5 must-know laws for business governance in Tanzania
Business governance refers to the structure of rules, practices, and processes used to manage a company. The business governance in Tanzania is regulated by a certain number of laws and regulations. Understanding these laws as a business is necessary to ensure administrative compliance and, as a result, smooth operations.
The body responsible for managing business and enforcement of legislation in Tanzania is the Business Registration and Licensing Authority (BRELA). Its responsibilities include registering corporations, business names, trade and service marks, patents, and industrial licenses. There is a need to understand the state of business governance in Tanzania to improve your company’s chance to establish successfully and excel.
Here are five statutes governing the Tanzanian corporation law.
1. Business governance in Tanzania: Companies Act 2002
The first law you should be familiar with to operate successfully in Tanzania is the Companies Act 2002. Even though the President signed it on June 27, 2002, the Companies Act of 2002 (the Act) came into effect on March 1, 2006. The Companies Ordinance (Cap. 212), 1932, was overturned in support of the new legislation patterned on the British Corporations Law 1929 and attempted to offer a more current and updated legal structure.
The above Legislation (Companies Act 2002) has 490 parts, which is 140 above its preceding. With the provisions of the act, significant areas of change include:
- Penalties and filing fees have increased
- Third-party protection regarding the company’s and its officials’ ability to act
- Auditing and accounting
- Returns each year (includes the necessity to submit detailed costings, including for private enterprises)
- Insolvent businesses (comprising relief options for enterprises on the verge of failure and extensive guidelines on the administration of corporate debtor and company stopped)
- Directors of the company (encompassing age limitations, heightened responsibility, regulation, and transparency)
- Resolutions and meetings
- Minority shareholder protection
- Investor protection in publicly traded firms
- Lowering of outstanding shares
Above all, the Business Laws (Miscellaneous Amendments) Act No. 3 of 2012 guided the revision of the Companies Act 2002.
2. Business governance in Tanzania: Law of Contract Act CAP 345
The Law of Contract Act governs contracts and determines when promises made by contracting parties are legally binding. The objective of contract law is to ensure that the parties to an agreement are aware of the contract’s terms and consequences.
Hence, it is vital to consider the legal aspects required during the construction of a contract. A contract must comprise a valid offer, acceptance, consideration, and competence to the agreement. Furthermore, it highlights the intention to engage in legal relations and the lawful object of the contract to be enforceable (terms and conditions). Therefore, the arrangements are invalid, voidable, or unenforceable if any of these parts are missing or inadequate.
3. Business Governance in Tanzania: The Business Names Act
The Business Names Act is an amendment to the Business Activities Registration Act 2007. It was amended by the Business Laws (Miscellaneous Amendments) Act No. 3 of 2021.
The Business Names Act provides for the registration of businesses, persons, and corporations operating under a business name, as well as other relevant topics. Besides the amendment, the Business Activities Registration Act 2007 creates the primary registry, which will connect to the registers established under the Companies Act, the Business Names (Registration) Act, and any other register or record found within this legislation. It also demands establishing a company’s business licensing system, business license centers, and facilities in Tanzania.
4. Business governance in Tanzania: Income Tax Act CAP 332
Another relevant law to note for operating a business in Tanzania is the Income Tax Act CAP 332. It provides for the taxable billing, evaluation, payment, and the determination of the income to be taxed and related concerns.
A tax revenue law is a type of levy imposed by the government on the revenues of businesses and individuals within its jurisdiction. In particular, the income tax is used to fund government services, settle debts, and distribute goods to inhabitants.
5. Business Governance in Tanzania: Fair Competition Act 2003
Notably, the Fair Compensation Act is another important law. It is a law that promotes and defends fair competition in business and trade, safeguards the interests of consumers from unfair and deceptive market behaviour, and handles other related concerns.
This law establishes market norms and protects consumers in Tanzania. The purpose of this Act is to improve the general welfare of Tanzanians by fostering and defending robust competitors and opposing misleading and deceptive market behaviour across Tanzania to:
- Improve performance in the manufacture, transportation, and provision of products and services
- Encourage creativeness
- Maximize resource efficiency
- Protect consumers
The law establishes the competitiveness in the industry agency as well as the competitiveness in the industry arbitration. Advertisement, product information, and product safety, in particular false information, are all governed by specific standards. By notice published in the Gazette, an official may announce that a particular standard established or authorized by the Bureau of Standards constitutes a consumer product information or safety standard regarding products of the kind described in the notice.
The purpose of corporate legislation is to keep things in order among businesses, brands, and companies. They defend the rights of the company and its employees while also forming a norm for how things should work.
Knowing and understanding the laws of business governance in Tanzania would help you establish and run a business better. The rules assist you in better understanding the taxation systems that apply to various forms of companies and the definitions of business partnerships, entities, sole proprietorships, liability companies, and corporations.
No matter how large or small, every company operating in Tanzania must follow the region’s legal laws of business governance, as highlighted.
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