Q&A – 10 June 2013

Mandatory retirement of directors at age 70

I have been a director of a company in Tanzania since I was 30 years. The appointment was made by the majority shareholder who was a friend of mine and I have been enjoying allowances for the past 40 years. The majority shareholder passed away and his son has not been as nice to me. Due to my seniority he has not fired me as a director but now that I have reached 70 years, he has requested me to step down as the law does not allow a director to serve above the age of 70 years. I know of hundreds of people who are above the age of 70 and serve as directors. This law, if it is true, is obsolete. Is there such a law? I have checked the memarts of the Company and they also provide retirement at 70. Can I get a Court order to stay on as I really need my directors fees?
EL, Dar

Section 194 of the Companies Act states inter alia that (I) Subject to the provisions of this section, no person shall be capable of being appointed a director of a company which is subject to this section if at the time of his appointment he had not attained the age of twenty-one or he has attained the age of seventy. (2) Subject as above, a director of a company which is subject to this section shall vacate his office at the conclusion of the annual general meeting commencing next after he attains the age of seventy: Provided that, acts done by a person as director shall be valid notwithstanding that it is afterwards discovered that his appointment had terminated by virtue of this subsection.

This section read when read with the memarts that you say have a limit of 70 years makes it mandatory for you to retire.
Section 194(5) is a salvaging section for you which does provide that nothing in the foregoing provisions of this section shall prevent the appointment of a director at any age above the age of eighteen, or require a director to retire at any time, if his appointment is or was made or approved by the company in general meeting, but special notice shall be required of any resolution appointing or approving the appointment of a director for it to have effect for the purposes of this subsection and the notice thereof given to the company and by the company to its members must state or must have stated the age of the person to whom it relates.

Hence if the Company does pass a resolution to the effect that it is changing the age limit of 70 years, then you may continue. You may want to try convince your former friends son to let you stay.

With reference to getting a Court order to stay on as a director, please note that directors are appointed by the shareholders and the shareholder has full power to appoint and terminate directors. It is very unlikely, in your case, for a Court to be able to intervene just because you want to continue your steady stream of director’s fees. Your lawyers can guide you further.

BoT refusal for name

We are a bank of international repute and have been using our name which also bears the word Central in it. Our informal discussions with BoT have revealed that BoT is not happy with the use of the word central as the BoT is sometimes referred to as central bank. However our name is not central bank but rather a name that only has, amongst other words, the word central. How do we convince BoT? Why is the BoT so stiff about this.
PE, Dar

The Bank of Tanzania Act is clear in that save with the written consent of the Bank, no bank shall be registered hereafter under the provisions of any law, by a name which includes any of the words “Central”, “State,” “Government” and” Reserve”.

BoT is bound under this act and will very likely not allow you to register. BoT is not being stiff but is trying to ensure that there is, amongst others, no market confusion that you will create.

Imprisoning corporate bodies

I have been reading the laws of Tanzania and many times I have come across that a corporate body shall be punished and convicted. I know that individual persons can be imprisoned but how does one imprison a company?
GJ, Dar

We are not sure what law you are referring to in specific but there are certain laws that provide for directors to be imprisoned, meaning that the company’s conviction is that of the directors.

The Interpretation of Laws Act of Tanzania also states in section 71 that (1) Every enactment relating to an offence punishable on conviction or on summary conviction shall be taken to refer to bodies corporate as well as to individuals. (2) Where under a written law, a forfeiture or penalty is payable to a party aggrieved, it shall be payable to a body corporate in every case where that body is the party aggrieved.
(3) Except where otherwise expressly provided, where the penalty prescribed in a written law in respect of an offence does not consist of or include a fine, the court before which the offence is tried may, in the case of a body corporate, impose a fine– (a) where a term of imprisonment not exceeding six months is prescribed, a fine of two million shillings; (b) where a term of imprisonment exceeding six months but not exceeding one year is prescribed, a fine of three million shillings; (c) where a term of imprisonment exceeding one year but not exceeding two years is prescribed, a fine of five million shillings; (d) where a term of imprisonment exceeding three years is prescribed, a fine of ten million shillings.

You can see from the above that the corporate body, where the directors are not to be imprisoned, shall be fined amounts in lieu of “imprisonment”.