I want to register a company in my name and wish to be the sole shareholder. Is this allowed?
30 January 2012
The Registrar of Companies will not allow you to register a company with less than two shareholders. One of the Companies Act sections reads as follows: If at any time the number of members of a company is reduced below two, and it carries on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and knows that it is carrying on business with fewer than two members, shall be liable (jointly and severally with the company) for the payment of the whole debts of the company contracted during that time.
The Business Laws (Miscellaneous Amendments) Act 2011 is a new Bill that is being debated in parliament. Once approved by parliament, this new law shall allow a company to have a single shareholder/ member. This new change states as follows:
A limited liability single shareholder company shall be formed by one member.
The company’s list of members shall contain: (a) the name and address of the sole member; and (b) identification and a statement that the company contains only one member.
The planned law further states that, where the membership of a limited liability single shareholder company increases from one to two or more, the occurrence of that event shall be entered into the company’s register of members with (a) the name and address of the person who was formerly the sole member; (b) a statement that the company ceased to have one member; and (c) the date on which that event occurred.
The amendment also adds that a company, or any officer of the company, who contravenes the provisions of this section commits an offence. Anyone convicted of this offence shall be liable to a fine of TZS 5M, or to imprisonment for a term of two years, or both.
If this Bill passes parliament, you will be able to register a company with only one shareholder.
Meanwhile, you have the option of registering a business under your own name as a sole proprietor. This will give you full control of the company. The major drawback of this approach is that the liability of the sole proprietor is not limited. This means that any claims against this sole proprietorship company will spill over to all of your personal assets.