Background of the Case.
The Case was between Tito Magoti (as the “Petitioner”) and the Attorney General (as the “Respondent”), whereby an application was filed through a petition to the High Court of Tanzania, Main Registry, in Dar es Salaam (the “High Court”). The Petitioner filed the application in his capacity as a citizen of the United Republic of Tanzania challenging the legality of the impugned provisions of the Act, namely, sections 8(1), (2) and (3), 11(1), 14(5), 19, 20, 22(3), 23(3)(c), (d) and (e), 25(2)(e) and (f), 26, 30, 33(2) and 34, while the Respondent was involved as the advocate of the Government in accordance with Article 59 of the Constitution of the United Republic of Tanzania (as amended) (the “Constitution”). The validity of the petition was challenged by the Respondent because the Petitioner was not directly affected by the impugned provisions. However, that preliminary matter was dismissed by the High Court based on ground that every citizen has the right to protect the Constitution and all other laws as provided for in Article 26(2).
The Petitioner claimed that the impugned provisions violate Article 12(1) and (2), 13(1), (2) and (6)(a), 16(1), 21(2) and 29(1) of the Constitution. Generally, the Petitioner’s claims were centered on the premise that the structure and wording of the impugned provisions violated basic rights of individuals.
The High Court deliberated the arguments from both parties and concluded that all the provisions of the Act are constitutional save for section 22(3) which reads as follows: “A data controller shall not collect personal data by unlawful means” and section 23(3)(c) and (e) which state that “A data controller is not obliged to comply with subsection (1) (which states that “Subject to subsection (3), a data controller shall collect personal data directly from the data subject concerned.”) where- (a) the personal data is publicly available; (b) the data subject concerned authorizes the collection of the personal data from a third party; (c) compliance is not reasonably practicable in the circumstances of the particular case; (d) non-compliance is necessary for compliance with other written laws; or (e) compliance would prejudice the lawful purpose of the collection.”
The High Court declared that section 23(3) to be unconstitutional on the grounds that it lacks clarity thus being wide and vague. The High Court explained that the provision ought to have been defined simply because it creates an offence, hence requiring further clarification. The lack of clarity in respect of this provision makes it difficult for the law to guide the behaviours of individuals.
Additionally, the High Court also declared section 23(3)(c) and (e) of the Act to be unconstitutional. The decision was derived from the basis of the provisions being vague, ambiguous and unclear leading to legal uncertainty. The High Court further explained that, section 23(3)(c) of the Act does not disclose the circumstance where compliance is not necessary, hence leaving it to speculation. The High Court further held that section 23(3)(e) of the Act lacked examples of situations in which a data controller adhering to the legislation would undermine the legitimate goal of the data collection. Thus, making it also unclear and open to speculations and abuse. Conclusively, the impugned sections are required to be amended with a view of providing certainty as to what acts or omission shall be regarded as unlawful.
The High Court ordered the Respondent to make the necessary amendments to the above-mentioned provisions. The High Court further stated that the provisions will be struck out from the Act if the Respondent fails to amend the unconstitutional provisions within a year from the date of the judgement.
On the other part, the Judgment did not elaborate if the impugned sections are to be inoperable until they are amended or otherwise. In addition, there is no clear history of the Parliament of Tanzania making amendments to provisions in legislation that the High Court has declared unconstitutional. However, in most instances, cases that center on provisions of Acts of Parliament which have been declared unconstitutional, the decision of the High Court prevails.
However, when the decision of the High Court is challenged in the Court of Appeal of Tanzania and the impugned provision are found to be constitutional, then the decision of the Court of Appeal of Tanzania will prevail instead of the decision made by the High Court.
Imogen E. Homanga – Legal Intern
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.
The Personal Data Protection Act Number 11 of 2022 (the "Act") was enacted on November 1, 2022. It is to be read in conjunction with the Personal Data Protection (Collection and Processing of Personal Data) Regulations, issued under Government Notice 449C of 2023 (the "Regulations"), which came into effect on July 4, 2023. This legislation applies to both Tanzania Mainland as well as Tanzania Zanzibar. Furthermore, these legislation provide guidelines on how data should be transferred outside Tanzania as follows: -
Transfer of personal data is not specifically defined in the legislation however, a simple definition can be taken from Article 44 of the European Union General Data Protection Regulation (GDPR) which defines personal data transfer as an intentional sending of personal data to another party or making the data accessible by it, where neither sender nor recipient is the data subject.
The transfer of personal data outside Tanzania is permitted solely by the Personal Data Protection Commission (the “Commission”) which allows personal data transfer outside Tanzania and issues the necessary permit for such transfers.
Generally, the transfer of personal data to other countries is prohibited according to section 31 (1) of the Act, however, this is permissible by the consent of the Commission pursuant to section 31(2) of the Act, provided that, among other things, the recipient country has adequate legal framework for personal data protection.
Procedures For Data Transfer Outside Tanzania
Regulation 20 (1) – (7) of the Regulations provides for the procedure in respect of personal data transfer from Tanzania. The procedure set out is as follows: (a) A data controller or processor must apply for a permit using Form Number 7 of the Regulations, (b) Applications for permit to transfer personal data shall include details such as particulars of the applicant and recipient, data subject, type of data, purpose of transfer, security measures, consent of data subjects, and other required information, (c) Applicants must show that the recipient country has ratified an international data protection agreement, there is an agreement between Tanzania and the recipient country about personal data protection and a contractual agreement between a requester in Tanzania and recipient abroad, (d) the Commission reviews applications within 14 days and if rejected, a written notice with reasons will be provided. Upon approval the Commission will issue the permit for data transfer outside Tanzania using Form Number 8.
Conditions for the Permit. Regulation 22 of the Regulations mandates that permits issued by the Commission require personal data to be transferred only to authorized recipients, used solely for its intended purpose, not accessible to others without the Commission’s approval, and processed in compliance with Tanzanian laws.
Non-compliance and penalties. Section 60 of the Act imposes penalties for unauthorized handling or disclosure of personal data: as Individuals disclosing personal data may face a fine up to TZS 20,000,000 or ten years in prison and corporations can be fined between TZS 1,000,000 and TZS 5,000,000,000 for unauthorized disclosure of personal data.
Conclusion. In summary, Tanzania’s legal regime for protecting personal data applies to all data subjects, however, it is still at its infancy stage. The passing of the Act is a positive and progressive step towards personal data protection for data subjects. However, it appears that most businesses and/or organisations are not aware of whether they fall within the definitions of data collectors and/or data processors, and what implications that this may have on their business.
PREPARED BY:
EVELYN MFUNGAHEMA
LEGAL INTERN
NOTE; This is not a legal opinion, and the content hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing.
A Summary Procedure Suit is a fast-tracked civil proceeding whereby the Plaintiff desires to proceed in Court on causes of action emanating from bills of exchange (including cheques) or promissory notes, recovery of income tax, mortgages (whether legal or equitable), suits by the Tanzania Electric Supply Company Limited for the recovery of meter rents, chargers for the supply of electricity, recovery of rent (interest), recovery of possession of immovable property and recovery of possession of any immovable property from a lessee under financial lease agreement whereby a lessee has no right of ownership over the property leased to him/her.
Institution of Summary Suits.
Summary Procedure Suits are primarily governed by Order XXXV of the Civil Procedure Code, Chapter 33, Revised Edition, 2019 of the laws of the United Republic of Tanzania. Suits under this order are usually instituted by presenting a Plaint in the usual form but endorsed “Order XXXV: Summary Procedure” and the summons shall specifically inform the Defendant that unless he obtains leave from the Court to defend the Suit, a decision may be given against him.
In order to defend the Summary Suit, the Defendant is under the obligation to apply for leave of the Court so as to Defend it, meaning that the Defendant has to file an Application supported by an Affidavit detailing the reasons for him/her to be granted leave to file a Written Statement of Defence in respect of the Summary Suit. Further, the Application filed in Court can be challenged by the Plaintiff and it may or may not be granted depending on what is presented before the Court determining that matter. However, in default of his/her obtaining such leave or of his appearance in pursuance thereof, the allegations in the Plaint shall be deemed to be admitted as per Order XXXV Rule 2(2) of the Civil Procedure Code.
The Defendant has to show merits on leave to appear and defend.
The Court may upon Application by the Defendant, grant leave to defend the suit by taking into consideration what has been sworn in the Affidavit, which should disclose:-
Leave to defend may be given unconditionally or subject to such terms as payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit.
Summary Suit for Possession against trespassers.
Where in a Summary Suit for possession against trespassers, if at all the Plaintiff does not know the name of a person in occupation and/or trespassing, the suit shall be brought against “persons unknown” in addition to any recognized Defendants. In this suit, the known Defendant shall be served with the Plaint and supporting Affidavit within two (2) to five (5) days before the Hearing date. Whereby in all other possessions suits the Hearing date shall not be less than twenty-one (21) days from the date of issuance of the Plaint.
Suits for possession of Mortgage.
In Summary Suits for possession of Mortgage, the Plaint shall also set out the state of the Mortgage account by including the amount advanced, any periodic repayment and any payment of interest required to be made. Further, the Plaint shall state the rate of interest payable at the commencement of the Mortgage, immediately before any arrears accrued and interest at the commencement of the proceedings in Court.
If the Summary Suit is brought because of failure to pay the periodic payments thus the Plaint shall disclose the dates when the arrears arose, all amounts due, the dates and the amounts of all payments made and a running total arrears. Further it shall disclose any payments required as per the terms of the mortgage such as:-
Summary Suits for possession of land consisting of a dwelling house.
This is a Summary Suit where a mortgagee seeks possession of land which consists of or includes a dwelling house. In this suit the Plaintiff shall send a notice to the property addressed to the occupiers within fourteen (14) days before Hearing date, the notice shall state the possession suit for the property has been initiated and shall display the name and address of the Plaintiff, the Defendant and give details of the place and time of the Hearing.
The overall objective of Summary Suits was illustrated in a landmark Case in respect of Summary Suits between CRDB Bank Limited versus John Kagimbo Lwambagaza (2002) Tanzania Law Report, whereas Honourable Kimaro, J held that “The purpose of Summary Suits is to enable a Plaintiff to obtain Judgment expeditiously where the Defendant has in effect no substantial defence to the suit and prevent the Defendant from employing delaying tactics and, in the process, postpone the day of reckoning. I am of the settled view that Order XXXV is self-contained, in so far as it relates to suits stipulated there under.”
By Said Nassor - 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.
The ISDA (International Swaps and Derivatives Association, Inc.) Cross-Border Risk Management Swaps and Derivatives refers to the standards and methods developed by ISDA to address the risks associated with cross-border swaps and derivatives transactions. This framework aims to ensure compliance with diverse national regulations, decrease legal uncertainty, and increase market stability in the global derivatives business.
Tanzania's swaps and derivatives market is booming, despite the lack of clear legislation governing these hedging instruments. However, on February 10, 2015, the Bank of Tanzania issued a circular imposing restrictions on transactions involving swaps and derivatives denominated in Tanzanian shillings. According to this circular, swaps and forwards involving the Tanzanian shillings can only be conducted by licensed banks and financial institutions, provided there is evidence of an underlying economic activity. Additionally, licensed banks and financial institutions are prohibited from entering into swaps with non-residents for periods shorter than three months and with residents for periods shorter than seven days.
In terms of cross-border hedging swaps and derivatives under ISDA, which are widely utilised around the world, contract parties are normally free to engage in these transactions and choose English law as the governing law. Courts in Tanzania will honour this choice, provided it adheres to the mandatory requirements of the laws of Tanzania, such as those outlined in the circular. Thus, while parties to an ISDA Master Agreement can generally choose their own legal structure, they must nonetheless adhere to the precise regulatory obligations outlined in the laws of Tanzania.
An important aspect of cross-border hedging transactions is managing the insolvency risk of a Tanzanian party (e.g., a borrower) and the resulting impact on the hedging arrangement. Key considerations include the validity and enforceability of close-out netting and set-off provisions. The Companies (Insolvency) Rules, 2004 (the Rules) recognise the concept of close-out netting and set-off provisions. However, these mutual credits, debits, or other mutual dealings do not include any debts incurred when the creditor was aware that a creditors' meeting was summoned, or a winding-up petition was pending. The Rules also prioritise claims, giving secured creditors precedence over unsecured creditors. In practice, when a debtor/borrower becomes insolvent, the specific terms of the ISDA Master Agreement, the priority of creditor claims, and the regulatory framework will dictate the treatment of the hedging arrangement.
Given the increasing use of cross-border hedging instruments under the ISDA framework, it is crucial for Tanzania to develop a comprehensive legal framework to regulate these transactions, beyond the existing limited directives. This would ensure greater clarity and stability in the market, providing better protection for all parties involved in such financial arrangements.
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.
To ensure local participation in the telecommunication sector, the Tanzanian government introduced changes vide Section 26 of the Electronic and Postal Communication Act, Chapter 306, Revised Edition of 2022 of the laws of Tanzania (the “EPC Act”), by requiring that all holders of Network Facilities Licence or Network Service Licence list 25% of their issued and duly paid up shares to the public through the Dar es Salaam Stock Exchange (the “DSE”) in line with the Capital Markets and Securities Act, Chapter 79 of 1994 (as amended) (the “CMSA Act”). By listing on the DSE, telecommunication companies will not only fulfil this requirement but also contribute to the development of the local financial market and economy. This action aims to establish a more equitable and participatory economic environment, ensuring that the benefits of the telecommunications sector are more widely shared among the population.
The requirements under Section 26 of the EPC Act do not apply to: - (1) Application Services Licence, (2) Content Services Licence, (3) Postal and Courier Services Licence, (4) Network Facilities or Network Services Licence wholly owned by the Government, (5) Network Facilities or Network Services Licence in which the Government owns at least twenty-five (25%) percent of the licensee’s shares and (6) Network Facilities Licence for lease of towers.
The CMSA Act together with the Dar es Salaam Stock Exchange Rules (PLC) of 2022 (the “DSE Rules”) outlines the listing criteria that applicants must fulfil to have their shares listed at the DSE.
For example, the listing requirements for an applicant at the Main Investment Market Segment are as follows, among others: -
Challenges associated with telecommunication companies not being able to list at the DSE.
Currently, twenty-three (23) companies have secured a Network Facilities Licence, and only one (1) of these has been listed on the DSE, that is, Vodacom Tanzania PLC. Furthermore, twelve (12) telecommunication companies have secured a Network Service Licence and just one (1) has been listed on the DSE, that is, Vodacom Tanzania PLC.
We note that most telecommunication companies required to list twenty-five percent (25%) of their issued and paid-up share capital on the DSE, failed to do so due to non-compliance with the listing requirements under the CMSA Act. As a result, the CMSA has rejected any application from these companies seeking to list on the DSE. As of the date of this article, no punitive actions have been taken by the Tanzania Communication Regulatory Authority (“TCRA”) against companies qualifying to list the shares at the DSE as required by the EPC Act. It should be noted that, non-compliance could lead to the suspension or cancellation of the licence by the TCRA for a material breach of section 26 of the EPC Act, if the breach is not remedied within thirty (30) days of receiving notification from the TCRA.
By Magreth Benson - Legal Intern
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.
What is Carbon Trading?
Carbon trading (also known as “carbon emissions trade”) is the buying and selling of verified and certified credits that permit an entity to emit a certain amount of greenhouse gases. Carbon trading represents a novel approach in combating global warming by mitigating its environmental impacts.
The concept of carbon trading stems from the cap-and-trade mechanism advocated by the United Nations Treaty known as the Kyoto Protocol of 2005 established to address the challenges of global warming. Globally, the carbon credits are issued and regulated by the United Nations Framework Convention on Climate Change of 1992 (also known as “the Paris Agreement).
How Does Carbon Trading Work?
In simple terms, carbon trading involves a buyer (usually a company or industry owner) acquiring credits from a seller (usually a land owner) who owns large acres of forestry in an area authorized by the Government.
Carbon credits are traded through carbon markets which operate similarly to other financial markets, the only difference is that carbon markets deal with buying and selling of units of carbon emissions reduction or removals and these credits are held in electronic registries. Carbon credits can be traded on various platforms such as exchanges, brokerages and over-the-counter markets. The platforms facilitate the buying and selling of carbon credits between entities looking to either meet regulatory requirements, offset their emissions or invest in sustainable projects.
The cost of carbon credits is variable and subject to fluctuations influenced by diverse factors such as supply and demand dynamics, regulatory structures, compliance standards, quality assurance and verification procedures, project attributes, geographic positioning, and investor inclination. Those factors can cause the market price to fluctuate depending on the position of the buyer and seller and such predicament provide the price at the end. The price of carbon credits can be negotiated like any other financial instruments and the parties must negotiate with regards with relevant regulations and standards governing carbon markets.
Carbon Trading in Tanzania.
The concept of carbon trading was introduced in Tanzania in 2022 through the National Carbon Trading Guidelines which were aimed to be a guide to international, regional and national stakeholders engaging in carbon trading in Tanzania. In the same year, Tanzanian introduced the Environmental Management (Control and Management of Carbon Trading) Regulations vide Government Notice Number 636 of 2022 (hereinafter referred to as “the Regulations”) and later on, its amendment of 2023 both under the Environmental Management Act, Number 20 of 2004 and the Written Laws (Miscellaneous Amendments) Act Number 3 of 2021. The Regulations were made with the aim of controlling and managing carbon trading as well as providing the legal framework of carbon trading in Tanzania as set out in Regulation 5 of the Regulations. The Ministry of Environment regulates carbon trading in Tanzania and through Regulation 5 of the Regulations, the Designated National Authority (also known as the “National Focal Point”) was established to help it coordinating matters relating to environment and carbon trading projects in the country.
Since carbon trading projects require preservation of forests, Local Government Authorities have become heavily involved in such projects as they are the link between the Central Government or investors and local communities as prescribed in Regulation 17 of the Regulations. Carbon trading is expected to result in advantageous outcomes for the Government, as it stands to gain revenue through auctioning carbon credits and imposing taxes. Simultaneously, local communities stand to gain from job creation and opportunities, as well as environmental advantages like afforestation projects and soil conservation.
Tanzania is yet to introduce tax benefits for carbon trading but other countries such as the United States of America, are deducting taxes depending on the kind of carbon credits that a person or company owns and in the United Kingdom, the tax benefits depend on the purchase of carbon credits if it is wholly and exclusively for the purpose of trade.
The Government’s dedication to carbon trading has yielded positive results, with Tanzania receiving 35 applications for carbon trading projects as at December, 2023. With its extensive 48 million hectares of forestry, Tanzania has emerged as a frontrunner in the global carbon trade, thus attracting attention for further carbon trading opportunities. However, considering that this area is at its infancy, it is difficult at this stage to pinpoint how much this sector will contribute to the Gross Domestic Product as, currently, it is not a sector of the economy that is heavily invested in, such as agriculture, tourism and mining.
Imogen E. Homanga – Legal Intern
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.
Mergers and acquisitions (hereinafter collectively referred to as “merger(s)”) are business transactions in which the ownership and/or controlling interest(s) of a business entity or organisation, are transferred to another business or organisation. Notably, a merger occurs when two businesses unite to create a new entity, whereas an acquisition involves one business acquiring a majority stake in another entity.
In various jurisdictions, the approval of the relevant regulator is typically required for a merger transaction to proceed. Local laws in these areas may explicitly forbid the completion of a merger before obtaining such approval. Failure to secure approval prior to finalizing the transaction may result in significant penalties for the parties involved.
Some of the jurisdictions with mandatory notification of a merger prior to implementation include, Tanzania, India, Korea, Singapore, The European Union and Turkey, to name a few, while jurisdictions with voluntary notification include, Australia, France, Spain, the United Kingdom and Mauritius.
Merger notification in Tanzania.
Notification of mergers in Tanzania is governed by the Fair Competition Act, Number 8 of 2003 as amended from time to time (hereinafter referred to as “the Fair Competition Act”), which establishes the Fair Competition Commission (hereinafter referred to as “the Commission”) mandated to investigate, approve or revoke merger transactions.
The Fair Competition Act further establishes a notification requirement for mergers that meet the prescribed threshold for notification. The current threshold for notification is TZS 3.5 billion (approximately USD 1.4 million[1]) calculated from the combined market value of the assets or turnover of the merging firms.[2]
Merger Notification Procedure
The notification procedure in Tanzania is initiated by filing a prescribed merger notification form FCC.8, accompanied with memorandum and articles of association; copies of audited annual financial statements for the preceding three years; strategic business plans; certificates of incorporation/registration; annual performance report and any other additional documentation as directed by the Commission in respect of both, the acquiring firm and the target firm.
Within five (5) working days after receipt of the merger notification, the Commission will review the merger and issue either a notice of complete filing or a notice of incomplete filing. If the Commission issues a notice of incomplete filing the acquiring firm can apply to the Commission to have the incomplete filing set a side.
If the Commission issues a notice of complete filing, within fourteen (14) days after issuing the same, the Commission may approve the merger and the parties can proceed with closing. However, if the Commission decides to further examine the transaction, closing of the merger may be prohibited for ninety (90) days in order for the Commission to conduct an investigation of the merger to ascertain whether the relevant merger will have a major economic impact or if it is likely to harm competition. Once the 90 days period ends and the Commission is not satisfied, the investigation can be further extended for another thirty (30) days. After the conclusion of the investigation and upon the satisfaction of the Commission, it may: -
Conditional approval of a merger
The Commission grants conditional approval for mergers as part of its responsibility to uphold fair competition and endorse optimal business practices. The underlying reasons for granting conditional approval to mergers include sustaining and fostering robust competition among businesses providing goods and services, advancing the welfare of consumers, buyers, and other users of goods and services, as well as supporting employment, small businesses, and specific economic sectors. In that regard, conditions issued by the Commission in respect of approving merger may include a condition that:
Notable example: In 2022, Scancem International DA’s (“Scancem”) indirect acquisition of Tanga Cement Public Limited was approved with conditions that required Scancem not wind up Tanga Cement Public Limited without prior notice or approval of the commission; Scancem was also required to continue the production and the promotion of the Simba Cement brand owned by Tanga Cement Public Limited; and Scancem was also required to submit to the Commission a payment plan for Tanga Cement Public Limited’s existing debts.
Prohibition of a Merger
The Fair Competition Act grants the Commission power to prohibit a merger if the intended merger will create and or strengthen the position of dominance in a market. Position of dominance in the market can be described to mean an entity while acting alone can profitably and materially restrain or reduce competition in that market for a significant period of time; and the entity’s share of the relevant market exceeds thirty-five (35%) percent.
Notable example: In 2013, Toyota Tsusho Corporation (“Toyota”) notified the Commission of its intention to acquire 100% of CFAO Motors (T) Limited (“CFAO”). Both entities deal in the distribution of automotives. The Commission’s investigation established that Toyota had a 40% market share while CFAO had 18.445% market share. When combined the market share of both entities would be 58.445% which exceeded the prescribed threshold of 35%. The Commission prohibited the merger based on the reason that Toyota would be strengthen its position of dominance in the market thereby likely to harm the competition in the automotive sector.
Conclusion
The completion of the intended merger transaction may also be influenced by regulators specific to the sector of the target company. In practice, the legal due diligence conducted before initiating the transaction will uncover any sector-specific approvals or requirements that could affect the merger. Nonetheless, it is crucial to emphasize the importance of acknowledging such factors. For example, in the Banking and Financial Sector, any transfer of ownership in a bank that results in an individual owning more than five percent (5%) of the voting shares must receive approval from the Bank of Tanzania.
By Kenneth Ulaya - 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.
[1] Based on the Bank of Tanzania exchange rates as of 22nd December 2023.
[2] Fair Competition (Threshold for Notification of a Merger) (Amendment) Order of 2017
Before we proceed, it is best to acquaint ourselves with the concept of “adoption” in accordance with the provisions of the Law of the Child Act, Chapter 13, Revised Edition of 2019 (hereinafter referred to as “the Act”) of the Laws of the United Republic of Tanzania.
What does adoption entail? It encompasses the placement of a child's well-being, care, and support to individuals (referred to as foster parents) other than the child's biological parents, provided they are willing and capable of assuming these responsibilities.
What are the Laws Governing Adoption in Tanzania?
Adoption of a child is governed primarily by the Act, and the Adoption of the Child Regulations of 2011 (hereinafter referred to as the “Regulations”).
Types of Adoption
The Act delineates two forms of adoption: (1) open adoption and (2) foster adoption. Open adoption involves a relative of the child applying for the process at the Resident Magistrate’s Court or the District Court. Conversely, foster adoption is facilitated through the High Court of Tanzania. In this procedure, a child is placed in a foster home, where the foster parent assumes all parental responsibilities for the adopted child.
Who can Adopt?
Section 56 of the Act sets out requirements to be met by a person who intends to adopt a child. These include: (1) the applicant should be 25 years and above and must be at least 21 years older than the adopted child, (2) the applicant is a relative of the child and is above the age of 25, and (3) there is consent from the other spouse in case the applicant is married and that if the applicant is a single woman, she must be a Tanzanian citizen.
The Act requires that the applicant and the adopted child should reside in Tanzania unless the applicant is a Tanzanian citizen residing overseas. Furthermore, the law also requires the child to have been in continuous care of the applicant for at least 6 months or more, before the date of the application for adoption is made before a Court.
Can a non-citizen adopt a child in Tanzania?
Section 74 of the Act provides that, a non-citizen must have been a resident in Tanzania for at least three consecutive years and has fostered the intended child for at least three months under the supervision of a social welfare officer. Further, the non-citizen has to have a recommendation concerning his/her suitability to adopt a child from his/her country’s social welfare officer and other competent authority of his/her permanent country of residence. The foreign applicant must also come from a country whose legal regime recognizes the Tanzanian adoption order.
What are the laid-out procedures for Adoption?
The procedure governing adoption of a child begins by an application to the Commissioner for Social Welfare who forwards the application to the District Social Welfare Office. The applicant is then required to fill out an application form to foster the child. The applicant will be expected to give the District Social Welfare Office three referees who will be interviewed by a Social Welfare Officer to ascertain the eligibility or suitability of the applicant.
Subsequently, a Social Welfare Officer will conduct a home investigation, conduct multiple interviews to evaluate the potential living conditions of the child and preparing a corresponding report.
If the Social Welfare Officer deems the inquiry satisfactory, a recommendation will be submitted to the Commissioner for Social Welfare, and an eligible child will be matched with the applicant(s). Subsequently, the Social Welfare Officer will collaborate with the Police Department to ascertain if any relatives are asserting custody of the child. If such claims exist, consent must be obtained for the child's adoption. Following this, the Police Department issues a Certificate of Abandonment, effectively extinguishing the rights of the child's previous relatives.
The child will then be put into foster care for a period of not less than three months, where there will be continual supervision by the Social Welfare Officer. When all requirements are adequately met, a Chamber Application supported by an Affidavit accompanied by a Petition for Adoption will be lodged at the High Court of Tanzania (or at the Resident Magistrate’s Court or in the District Court) to obtain an adoption order.
During the hearing of the Application, a Social Welfare Officer shall present the Social Investigation Report to the Judge and/or Magistrate, and all its annexures and the foster parent(s) shall present reasons before the court as to why there are suitable candidates to adopt the child.
What are the legal implications once the adoption order is granted by a court?
The adoption procedure transfers all rights of the adopted child from the biological parents or relatives to the foster parents, who take on full responsibility of the child. In the case of married applicants, they are obligated to undertake the responsibilities of the adopted child, encompassing custody, financial support, and education, similar to those of a biological parent.
By Said Nassor - 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.
Introduction
A trust is a legal arrangement in which an owner of a property commonly referred to as a settlor transfers legal ownership of that property to another person known as a trustee. Under such an arrangement, the trustee will be responsible for the management and control of the trust property for the benefit of the settlor’s intended beneficiaries. Trusts can be created by personal acts of the settlor, an order of a court or by operation of the law.
Section 1A of the Trustees Incorporation Act, Chapter 318, Revised Edition of 2002 as amended by the Written Laws (Miscellaneous Amendments) (No. 3) Act of 2019 (hereinafter referred to as “the Act”) excludes the following entities from being registered as trusts, that is, Non-Governmental Organizations (NGOs), Companies, Civil Societies, Labour Trade Unions, Agricultural Associations, Political Parties, Sports Associations, Microfinance Groups (VICOBA), Corporative Societies and any entity that the Minister responsible for Legal Affairs may declare not to be a Trust.
Types of Trusts
Trusts recognized in Tanzania include a testamentary trust and living trust. A testamentary trust can be found in a will of a settlor, it comes into existence after a settlor’s death. A testamentary trust entails, among other things, the name of a person appointed as a trustee, the names of the beneficiaries, details of the trust property (assets) and powers of the trustee(s). Testamentary trusts are generally irrevocable in nature unless the beneficiaries agree, to alter or change the conditions in a trust. A living trust is created during the settlor’s lifetime, whereby the settlor appoints a trustee to manage his/her assets for the benefit of the settlor’s beneficiaries. The settlor and trustee(s) will execute a trust deed which sets out the management and distribution of the settlor’s assets containing, the description of the trust property, details of the trust’s beneficiaries and how the trustee(s) will exercise his/her power in managing the trust property.
In most instances, living trusts are revocable and one major advantage of creating a living trust is to avoid probate proceedings which can be very tedious, costly and could lead to exposing private financial details of the settlor’s estate to the public since the outcome of probate proceedings are made public.
Procedures of incorporating a Trust
The Act provides for procedures to follow when incorporating a trust. Trusts are regulated by the Registration Insolvency and Trusteeship Agency (RITA). The process commences with the submission of a formal request to the Administrator General seeking incorporation as a body corporate. This involves completing application form number (TI.1) and remitting an incorporation fee of Two Hundred Thousand Tanzanian Shillings (TZS 200,000/=), along with the following documents::-
Secondly, the Administrator General may require furnishing of an oath or any other document that will stand as evidence for verification of the statements and particulars in the application. Thirdly, the applicant is then issued with an invoice to make payment for the incorporation fees. Thereafter, if the Administrator General is satisfied that the application process has met the set-out criterion, then the trust will be incorporated and a certificate of its registration will be issued in that regard.
Taxation of a Trust
If a trust originates from a resident in Tanzania, the distributions of the trust assets to its beneficiaries are exempted from income tax, that is, the beneficiary does not have to include the distribution in their income. However, if a trust is not resident in Tanzania, the beneficiary must include the distribution from a trust as part of his/her/its income as prescribed under section 52(2) of the Income Tax Act, Chapter 332, of the laws of United Republic of Tanzania which reads:-
Distributions -
(a) of a resident trust or unit trust shall be exempt in the hands of
the trust's beneficiaries; and
(b) of a non-resident trust or unit trust shall be included in
calculating the income of the trust's beneficiaries.
Liability of a Trustee
A trustee is liable for the breach of the terms and conditions contained in a trust deed and for such to happen the trust must have suffered loss. Where a trustee has been made liable for breach of trust, which was not due to his/her fault, he/she can make a claim for reimbursement from other trustees (if any) and where there is no trustee, he/she may claim to court with competent jurisdiction. A trustee is not personally liable for torts committed while administering a trust unless a trustee was personally liable.
Termination of Trust
Deregistration of a trustee occurs when:-
1. a settlor may exercise a power of revocation and it can also be revoked by settlor’s will;
2. a trust is induced by fraud, duress, undue influence or mistake hence invalidity declaration;
3. lapse of time which marks expiration of a trust duration;
4. consent of beneficiaries; and
5. failure of material purpose such as destruction of trust property.
PREPARED BY: MAGRETH BENSON- Intern
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.
The common types of assets taken by lenders in Tanzania as collateral in corporate finance transactions include the financed commodities, landed properties, other physical assets such as motor vehicles, plant and equipment. However, contractual rights while considered risky, can also be taken as security in a corporate finance transaction. To create security over rights to receive payment, and other rights stipulated in a contract can be appealing to lenders and has become an important factor in structuring many asset finance or commodity transactions. These rights are generally choses in action that is, personal rights of a property that can only be claimed or enforced by action, and not by taking physical possession.
Creating security over contractual rights is commonly done through assignment by way of security of the said rights, benefits, and or interests in a contract from the person assigning the rights (the “assignor”) to the person being assigned the rights (the “assignee”). Contractual rights that can be the subject to assignment by way of security include rights to receivables, insurance policies, sale and purchase agreements, rights relating to investments, and credit balances.
Contractual rights can further be secured by way of charge, thus, creating proprietary interests over the rights, benefits, and interests of the person creating the charge (the “Chargor”) in a contract in favour of the person receiving the charge (“the Chargee”). The charge grants the Chargee the right to take possession of and take benefit from the interest in the rights if the Chargor defaults on the secured obligations as stipulated in the deed of charge and the underlying facility agreement.
The charge will serve as an encumbrance on the Chargor’s rights within a contract but does not transfer ownership to the Chargee and the ability to exercise contractual rights remains with the Chargor albeit the exercise of all or some of the referenced contractual rights could be subject to approval or prior notification to the Chargee.
A non-typical scenario where contractual rights can be taken as security is a commodities finance transaction, Oil being the financed commodity where both the Lender and the Borrower are foreign entities from separate jurisdictions with no commercial presence in Tanzania, but the financed Oil is for supply and is stored in comingled storage tanks in Tanzania.
In this particular scenario the borrower’s obligations cannot be secured by executing a debenture considering debentures can only be perfected if the borrower is an entity incorporated in Tanzania. Further to that, the borrower cannot execute a charge or pledge the financed Oil as security to the Lender since the financed Oil is comingled with the Oil owned by other parties. Independent security interests cannot exist in goods which are commingled since the identity of the original goods is lost. Contractual rights however can be taken as security.
Contractual rights to be taken as security for the financed Oil in comingled storage arise from the storage Agreement executed between the borrower (as the owner of the Oil in storage) and the storer. While the Oil is in storage, title to the Oil is vested to the storer. The storage agreement will entitle the Borrower to hold space in the storage tanks, to be able to inject and withdraw the Oil to and from the tanks. The storage agreement may also contain certain guarantees relating to the storage of the Oil issued by the Storer to the Borrower; the tank receipts issued by the Storer; insurance policies of the Storer and the Borrower; and letters of credit or local purchase orders issued to the borrower by its customers purporting to acquire the Oil. All these agreements confer certain rights to the borrower and it is these rights that can be charged and assigned in favour of the Lender.
When purporting to assign contractual rights by way of security a due diligence should be conducted on the contracts to check provisions restraining the parties from assigning their rights to third parties, and to ensure that appropriate consents to assignment are obtained from counterparties if necessary.
By Kenneth Ulaya - 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.
