- A brief overview of the new legal requirements for foreign companies registered in Zanzibar.
- Summary of the amendment of the Zanzibar Companies Act enunciated in the Finance Act No. 3 of 2021.
- The legal implications on the new amendments on Foreign companies registered in Zanzibar
The Revolutionary Government of Zanzibar on the 24th June 2021 published the Finance (Public Revenue Management) Act, 2021 (the Act.) The Act impacted changes in various laws including the Zanzibar Companies Act No. 15 of 2013. The major amendment in the Companies Act touches on companies incorporated in Tanzania Mainland having registered their businesses in Zanzibar by virtue of being issued Certificate of Compliances.
Following such amendments, on the 21st September 2021, the Ministry of Trade and Industries Development (the Ministry) issued a public notice to all companies with Certificate of Compliance to re-register with Zanzibar Business and Property Registration Agency (BPRA) and attain a Certificate of Incorporation.
Our Corporate Secretarial and IP Department at Breakthrough Attorneys has prepared this brief overview of the amendments in this article as amended in the Act.
2.0 Re-registration of Tanzania (Mainland) companies holding Certificates of Compliance in Zanzibar
The Act has amended Section 238 of the Zanzibar Companies Act by adding a new subsection that is subsection (3) that reads as follows;
…A company incorporated under the law applicable in Mainland Tanzania shall register a foreign subsidiary company under the law applicable in Zanzibar if it establishes a place of business in Zanzibar.”
This means that, before the amendments companies that were duly incorporated in Tanzania (Mainland) were issued with a Certificate of Compliance upon registering shop/place of business in Zanzibar. This was under the umbrella that; they were deemed as foreign companies due to the jurisdiction the companies were incorporated initially.
The new amendments have the effect of revoking all the certificates of compliance of companies that are primarily incorporated in Tanzania Mainland and have presence in Zanzibar. Further, these companies are required to register afresh so that they can attain a Certificate of Incorporation. By re-registration it means that the companies shall follow the same process of registration of a new company in Zanzibar.
3.0 Timeline for re-registration
The Ministry has issued a timeline for the re-registration of these companies within ninety (90) days from the date of the public notice as issued by the Ministry. Companies which will fail to comply within the set timeline shall be struck off the Companies Register at BPRA. This means that the struck off companies will not be able to do or conduct business in Zanzibar as they will be deemed non-existent.
4.0 Legal implications on the re-registration of companies in Zanzibar
One might be asking themselves on the implications of this Notice on Tax Identification numbers, business licences and so forth considering that under normal circumstances a newly incorporated company must apply for a TIN certificate, business license and other regulatory approvals. Therefore, with this notice the fate of the previously acquired TIN certificate, license(s) and audit books filing or generation might be in question.
Based on the foregoing concern, it should be noted that according to the current practice in Zanzibar and due to the time limitation set for these changes to be effected, the companies will retain the same TIN certificate and business licence as previously acquired. However, these companies are required to update their status to the relevant authorities like Tax Authority, business license authority etc. upon re-registration.
Regarding, statutory auditing of the newly incorporated company in Zanzibar, the company must be audited separately as a subsidiary to the company registered in Tanzania company. Therefore, separate Audited Accounts must be prepared for the newly incorporated company and filed at the Zanzibar Tax authority.
This timeline provided is very short and limited. Considering the BPRA online system may not be able to handle a flood of re-registration applications due to magnitude of applications compared to the labour force. Therefore it is crucial for all relevant companies falling under this enacted change to adhere at the earliest time to avoid their business in Zanzibar to stop and their companies to be struck off the Companies Register.
This publication has been prepared for information purposes only, and it does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employees, and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.