Beneficial ownership in Tanzania

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I am setting up a company in Tanzania and heard about the Companies (Beneficial Ownership) Regulations of 2023. What does beneficial ownership mean, and how does it affect my business in Tanzania?
VH, Comoros

Beneficial ownership is a concept that refers to the actual owners of a company who ultimately control it, even if their names are not listed in official registration documents. The Companies Act Cap. 212 [R.E 2019] governs matters related to companies registered in Mainland Tanzania. The Companies (Beneficial Ownership) Regulations, 2023 (G.N. 714 of 2023), made under section 22 of the Companies Act, provide for specific aspects regarding beneficial ownership. The Regulations require natural persons, whether shareholders, directors, or company secretaries, to disclose beneficial owners to enhance corporate governance and transparency.

Key provisions of the Regulations and how they affect your business: Definition of Beneficial Owner – According to Regulation 2, a beneficial owner is defined in the Anti-Money Laundering Act, Cap. 423 [R.E 2022] as any natural person who ultimately owns or controls the customer, the natural person on whose behalf a transaction or activity is being conducted, a person who exercises ultimate effective control over a legal person or legal arrangement or a beneficiary of an insurance policy or other investment-linked insurance policy. Disclosure Requirements-Under Regulation 4, directors or company secretaries must submit beneficial ownership details to the Registrar of Companies. Penalties for Non-Compliance – Under Regulation 11, any person be shareholder, director or company secretary that fail to keep register of beneficial owners, and fails to submit the same to the registrar for registration shall have committed an offence and shall, on conviction, pay a fine of not less than TZS 1M and not exceeding TZS 5M.

These regulations generally aim to prevent financial crimes such as money laundering and ensure accountability in corporate governance. If you are setting up a company in Tanzania, it is advisable to consult a legal expert to ensure compliance with disclosure requirements and avoid penalties. Your lawyer can guide you further.