The Companies Registry of Tanzania at the Business Registrations and Licensing Agency (BRELA) has issued a notice (the ORS Notice) urging all Tanzanian companies, Tanzanian branches of foreign companies and proprietors of business names, who have not yet done so, to register on the BRELA Online Registration System (ORS) by 26 December 2019, 90 days from the date of the notice.
- BRELA requires all Tanzanian companies and branches to have registered on the BRELA ORS by 26 December 2019.
- Pre-registration steps include ensuring the company and its directors and shareholders have requisite documents in place (including NINs and TINs for Tanzanian national/resident individuals) and the company's existing BRELA filings are correct, complete and up to date in accordance with law and BRELA practices.
- Registration may take several weeks, or even months, for companies with historic mistakes (anomalies) or omissions in their existing BRELA files, as BRELA requires rectification of all such anomalies before migration to ORS. The process may be sped-up with assistance from professionals who understand the law and BRELA practices.
- There are numerous practical repercussions of a company not having been registered on ORS which may impact negatively on the company's ability to trade and raise finance and lead to direct penalties on directors as individuals and the company.
The ORS went live on 4 January 2018 and enables online filings, searches, incorporations and registrations of Tanzanian companies, branches, business names, trademarks, patents and industrial licences.
Companies incorporated before 4 January 2018 must actively register on the ORS to migrates their official file at BRELA to the new electronic system.
Penalties for non-compliance
There is currently no official penalty for failure to migrate to the ORS by the Christmas deadline.
However, in practice, failure to register means that affected companies cannot make any statutory filings at BRELA (for example, annual returns or notifications in respect of changes of directors, shareholdings or secretary) until these companies migrate to ORS. The practical consequences of this include that:
- official searches from BRELA required by trading partners, banks or regulators (e.g. for investor work permits) may display incorrect details;
- banks may refuse to lend as any security from the company cannot be registered at BRELA;
- some events, such as changes of registered office, cannot take place as they take legal effect from filing at BRELA;
- the company will accrue monthly penalties for late filings; and
- the directors of the company may face individual default fines, if operationalised in future, and may be disqualified from acting as a director of any Tanzanian company for a set period.
In addition, companies which have not migrated to the ORS may not be granted annual Business Licences (Class A), which are now issued by BRELA on behalf of the Ministry of Industry and Trade. Without these, a company cannot undertake Class A trading activities, such as export or import or manufacturing and selling goods, security services and a host of other business lines including any business that is cross-country (national) or international or is regulated by a specific Tanzanian regime such as telecoms, mining or insurance.
Hurdles: Shareholder and director documents
Companies migrating to ORS should plan ahead to have the following ready:
- Unless using a professional adviser with their own ORS account, a shareholder or director of the company must create their own ORS account to apply for the migration. A shareholder or director will need such account to change details on ORS going forwards.
- To migrate a company to ORS or create their own account, shareholders and directors who are Tanzanian nationals or Tanzanian residents must have a National Identification Number (NIN) from the National Identification Authority (NIDA), which is a one-off registration for locals.
- To speed up the NIDA process, NINs are now available to apply online here with the printed form lodged at local NIDA offices. The NIN (without the NIDA cards themselves) can then be otbained online. There are also telephone alternatives.
- The ORS Notice was published with a second notice from BRELA and NIDA, dated 27 September 2019, stating that access to NINs has been further enhanced and a NIN required for BRELA ORS purposes should be available from NIDA within two days of submitting an application to a NIDA office.
- Directors who are Tanzanian nationals or Tanzanian residents, and the company migrating to ORS, must also each supply their Taxpayer Identification Number (TIN).
- All such TINs should have been verified by the Tanzania Revenue Authority if granted before 2016.
- The Companies Act historically required all companies to file annual accounts with their annual returns at BRELA, but very few companies were compliant.
- The ORS system requires a company's latest annual audited financial statements to be uploaded with its ORS application, with limited exemptions.
Hurdles: Rectification of anomalies
The 90-day deadline will be very difficult for some companies to meet, as BRELA will not permit the ORS registration until all 'anomalies' in historic filings at BRELA are first rectified in line with law and BRELA practices.
Rather than declaring an amnesty upon the introduction of the ORS, BRELA has insisted on regularisation of all corporate records by requiring rectification and refiling of incorrect or missing filings dating back to a company's incorporation, which for some companies may be the 1960s or earlier.
Anomalies include failing to put certain details on company returns and filings in the manner which BRELA now requires, for example, BRELA requires residential addresses of directors to be stated on returns, rather than PO Boxes.
Many in-house company secretaries without professional qualifications were historically not aware of the BRELA requirements, and therefore neglected to meet these in previous filings, thereby creating anomalies.
Defective filings, previously accepted by BRELA, are now being retrospectively rejected for anomalies when applying to the online system without always fully stating the specific anomalies, in a cycle of rectifications, rejections from BRELA then further rectifications and so on.
Therefore, without professional assistance, many companies have spent several months trying to rectify their files since before January 2018.
For this reason, BRELA emphasises in the ORS Notice that companies should (amongst other things):
- complete the exercise themselves or use professionals with an adequate understanding of various registry rules;
- submit complete, accurate and reliable information; and
- attach relevant documents with various changes for the company (i.e. rectify documents with anomalies) and not repeat the same error or add other errors.
Frequently, particularly for older companies with many years of anomalies and changes of staffing, an in-depth process of internal fact-finding and perusing the physical files at BRELA may be required before embarking on rectifications, and hundreds of documents may need to be rectified.
Companies are advised to start any rectifications as soon as possible, particularly given the holidays in December.
BRELA has been preparing to move online for several years, and made various public announcements, including:
- in February 2017, BRELA announced that 76 316 companies had defaulted on certain historic filings and had three months to rectify these or face being struck off (dissolved) and potential legal proceedings instituted against directors and other stakeholders;
- in March 2018, BRELA was reported to have given companies six months to rectify anomalies and move to the online system – but this was extended.
In 2019, BRELA has put significant resources into creating a large team to process migrations to the ORS and meet requirements from the Ministry of Industry and Trade to complete the migrations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.