Tanzania's Companies Act (Cap. 212) has undergone significant amendments that every director, company secretary, and business owner operating in Tanzania needs to be aware of. These changes, which came into force in January 2025, affect company formation, directors' duties, shareholder rights, and compliance obligations across the board.
In this article, we provide a plain-language analysis of the key changes and what they mean for your business. If you have specific questions about your company's situation, our corporate team is available for a confidential consultation.
"The amendments represent the most significant modernisation of Tanzania's corporate law framework in over a decade — and businesses that fail to adapt risk serious legal and regulatory exposure."
1. Enhanced Directors' Duties and Personal Liability
The amendments significantly expand the scope of directors' duties under Tanzanian law, bringing the framework closer in line with international best practice. Directors are now expressly required to:
- Act in the best interests of the company and its stakeholders, including employees, creditors, and the community;
- Exercise reasonable care, skill, and diligence — assessed against an objective standard (what a reasonably diligent person with their knowledge and experience would do);
- Avoid conflicts of interest and disclose any personal interests in transactions in writing to the board;
- Not accept benefits from third parties that might influence their duties to the company.
Crucially, the amendments introduce personal liability for directors who breach these duties. In cases of gross negligence or wilful misconduct, directors can now be personally sued by the company, shareholders, or — in some circumstances — creditors. Directors of companies that are found to be in fraudulent or wrongful trading may face personal liability for company debts.
Practical Advice: Every company should immediately review its directors' service contracts and D&O insurance arrangements in light of these changes. Where a director has multiple roles across related companies, a conflict of interest register and robust board procedures are now essential.
2. New Share Capital Requirements and Disclosure Rules
The minimum share capital requirements for private companies have been updated, and the rules around share issuance, transfer, and buy-back have been clarified and in some areas tightened. Key changes include:
- Private companies must now maintain a register of persons with significant control (PSC register), recording any individual or entity that holds more than 25% of shares, voting rights, or has the right to appoint or remove a majority of directors;
- Companies must file their PSC register with BRELA annually, alongside their annual returns;
- New rules on beneficial ownership disclosure require companies to look through corporate structures to identify ultimate beneficial owners — particularly important for foreign-owned companies operating in Tanzania;
- Share buy-backs are now permitted subject to solvency tests and shareholder approval, giving companies greater capital management flexibility.
3. Strengthened Corporate Governance Requirements
Public companies and large private companies (defined as those with turnover exceeding TZS 1 billion or more than 50 employees) are now required to:
- Establish an audit committee with at least one independent member with financial expertise;
- Prepare and publish an annual corporate governance statement;
- Conduct formal annual board performance reviews;
- Implement a documented whistleblower protection policy.
4. Revised Insolvency and Restructuring Framework
The amendments introduce significant changes to the insolvency and restructuring provisions of the Companies Act, designed to promote business rescue over liquidation. These include:
- A new Business Rescue Procedure (BRP) that allows financially distressed companies to enter a moratorium on creditor claims while a rescue plan is developed and voted on by creditors;
- Clearer rules on the duties of administrators and liquidators;
- Enhanced protection for employees during insolvency proceedings, including priority status for wage claims up to three months' salary;
- New provisions allowing for pre-pack sales — where a company's business is sold to a new entity as part of an insolvency process, subject to creditor transparency requirements.
Key Warning: Directors who continue to allow a company to trade when they knew (or should have known) it was insolvent — known as "wrongful trading" — now face significantly enhanced personal liability. This is one of the most important changes for directors of financially stressed businesses.
5. Digital Compliance: Electronic Meetings and Records
In a welcome modernisation, the amendments formally recognise electronic meetings and digital corporate records. Companies may now:
- Hold board and shareholder meetings fully electronically, provided all participants can communicate simultaneously and the constitution does not prohibit this;
- Pass written resolutions electronically, without physical signatures, using approved e-signature methods;
- Maintain statutory registers in electronic form, provided they are accessible and searchable;
- File documents with BRELA electronically — with paper filing being phased out for large companies by end-2025.
What Should Your Company Do Now?
Given the scope of these changes, we recommend that all companies operating in Tanzania take the following steps as a matter of priority:
- Constitutional Review: Have your Memorandum and Articles of Association reviewed to ensure they are compliant with the new Act and take advantage of available flexibilities;
- Directors' Training: Ensure all directors understand their new duties and the personal liability consequences of breach;
- PSC Register: Establish or update your register of persons with significant control and ensure timely filing with BRELA;
- Governance Audit: Commission a corporate governance audit to identify gaps relative to the new requirements;
- Insurance Review: Review D&O insurance coverage in light of expanded director liability provisions.
Our corporate law team has been advising clients on these amendments since the Bill was in its consultation phase. We have developed a comprehensive Companies Act Compliance Checklist that we are making available free of charge — download it from our Resources page.
