nominee shareholder and nomineee secretary, then no reference will be made to you at the Companies Registry. You will however still retain full control and ownership of the company through special arrangement. This service has been designed to allow our clients to retain their privacy for legitimate reasons in a world where your personal information can easily be obtained by anyone who knows where to look. This service should not be used for any illegal purposes.
The details of the company secretary, director or shareholder that are recorded at the Companies Registry must be updated each year. You will be contacted regarding confirmation of contact details and other information required in the filing of annual return. If we are to provide an efficient service, you will need to keep us informed of any changes in contact details. If we are unable to contact you, we will be unable to file the annual return, nor continue to act on your behalf. Ultimately, we will have to refer the matter to Companies Registry. If you intend to incorporate a company in Tanzania, please go through the guidelines on the specific requirements. If you need further information or clarification, please contact us.
Investment Registration
The Tanzania Investment Act, 1997 (“Act”) is the principal law guiding investment activities in Mainland Tanzania. Section 4 of the Act creates the Tanzania Investment Centre (TIC). TIC grants Certificate of Incentives to investors which provide them with a package of tax incentives, immigration requirements relaxation, guarantee against nationalization and expropriariation, and land ownership advantages. In addition, TIC’s mandate includes both investment facilitation and investment promotion. The functions of the TIC include, but are not limited to, assisting all investors to obtain all necessary permits, licenses, approvals, consents, authorizations, registrations, and other matters required by law for a person to set up and operate an investment. In other words, as contemplated under Section 16 of the Act, the TIC is intended to be a “one-stop center” for all investors.
In order to enhance the efficient operation of the TIC as a “one-stop center” for investors, Section 16 of the Act requires that all government agencies and other public authorities cooperate fully with the TIC in the performance of its functions. For example, if a license or approval from another authority is required by an investor, the TIC works with the relevant authority to secure the necessary license or approval. Under Section 16(3) of the Act, the relevant authority must issue the required license or approval (or serve a written objection) within 14 days of receipt of the request. In addition, TIC coordinates the establishment of all business enterprises to which the Act applies, including incorporation or registration of business enterprises, the filing of VAT forms, the filing of investment registration forms, facilitating the necessary licenses, approvals, facilities, or services, and the filing of immigration forms.
Persons applying for a Certificate of Incentives must pay a US$ 100 fee to obtain the Application Form. The complete application must be returned to TIC with the following documents: (a) Three copies of the project’s business plan. Generally, the business should aim at foreign exchange generation and savings, import substitution, creation of employment opportunities, linkage benefits, transfer of technology, expansion of production of goods and services etc. It is expected that the business plan contains the following information: clear statement of the project objective, investor’s profile, details of investment costs (foreign and local expected capital expenditure), how the proposed investment will be financed, specific sources(s) of finance for the project, terms and conditions of the loan (if applicable), sources of technology (if applicable), project financial and economic analysis, market study, project capacity, production process (if applicable), environmental impact assessment, expected employment generation, proposed implementation schedule, etc.; (b) Three duly filled copies of TIC application forms; (c) A copy of audited accounts for the past three years; (d) A copy of the Memorandum and Articles of Association.A certified copy of the Certificate of Incorporation; (e) A brief profile of the applicant (separate from profile contained in the business plan); (f) Evidence of sufficient finance capital available to implement the project (equity and commitments by lenders); (g) Evidence of land ownership for the location of the project. This can be more than one location; (h) Board Resolution authorizing to register with TIC; (i) Project implementation schedule; (j) An overall covering letter to which all the above are attached; and (k) A fee of US$ 750 which will be paid for the Certificate of Incentives when the application is processed by TIC.
Secretarial Services
To relieve international companies of an administrative burden and to give them confidence that legislative obligations are met, we offer company secretarial services that deals with company formations and all statutory compliance requirements. Our law firm has qualified lawyers and one certified public accountant who are currently teaching company law at universities. Every Tanzanian limited liability company must have a company secretary who will perform a variety of tasks that are crucial to the smooth running of the company, which includes ensuring that the company's statutory obligations are complied with. LawCastles will act as your Tanzanian company nominee secretary or as a joint company secretary to ensure that you are compliant with the Companies legislation. We can act as company secretary through a nominee company owned by our firm or by appointing one of our attorneys and we can provide a registered office service. We undertake the maintenance of the company's statutory registers and the filing of returns and other documents with the Registrar of Companies as appropriate.
We can help to ensure that incorporations are effected with the correct corporate structure, both as to type of company (public or private, share capital or guarantee, joint venture company, etc) and with appropriate provisions in the company's Memorandum and Articles of Association. Ongoing support and advice is then available on Board and shareholders' meetings, appointment and retirement of directors, share issues and transfers, and all other technical and procedural matters.
As a rule, the company secretary does not have any involvement in the day-to-day operations of the business and does not become signatory to any bank accounts. Our company secretarial services to your company include preparing and filing annual return; filing annual accounts; maintaining the registers that a Tanzanian company is required to keep by law; filing information on changes in directors'/secretaries' details; filing information on change in the registered office; filing information regarding changes in shareholdings and share structure; issuing share certificates; issuing dividend vouchers; making arrangements for a company meetings; and maintaining the minute book, etc.
Shareholding Restrictions
Subject to the exchange control restrictions and sector specific laws, ownership of a company by foreign persons and companies is generally not restricted. Most of business activities are open to foreign investors. In a few sectors such as shipping agencies, insurance, telecommunications and broadcasting, ceilings have been placed on foreign shareholdings by licensing authorities. Under the Shipping Agency Act, 2002 a license to conduct shipping agency business can only be granted to a citizen of Tanzania or body corporate incorporated in Tanzania in which more than 50% of the share capital is held directly or indirectly by a citizen of Tanzania. A licence to provide telecommunications and postal services can only be granted to an entity in which a local shareholder possesses thirty five percent of the shares. In case of broadcasting content businesses, a licence can only be granted to an entity in which a local shareholder possesses a minimum of fifty one percent of equity interest. Section 8 of the Insurance Act, 1996 provides that an insurance company to be registered in Tanzania must be locally incorporated and at least one third of the controlling interest (whether in terms of shares, paid up capital or voting rights) must be held by citizens of Tanzania and at least one third of the members of the board of directors must be citizens of Tanzania. There are also foreign shareholding limitations in companies holding certain types of mineral rights under the Mining Act, Cap. 123.
Stock Exchange Participation
For companies listed at Dar es Salaam Stock Exchange (‘DSE’), the Capital Markets and Securities (Foreign Investors) Regulations, 2003 set out the limit of aggregate securities to be held by foreign investors. The applicable regulations provides among other things that: (a) Foreign investors are allowed to purchase up to a maximum of 60% of the shares floated at DSE. The remaining 40% of the shares floated must be reserved to Tanzanian investors; (b) For listing that is taking place in a form of initial public offering, preference to purchase the shares must be given to Tanzanian investors unless the Tanzanian investors are unable to purchase all the shares offered; (c) Government securities are excluded from purchase by foreign investors; and (d) The sources of funds for the purchase of shares and bonds by foreigners must be from inward foreign currency remittances, or debits to foreign currency accounts, or withdrawals from local currency accounts opened by a foreign investor at a licensed banks operating in Tanzania provided that both foreign currency accounts and local currency accounts must be funded from external sources.
Land Ownership
In Tanzania, all land is declared to be a public land and private individuals and companies can own land either by way of right of occupancy or lease. There is no freehold system in Tanzania. Rights of occupancy are always given for a term not exceeding 99 years. Leases can be created out of a right of occupancy for any term which does not exceed the length of the right of occupancy. The Land Act, 1999 restricts the right to foreigners to hold land in a form of rights of occupancy. A company is considered to be a foreigner if fifty one percent of its shareholders are foreign individuals or companies registered in other countries. Foreigners are only allowed to hold land in a form of either right of occupancy or long term lease (called ‘derivative rights’) for the purpose of the project registered by Tanzania Investment Centre (‘TIC’). Accordingly, before acquiring land, in a form of right of occupancy or long term lease, a foreign entity must submit the project to TIC for registration. It is possible for a ‘foreign entity’ to enter into a contract to purchase land subject to obtaining TIC certificate. To qualify for and obtain the certificate of incentives under this Act, a minimum fixed direct investment must be at least US$ 300,000 for projects wholly owned by foreign investors or joint ventures between Tanzanian citizens and foreign investors. Upon registration of investment, TIC issues a formal certificate of incentives, which serves as the official recognition of a company’s entitlement to incentives provided under the Investment Act, 1997. There are various investment incentives that the holder of the certificate of incentive is entitled including holding land in a form of in a form of right of occupancy or long term lease.
To contact the partner in charge for company formations, please click here.