Beneficial interest means substantial economic interest or benefit or substantial control in a company. Beneficial ownership is categorized into two, namely direct beneficial owner and indirect beneficial owner. An indirect beneficial owner is a natural person who holds or acquires a beneficial interest in the company not registered in his name. On the other hand, a direct beneficial owner is a natural person who holds or acquires a beneficial interest in the company and is registered in his name.
In Tanzania, beneficial ownership is regulated under The Companies (Beneficial Ownership) Regulations, 2023.
Registration of Beneficial Owner
Particulars of the Beneficial Owner have to be submitted to the Registrar of Companies (Registrar) by the respective company. In the case of the direct beneficial owner shall notify the Registrar within thirty days from the date which his/her name entered in the register, in the manner prescribed in the beneficial ownership portal. Similarly, an indirect beneficial owner of a company shall submit to the Registrar their particulars by filling form No 14b prescribed in the Companies (Forms) Rules within a time limit of thirty days from the date his name is entered in the Beneficial Owners Register.
The particulars to be filed in form No 14b are:-
- The name and the type of the company
- Incorporated number and registered office
- Full name of Beneficial Owner
- Date and place of birth of Beneficial Owner
- Legal executed oath or affirmation of a Beneficial Owner of whether or not is a politically exposed person
- National Identification Number of the beneficial owner
- Physical address, phone number, and email of Beneficial Owner
- The percentage of shares a person holds in the company
- The percentage of voting rights a person holds in the company
- A person holds a right to appoint or remove a majority of the board of Directors of the company
- A person exercises significant influence or control over the company
- Name of shareholder holding shares on behalf of the Beneficial Owner of the Company and
- Name of Director appointed by the beneficial owner.
The company that fails to file registration of the beneficial owner within the prescribed time shall be liable to a late filing fee as prescribed in the Companies (Fees Payable to Registrar) Regulations. However, a Registrar may extend the time for a company to file registration of beneficial owner upon good cause shown by a company to the Registrar by way of an application, a time that would not exceed thirty days.
After the Beneficial Owner’s reports have been filed to the Registrar, the Registrar will register the Beneficial Owner to the Register of Beneficial Owners. The registrar reserves the right to refuse to enter the name of the Beneficial Owner in the Beneficial Owner’s register if requirements are not met.
Cessation of Beneficial owner
When an Indirect Beneficial Owner ceases his status, the company shall notify the Registrar of Companies by filing a company form No. 14c as prescribed in The Companies (Forms) Rules and payment of the fee prescribed in the Companies (Fees Payable to the Registrar) Regulations. This notification should be within thirty days from the date of cessation. Failure to notify the Registrar of Companies within the prescribed time limit, the company shall be liable to pay the late filing fee.
Declaration of beneficial interest
An indirect Beneficial Owner shall have to declare his or her interest by filing a prescribed company form No. 14e as prescribed in a Company (Forms) Rules within thirty days from the day of acquiring such interest. Also, a Beneficial Owner must notify the companies on respect of any changes that occur to him and the company shall notify the Registrar in respect of those changes.
The Regulations also allow a person who is the registered owner of shares of a company but not a Beneficial Owner to apply to become a Beneficial Owner by filing a prescribed company form No. 14d as prescribed in the Companies (Forms) Rules. This has to be done within thirty (30) days from the date that his name is entered in the register of that company.
A person who holds or acquires a beneficial interest in a share that is not registered in his name has to file company form No. 14e as prescribed in The Companies (Forms) Rules to register as a Beneficial Owner of a company/entity. A Beneficial Owner has to make a declaration to the company when changes occur in shares he is interested in. That declaration has to be in prescribed company form No. 14e as prescribed in The Companies (Forms) Rules and it has to be within thirty days from the day that changes occurred. The company after receiving such declaration has to file a return to the registrar concerning that declaration within thirty days.
Confidentiality
The law requires that information of the Beneficial Owner be kept confidential. Anyone who has access to Beneficial Owner information is required not to disclose them, except when required by the law. Further, any officer is bound to keep the information of the Beneficial Owner confidential even after cessation of his or her job.
Conclusion
The law makes it mandatory for all Beneficial Owners to be registered by the Registrar of Companies in the beneficial owners register for the record. Law set up the whole road map to follow.
If one fails to comply with the rules and regulations that govern the registration of the beneficial owner, the registrar may refuse the registration of the Beneficial Owner for such effect.
It is a mandatory requirement of the law to comply with the requirements to register as a beneficial owner. The law imposes a penalty of a fine of not less than five million Tanzania shillings but not exceeding ten million Tanzania shillings to a company or entity that;
- Fails to keep records of beneficial owners or,
- Fails to provide information to the Registrar about a change in beneficial ownership of a company or,
- Fails to provide the Registrar with a declaration containing information on the beneficial owners of the company or,
- Contravene with any provision of the Companies (Beneficial Ownership) Regulations, 2023.
To comply with all legal requirements In the Companies (Beneficial Ownership) Regulations, 2023, our team of legal experts at AVC & Partners (Advocates) can assist your company in ensuring that your entity is promptly complying with the regulations effectively.
Disclaimer
This article is only for general guidance based on the subject and is not to give professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. AVC & Partners (Advocates), its members, employees and agents do not accept or assume any liability, responsibility or duty of care for the consequences of anyone acting or refraining to act, in reliance on the information contained in this publication.
