Alteration of the memorandum and articles of association is permissible for companies registered in Tanzania. This may be done when a company seeks to alter its objects contained in its memorandum or when the company is converted from private to public and vice versa.
The Corporate Department at Breakthrough Attorneys has believes that there is less information on the law, practice and procedure for alteration of memorandum and/or articles of association of the companies registered in Tanzania. This has caused hardship to the business community and investors in Tanzania and reluctance into forming companies for fear of rigidity when it comes to changing the constitutional documents of such companies.
2.0 Alterations of the Memorandum of Association
Section 8(1) of the Companies Act, 2002 (‘the Act’) limits alteration of the memorandum of the company upon satisfaction of the following conditions:
i. The company should be intending to add or remove some or all of its objects reflected under its memorandum of association; or
ii. There should be a conversion of a company from one kind to another, either from private one to a public or vice versa.
3.0 Procedures for alteration of the Memorandum and Articles of Association.
The procedure for alteration of the memorandum and articles of association of the company involves the following:
(a) Convening of an extra-ordinary general meeting
The extra-ordinary general meeting with an object of making alteration of the memorandum and/or articles of association must be convened for a special resolution allowing the company to alter its memorandum and articles of association to be passed. This meeting shall be attended by the shareholders of the company.
(b ) Passing of a special resolution
Shareholders of the company must pass a special resolution allowing the company to make alternations of the memorandum and/or articles of association when such an extra-ordinary general meeting is convened. This resolution shall be lodged with the Registrar of companies for purposes of effecting the proposed alterations.
4.0 Documents to be submitted to the Registrar of Companies for alteration of the memorandum and articles of association of the company.
i. Special Resolution of the shareholders (with all the amendments done),
ii. Copy of a memorandum and articles of association (MEMARTS),
iii. Copy of a memorandum and article of association as altered,
iv. Letter requesting a change of name of the company and a new certificate to that effect (in case of conversion of a company),
v. Form No. 29 (For a private company changing into a public company).
5.0 Timeline for submission of the documents to the Registrar (Section 8(9)).
The documents for alteration of the memorandum and/or articles of association should reach the Registrar of Companies within the following timeline:
a) Within 14 days, if there was no application to Court for cancellation of the alternations
b) Within 14 days from the date of Court’s order cancelling or confirming the alternations.
6.0 Right of objection by shareholders disagreeing to the proposed alterations to the memorandum and articles of association (Section 8(2) (a) and (b)).
Shareholders are at liberty to make an application to the High Court, objecting the proposed alteration to the Memorandum. The application is made at High Court of Tanzania, Commercial Division). The qualification of shareholders mandated to object the proposed alteration of the memorandum and articles of association are the following:
a) The holders of not less in the aggregate than ten percent (10%) in nominal value of the company’s issued share capital or any class thereof or, if the company is not limited by shares, members shall be not less than ten percent (10%) of the companies members.
b) The holders of not less than 15% of the company’s debentures entitling the holders to object to alternations of its memorandum.
c) These holders mentioned in (a) and (b) should not be among those who have consented or voted in favor of the alternations.
7.0 Time for lodging an application for objection against the proposed alteration of the memorandum and articles of association.
The application for cancellation of the said alterations need to be lodged in the Court within 30 days from the date the resolution altering the company’s memorandum and/or articles of association was passed. The hearing and order of the application are as discussed below:
a) Notice to the Registrar of the Companies in case of applications for objection against alteration of the memorandum and articles
If an application is made for objection against the alternation of the memorandum and/or articles of association, the Registrar of the Companies must also be served the same together with a notice for his presence in the Court on the hearing of such application. The requirement for notice to the Registrar was restated by the High Court of Mwanza Registry (Nsekela J,) In the Matter of Mofaju’s Investment Company Ltd  TLR 322 where it was held at page 325 that:
“The Registrar of Companies should be served with notice of and has a right to appear and be heard on applications to confirm alterations of objects and like proceedings in which his records are involved”
b) Court’s Orders for Cancellation or Confirmation of the Alterations (Section 8(4))
Upon the application to the Court against the alterations made to the memorandum and/or articles of association, the Court has a power to make an order for cancellation or confirming those alternations made. The Court’s order is made either to the wholly or in part and on such terms and conditions as it thinks fit.
A company may alter its memorandum and articles of association in line with the statutory procedure highlighted above. This procedure is done by the sanction of the shareholders. However, shareholders in disagreement with the proposed alterations may file an objection to the High Court. The High Court shall determine such objections and may make order to confirm the alterations or cancel the same.
This article has been prepared by the Corporate Department at Breakthrough Attorneys, with a view of shedding light to the general public on alterations of the memorandum and articles of association. We believe, the information contained shall be of significance for enlightening the general public on such matter. However, for clarity we recommend that companies have to consult for legal guidance before proceeding with making alterations of the memorandum and articles of association.
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.