COMPANY LAW UPDATE: EXTENSION OF TIME FOR REGISTRATION OF COMPANY’S BENEFICIAL OWNERS INFORMATION.
- Enforcement the Companies (Beneficial Ownership) Regulations, 2021
- Defining the beneficial owner
- Mandatory registration of Beneficial Owners by Companies in Tanzania
- Timeline for registration of Beneficial Owners
- Time extension for registration of Beneficial Owners’s information
As part of the efforts to developing Tanzania in business and investment, but also as a means to regulate corruption and money laundering, the Government of Tanzania issued regulations relating to the disclosure of Beneficial Ownership information as a requirement incorporated in the Companies Act (the Act). The Companies (Beneficial Ownership) Regulations, 2021 governs all companies registered in Tanzania, both private and public companies. The regulations requires that each beneficial owner of a company, to register their information with the Registrar of Companies at the Business Registration and Licensing Agency (BRELA).
The information to be reported at BRELA includes, any shareholding or voting control, whether direct or indirect, with no exemptions on quantity or percentage shares or votes held.
The regulations defines a Beneficial Owner (B.O.) as,
any natural person who directly or indirectly, enjoys ‘substantial control or influence’ over a company or has a ‘substantial economic interest’ in or receives substantial economic benefit from a company.
The regulations extend to any person who may have any influence in the company, for instance; a person who exercises substantial influence or control over a person in formal or informal agreement.
In light with the recent incorporation of the regulations and changes made to Companies Act, as well as the recent law updates and information; Our Corporate Commercial Department at Breakthrough Attorneys has prepared this Article highlighting the important aspects of these Regulations and law updates, and what directors and Senior Officers of Companies should know.
2.0 Timeline for registration of Beneficial Owners at BRELA
As highlighted herein above, the Companies (Beneficial Ownership) Regulation, 2021, amended by the Finance Act, 2020, require that all companies to report B.Os and register their details to the Registrar of Companies at BRELA as provided for under section 459A of the Act. In doing so, the law provided for a time line in which companies were required to make necessary fillings and registration of the B.O. Such time given was six months from 1st July 2020.
However, as recently reported by the Minister of Industry and Trade, Prof. Kitila Mkumbo that, due to Beneficial Ownership being a new concept, quite a number of companies have failed to comply with the regulations. These companies have also requested for extension of time which expired on 31st December 2021. The Minister also reports that, upto 3rd January 2022, only 14,026 companies, which is equal to 14% of the government’s expectation, have managed to register and file B.O. information with BRELA.
3.0 Extension of time for Registration and Filling of Beneficial Ownership Information
The Minister of Industry and Trade, further reported that, due to the challenges and unexpected response from companies in filing and registration of the B.O. information with BRELA, as well as the prayers for time extension to do the same, the Minister, by the powers vested in him as provided by section 459A (2) of the Act; has extended such time for filing and registration. He has extended such time to a period of six months from 1st January 2022 to 30th June 2022.
The Minister has also given mandate to BRELA to use such extended time to provide information to the public on importance and requirements of B.O. registration and filing, as well as, Companies make compliance within time extended.
The disclosure of such B.O. information is dependable on the company’s form and structure. Companies registered in Tanzania are urged to adhere to this requirement within the time stipulated therein. Failure to disclose Beneficial Owners’ information with the Registrar of Companies, a company shall face a fine of not less than 5 million and not more than 10 million Tanzanian Shillings.
Breakthrough Attorneys reminds and advises that, regardless of the extension of time for registration for the B.O. information, each company (directors and senior officers) take reasonable steps to identify its Beneficial Owners to ensure proper compliance.
This publication has been prepared for general guidance on matters of interest only, and 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.