Deadline To Disclose Beneficial Ownership In Tanzanian Companies Extended To 31 December 2021

• Published date: 10 March 2021
• Subject Matter: Corporate/Commercial Law, Tax, Corporate and Company Law, Transfer Pricing
• Law Firm: Anjarwalla & Khanna
• Author: Shemane Amin and Daniel Ngumy

Introduction

On 12 February 2021, the Minister for Industry and Trade extended the deadline for companies registered in Tanzania before 1 July 2020 to submit their beneficial ownership information from 31 December 2020 to 31 December 2021. ¹ We highlight below salient features of the beneficial ownership disclosure requirements and what this means for companies registered in Tanzania given that the regulations to operationalize the beneficial ownership disclosures are yet to be enacted. In practice, the Business Registration and Licensing Agency (BRELA) is not processing beneficial ownership information pending the enactment of the requisite regulations and this likely explains why the deadline for the submission of information has beeextended.

Introduction of Beneficial Owner Disclosures in 2020

In July 2020, the Companies Act, 2002 was amended to require every company registered in Tanzania to disclose its beneficial owners with the Registrar of Companies. The Government subsequently released the draft Companies (Beneficial Ownership) Regulations, 2020 (the draft Regulations), which set out further details on the forms, particulars and processes relating to the disclosure requirement. The draft Regulations have not yet been enacted and this has occasioned administrative challenges in terms of BRELA's ability to operationalize the filing requirements.

Who is a beneficial owner?

A beneficial owner is defined under the Companies Act as a natural person (i) who directly or indirectly ultimately owns or exercises substantial control over an entity or an arrangement, or (ii) who has a substantial economic interest in or receives substantial economic benefit from an entity or an arrangement directly or indirectly whether acting alone or together with other persons, or (iii) on whose behalf an arrangement is conducted, or (iv) who exercises significant control or influence over a person or arrangement through a formal or informal agreement.

Notably, the Companies Act does not define what "substantial control" or "substantial economic interest in..." or "substantial economic benefit in..." a company means. In certain jurisdictions, there is a percentage reporting threshold for beneficial ownership. The definition of "beneficial ownership" introduced in the Companies Act closely follows the European position, however, in most European jurisdictions, the applicable threshold for reporting of beneficial owners is ownership or control of 25% of the capital or voting...