Earlier this month, Tanzania announced a series of amendments to its Mining Regulations, including changes to the minimum shareholding requirements and to the public offering procedure. This article provides an overview of the key amendments and the implications to consider for those operating in the mining sector, specifically instances where special mining licence holders can be exempted from listing their shares publicly.
This month's update looks at the Mining (Minimum Shareholding and Public Offering) (Amendment) Regulations (the Amendment Regulations) which are to be read together with the Mining (Minimum Shareholding and Public Offering) Regulations of 2016 (the Principal Regulations). 1 The Principal Regulations are made under section 109 of the Mining Act No.14 of 2010 (the Act) as amended from time to time. 2 Section 109 of the Act gives the Minister of Minerals (the Minister) in consultation with special mining licence (SML) holders powers to make regulations prescribing the minimum shareholding requirement and procedure for selling shares to Tanzanian nationals and offering shares to the public through listing on the Dar es Salaam Stock Exchange (the DSE).
Waiver under the Principal Regulations
Regulation 4 (2) mandates the Minister to grant a waiver to a holder of an SML who has failed to secure the minimum local shareholding requirement of thirty percent (30%) due to an unsuccessful public offering. This waiver may be obtained by way of an application by the holder of an SML to the Minister or on the recommendation of the Capital Markets and Securities Authority (CMSA).
Exemption under the Amendment Regulations
The Amendment Regulations have amended the Principal Regulations by adding regulation 6A which exempts certain SML holders from the requirement to list on the DSE. The regulation provides that:
The provisions of regulations 4 and 5 shall not apply where a company holding an SML has entered into an agreement with the government of the United Republic of Tanzania (the Government) and the agreement provides for:
- non-dilutable free carried interest shares in the capital of a mining company
- an economic benefits sharing arrangement
The Amendment Regulations' exemption is on the basis of an agreement with the Government, if the agreement either provides for non-dilutable free carried interest shares in the capital of a mining company and an economic benefits sharing arrangement. This means a company that holds an SML and which has entered into the type of agreement in (a) and (b) above with the Government shall be exempt from:
- the thirty percent (30%) minimum local shareholding requirement under regulation 4 (1) of the Principal Regulations
- the requirement to offer its shares publicly within one (1) year after having obtained the SML if obtained after the commencement of the Principal Regulations as provided under regulation 5 (1) and 5 (3) respectively, or from listing on the DSE within two (2) years of the coming into operation of the Principal Regulations if the SML was obtained before the commencement of the Principal Regulations as provided in regulation 5 (2)
1 The Amendment Regulations were published on 3 March 2020 in Government Notice Number (G.N. No.) 181 of 2020.
2The Principal Regulations were published on 7 October 2016 in G.N. No. 286 of 2016.
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.