NewsCompanies Beneficial Ownership Compliance: Tanzania New Regulatory Requirement

INTRODUCTION

On 12 February 2021 the Government of Tanzania through the Government Notice No. 189 of 2021 namely, the Companies (Extension of Period for Submission of Information of Beneficial Ownership) Notice, 2021 had extended from 31st December 2020 to 31 December 2021 as a new deadline for Companies to submit information to the Registrar of Companies on Beneficial Owners of the Company.

This update, therefore, reviews these Regulations to highlight the changes brought about and compliance issues therein as well as provide necessary general legal information to our esteemed clients.

THE BACKGROUND

The compliance requirement for submission of the Beneficial Ownership information came as a result of the Amendment of S. 14 of the Companies Act, Cap 212 through the Finance Act, 2020. The Amendments, imposed new regulatory requirement for Companies to deliver to the Registrar of Companies accurate and up to date records/information of beneficial owners of a company. The information entails, full names, date and place of birth, telephone number, nationality, national identity, passport number or other appropriate identification and proof of identity.

WHO IS A BENEFICIAL OWNER?

According to the amendments of the Companies Act, Cap. 212 that were made through the Finance Act, 2020, Beneficial ownership is defined under S. 2 as a natural person-

1. who directly or indirectly ultimately owns or exercises substantial control over an entity or an arrangement.
2. 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
3. on whose behalf an arrangement is conducted; or
4. who exercises significant control or influence over a person or arrangement through a formal or informal agreement

INFORMATION IS TO BE SUBMITTED TO THE REGISTRAR OF COMPANIES

According to section 14(b) of the Companies Act, the information to be submitted to the Registrar of Companies entails accurate and up to date records/information of beneficial owners of a company. The information entails, full names, date and place of birth, telephone number, nationality, national identity, passport number or other appropriate identification and proof of identity. It is relevant to note that according to Section 451B the Beneficial Owners information submitted and kept by the Registrar of Companies are dully protected and privileged thus will only be accessible to the Government Competition entities and authorities dealing with Anti- Money Laundering and terrorist financing, Tanzania Revenue Authority, Financial Intelligence Unit and other relevant Government Institutions responsible for overseeing or implementing economic empowerment of Tanzanian nationals.

BENEFICIAL OWNERSHIP REGULATIONS

Further, on 14th May 2021 the government published other regulations namely, the Companies (Beneficial Ownership) Regulations, 2021 Government Notice No. 391 of 2021 that provide of the modality upon which the implementation of the Beneficial ownership compliance is to be handled. Among others, the regulations stipulates the forms to be used to submit the Beneficial Owners information to the Registrar, timelines for submission of the information as well as penalty for failing to submit information. Regulation 9 provides for modality of submitting information to the Registrar to be in electronic form/ by electronic communication or as the Registrar may deem appropriate.

DATA PROTECTION

It is important to note that, Regulation 6 requires Companies to protect and not use or disclose any information about its beneficial owner except-

1. for communicating with the beneficial owner concerned
2. in order to comply with any requirement of these Regulations; or
3. in compliance with a court order

OFFENCES

Regulation 10 provides for offences and the penalty for payment of fine of not less than TZS 5Million but not exceeding TZS 10Million for non-compliance on:

1. Failure to keep record of beneficial owners.
2. Failure to provide information to the Registrar about a change in beneficial ownership of a company
3. fails to provide the Registrar with a declaration containing information on the beneficial owners of the company

THE DEADLINE

According to the Government Notice No. 189 of 2021 namely, the Companies (Extension of Period for Submission of Information of Beneficial Ownership) Notice, 2021 the Government now requires Companies to comply and submit accurate and uptodate information of their Beneficial Owners by 31 December 2021. Failure to do so would amount to an offence and punishableby payment of fineof up to TZS 10Million.

CONCLUSION

Following the amendments of the Companies Act, Cap 212 by the Finance Act, 2020 companies in Tanzania are required to maintain and adhere to new regulatory requirements on submission, updating and handling of information of Beneficial Owners. Non Compliance is an offence and is seriously punishable with a fine of up to TZS 10Milion.