A charitable organisation is a type of non-profit organization that is formed for a specific charitable purpose, such as helping the poor, providing educational opportunities, or advancing medical research. In these kinds of organisations, all the money earned by or donated to them is used in pursuing the organisation’s objectives and keeping them running.
The term "Non-Governmental Organisations" (“NGO(s)”) is commonly used to refer to charitable organisations and other non-profit organisations. In Tanzania, they are regulated under the Non-Governmental Act, Chapter 56, Revised Edition 2002 of the Laws of Tanzania (the “NGO Act”).
Who is a Beneficial Owner?
A beneficial owner is a natural person who either owns, controls or is entitled to a substantial economic interest, whether directly or indirectly, over a company.
The Finance Act Number 8 of 2020 of the laws of Tanzania (the “Finance Act 2020”) introduced the concept of beneficial ownership in Tanzania and defines it as a natural person-
On the other hand, Section 14(2) and 459A of the Companies Act, 2002 (hereinafter referred to as the “Companies Act”) read together with Regulation 3(1) of the Companies Act (Beneficial Ownership) Regulations, 2021 (hereinafter referred to as the “Regulations”) requires companies incorporated in Tanzania to submit details of its beneficial owners to the Registrar of Companies.
The Regulations are applicable to both public and private companies, except for those incorporated outside of Tanzania that have a place of business in Tanzania, as they are not considered to be incorporated in Tanzania and are therefore exempted.
Is a Charitable Organisation a Company or a Trust?
An Organisation, a Company and a Trust are three distinct entities.
A Trust is a legal entity in which a person (Trustee (s)) holds title to a property or interests, subject to an obligation to keep or use the property for the benefit of another. Trustees are governed by the Trustees’ Incorporation Act Cap 318 Revised Edition 2002 (hereinafter referred to as the “Trustees Incorporation Act”) read together with its rules and is regulated by the Registration Insolvency and Trusteeship Agency (RITA).
Prior to 2019, one was able to register an NGO under different legislative regimes. However, in 2019, the Parliament of Tanzania passed changes, among others, to the Trustees Incorporation Act, the Companies Act and the NGO Act through the Written Law (Miscellaneous Amendments) (No.3) Act of 2019 (the “Amendments”).
The Amendments significantly required NGOs and other similar/related entities which were incorporated and/or registered under different legislative regimes other than the NGO Act to relinquish their registration or incorporation status under the other legislative regimes and become fully regulated by the NGO Act.
The Amendments also amended the definition of a company to mean a company formed and registered under the Companies Act or an existing company established for investment, trade or commercial activities and any other activity as the Minister may, by notice published in the Gazette, prescribe.
Similarly, the Amendments stated that NGOs are voluntary associations of individuals or organizations that are non-partisan or non-profit, established and operating for the benefit or welfare of the community or public, organized at the local, national, or international levels to promote economic, environmental, social, or cultural development, or to protect the environment, good governance, law and order, human rights, and advocacy on such issues. However, it should be noted that this definition excludes: (a) a company formed and registered under the Companies Act, (b) a trust formed and registered under the Trustees’ Incorporation Act; (c)a trade union formed and registered under the Employment and Labour Relations Act; (d) a religious or faith propagating organization; (e)a cooperative society formed and registered under the Cooperative Societies Act; (f) an agricultural association formed and registered under any written law other than this Act; (g) a society formed and registered under the Societies Act; (h)a political party formed and registered under the Political Parties Act; (i) a community microfinance group (VICOBA) registered under the Microfinance Act; (j)a sports association formed and registered under the National Sports Council of Tanzania Act; and (k) any organization which the Minister may, by order published in the Gazette, declare not to be a non-governmental organization for the purpose of this Act.
Based on the aforesaid, an NGO is not a company or trust as per the law, thus, they are not required to register and/or submit particulars of their beneficial owners. This is why the Finance Act 2020 did not include amendments to the NGO Act. Nonetheless, it is impractical to request beneficial ownership details because of the absence of an ownership framework within an NGO structure..
In general, NGOs are funded entities for the purpose of enhancing or promoting development with no ownership structure per se. However, the law mandates the NGOs to submit their donor contract or agreement to the Registrar as well as to the Treasury not later than ten(10) days from the date of entering the said contract or agreement for approval. NGOs are also obliged to declare to the Registrar any other resources received either in cash or kind before its expenditure.
By Joel Kimale – Advocate
Note: This is not a legal opinion, and the contents hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing
