Q&A – 22 August 2016

Reduction of share capital

Our company is overcapitalised and we wish to reduce the share capital. Is this allowed under Tanzanian laws?
UU, Dar

The Companies Act under section 69 allows this and states that (I) a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles and as provided herein, by special resolution reduce its share capital in any way, and in particular, may –

(a)extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or

(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid up share capital which is lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid up share capital which is in excess of the requirements of the company, and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

You can see that such reduction of share capital is allowed but the directors  and  where it is proposed to pass a resolution reducing the share capital of a company, the directors or a majority of them must certify that they have made a fall inquiry into the affairs of the company, and that, having so done, they have formed the opinion that the company will be able to pay its debts in full within twelve months from the date of the certificate or, if the company is wound up within that period, the date of the commencement of the winding up.

So long as the company is solvent and directors are able to make such a solvency statement, you can proceed.

Gifts to girlfriend

I met this beautiful girl and we started going out for some time. Having proposed to her and upon her agreeing to marriage, I gave her several gifts including one of my cars to ensure she is comfortable. I was shocked to find out recently that she has another man, who pretended to be the driver of the car, whom she has a serious relationship with and who has already paid a bride price. She is now refusing to give me back the gifts including the car. What should I do?
JR, Mwanza

Gifts given in contemplation of marriage are recoverable under the law if the intended marriage never happens. Section 71 of the Law of Marriage Act allows a suit to be brought for the return of any gift made in contemplation of a marriage which has not been contracted, where the Court is satisfied that it was made with the intention on the part of the giver that it should be conditional on the marriage being contracted, but not otherwise. Your lawyers can guide you further.

Loan before security perfection

In good faith our bank gave a loan to a customer without completing the security perfection procedures especially the mortgage which remains unregistered. Little did we know that the borrower’s intention was to disappear with this large sum of money. We now realize that the title deed he gave us to register is an old title that was revoked but looks very original. What should we do? The property still exists but belongs to someone else.
TY, Dar

It is a banking 101 principle that you should not give out a loan without perfection. Considering the facts, you are an unsecured creditor and apart from instituting a criminal complaint, will have to sue the individual for recovery and attach his or her personal assets, if any. It is likely the person also used a fake name and you may never find this person. Our experience reveals that such loans are always given in collusion with your officers. You may want to investigate further to conduct an internal investigation. Overall your chances of recovery look very bleak unless there are other securities you can rely upon.

At the least, we would have expected you to have taken the original title to the registrar of titles at the Ministry of Lands for verification before disbursing. It seems you did not even do that.

Will stolen

My sister in law has stolen my husbands Will from our cupboard. I am quite certain of that as there is a property she is eyeing that belonged to my husband that is supposed to pass to me. What should I do?
YE, Mbeya

The Penal Code specifically addresses this in that If the thing stolen is a testamentary instrument, whether the testator is living or dead, the offender Is liable to imprisonment for ten years. We suggest you report this to the police who can launch an investigation and based on the result, the police may wish to prosecute your sister in law. She can end up in prison for ten years.

Compelling partner for HIV test

My boyfriend and I have been in a relationship for six months and intend to get married. Whilst I have accepted his proposal, I have a condition that both of us should go for a HIV/AIDS test before we proceed. Surprisingly he has refused on grounds that he is healthy and doesn’t see the need of doing the test. Should I get married to him? What can I do?
TJ, Tabora

The law in Tanzania does not allow compulsory HIV testing unless there is consent of the person to be tested. There are however circumstances where HIV testing may not require consent like where there is a Court order, donor of human organs/tissue and to sexual offenders. Your boyfriend does not fall under any of the above categories and hence you cannot force him to do the test.

On a different note, it is worthwhile to inform your boyfriend that it is an offence under our law to intentionally transmit HIV to another person. The offence is imprisonable for between 5 to 10 years.