Introduction:
Share transfers are essential transactions in the corporate world, allowing individuals or entities to buy or sell ownership stakes in a company. In Tanzania, this process involves several key steps to ensure transparency and legality. This article outlines the streamlined procedure for transferring shares in Tanzanian companies.
Procedures of Transfer of shares in Tanzania
🔴Notice to Directors of the Company:
The process commences with the transferor (seller) providing written notice to the directors of the company. This notice should detail the intention to transfer shares and include information about the prospective transferee (buyer).
🔴Board Resolution to Approve Share Transfer:
Upon receipt of the notice, the board of directors convenes a meeting to consider the proposed share transfer. A board resolution is passed to approve the transfer, ensuring that it aligns with the company’s interests and legal requirements.
🔴Sale Contract and Share Transfer Execution:
Following the board’s approval, the transferor and transferee enter into a sale contract. This legally binding document outlines the terms and conditions of the share transfer, including the number of shares, purchase price, and any relevant warranties or representations.
Subsequently, the share transfer is executed by the transferor and transferee, and the transfer documents are duly signed and witnessed.
🔴Payment of Capital Gains Tax:
In accordance with Tanzanian tax laws, the parties involved in the share transfer must settle any applicable capital gains tax. This tax is calculated based on the profit gained from the sale of shares and is paid to the Tanzanian Revenue Authority (TRA). Usually is 10%
🔴Notification to Registrar of Companies:
Once the transfer is completed, the company is obliged to notify the Registrar of Companies about the change in share ownership. This involves submitting the necessary documentation, including the board resolution, sale contract, and other relevant paperwork.
🔴Surrender and Issuance of Share Certificate:
Following the Registrar’s approval, the transferor surrenders their existing share certificate, which is then canceled. Subsequently, a new share certificate is issued to the transferee, officially recognizing them as the new shareholder.
QUESTION AND ANSWERS
What are resolutions for transfer of shares?
Body resloution of transfee shares is meeting which company comvining foe the sake of approving the numbwr of shares to be transfer from one shareholder to another.
What is the share transfer tax in Tanzania?
Share transfe tax Tanzania is charged under Tanzania Revenue Authority and its 10%of the price, Capital Gain Tax.
How do you transfer shares in a private limited company?
Private company to transfer shares in members of company only subject to terms and conditions in the memorandum of association.
What documents are required for transfer of shares?
🔴Share certificate
🔴Share transfee deed
🔴 Certificate od payment of stamp duty
🔴 Certificate of payment of capital gain tax
🔴Notification ti Registrar (form)
What is the agreement for the transfer of shares?
This is legal agreement for purchasing shares from one perosn and another and also known as stock purchase agreement.
What is the time limit for share transfer?
The time limit for share transfer and register to registra is 28 days only as Tanzania laws concerns.
Do share transfers need to be registered?
Share transfer deed ist legal document whicj jave legal effect therefore must registered to registra so as to become effective.
Who completes a share transfer form?
Share transfer onlu complete when parties in the contract sign and exchange the documents.
Who are the parties in a share transfer agreement?
Transfer of shares patirs becomes shareholder and prospecting shareholder.
Can I transfer my shares to a family member? (Spouse or husband or wife, Child)
You may transfer to whatever you like if has capacity to enter into cntract and by following procedures of transferring share above.
Can shares be transferred without consent?
This will depend on memorandum of association but in general any shareholder can transfer share to anyone as binding contracts unless otherwise express probided as restricted by company constitution.
How long can take to transfer share?
This is like other contract whenver all Procedures have met it cna be effectively from 1 to 3 days.
Who needs to approve a share transfer?
It may be director or shareholder and when shareholder has sell his shares director shall update the company.
Disclaimer
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.
Do share transfers need to be registered?
Share transfer deed as other legal document shall be registered so as become effective and have legal force.
Conclusion:
Share transfers in Tanzania follow a structured process that prioritizes legal compliance and transparency. By adhering to these steps, both transferors and transferees can ensure a smooth transition of ownership interests within a company. It is imperative to engage legal professionals or corporate advisors familiar with Tanzanian corporate law to navigate this process effectively
