In Tanzania, all gaming activities are overseen by the government through the Gaming Board of Tanzania (the “Gaming Board”), a body corporate established by section 4 of the Gaming Act, Chapter 41, Revised Edition 2019 of the laws of Tanzania (the “Gaming Act”), for the sole purpose of carrying out the operations and management of the gaming activities in Tanzania.

The laws that govern gaming in Tanzania include the Gaming Act, the Gaming (Amendment) Regulations GN.401 of 2010, the Gaming Regulations GN No.385 of 2003, the Gaming (Amendment) Regulations GN.278 of 2009, the Gaming Equipment Standards – Smart Interface for Gaming Machines of 2019, the Gaming Equipment Standards – Gaming Devices for Route Operations of 2018, the Gaming Equipment Standards – Central Electronic Monitoring System for Route Operations of 2018 and the Sports Betting Rules, 2016.

The Gaming Board regulates gaming activities that are played with cards, dice, equipment, or any mechanical electromechanical or electronic device or machine for money, property, checks, credit or credit card, or any representative of value, including but without limiting the generality of the foregoing, bingo, wheel of fortune, baccarat, slot machine, horse race, lottery, wager or stake, any banking or percentage game or any other game or device approved by the Gaming Board. But this does not include, games played with cards in private homes or residences in which no person makes money for operating the game, except as a player, or games operated by charitable or educational organizations approved by the Gaming Board.

The Gaming Board issues a total of 18 licenses and certificates. These include : (1)casino license for conducting table games and slot machine; (2) slot machines or route operation for promotion of slot machines business in a shop, (3) manufacturer’s certificate for manufacturing of gaming equipment including its spare part, (4) seller’s or distributor’s license for supplying, selling or servicing gaming equipment, (5) key gaming employee certificate for a person in charge of any gaming activity at all times when the game is conducted, (6) accreditation license for a person engaged in non-gaming activity within gaming premises, (7) support license, required for a person employed in the gaming activities or a gaming employee, (8) a retail gaming license which is required by a retailer on a premise on which he maintains sole and exclusive legal possession of the entire premise for which he is issued internet casino license for conducting casino games through remote devices with internet connection, (9) SMS lottery license for conducting SMS lotteries for commercial purposes, (10) principal license for sports betting and slot machines operations, (11) internet sports betting license, (12) sports betting terminal license, (13) national lottery license to conduct of national lottery, (14) lottery license to conduct business Lotteries, (15) service provider License to provide services on gaming operations, (16) gaming consultancy License, (17) virtual games License and (18) certificate of suitability for license of gaming activities.

Process of registration for Gaming License

Before applying for a gaming license, an applicant must meet a set of criteria established by section 26 of the Gaming Act which includes:-

• he must have never previously had any gaming license denied, revoked, or suspended, nor may they have withdrawn an application for any gaming license in mainland Tanzania or any other country;
• the applicant (including the directors and shareholders) must have a clean criminal record;
• he must provide evidence of adequate funding; and
• he must possess gaming premises approved by the Gaming Board.

Application for a gaming license is made to the Gaming Board by submitting the prescribed documents. The Gaming Board shall upon receipt of the application for gaming license, investigate to determine the applicant’s suitability including the vetting process of the shareholders, directors, and business, and the applicant and the Gaming Board shall, where it is satisfied that the conditions for grant of gaming License have been complied with by the applicant,  issue a gaming license and may impose conditions or restriction on the license depending on the type of gaming activity that the holder of a license may carry on.

Post-registration compliances

Holders of gaming license in Tanzania are obligated to comply with the post-registration requirements enforced by the gaming laws, including but not limited to, payment of the gaming taxes to Tanzania Revenue Authority according to section 31 of the Gaming Act at the prescribed rates set out therein, and payment of the monthly gaming levy at the prescribed rates set out in the first schedule of the Gaming Amendment Regulations G.N. 401 of 2010.

Illegal gaming operations

Generally, it is unlawful to conduct any gaming operation without a valid license. Any person found to be carrying out illegal gaming activities in Tanzania commits an offense and upon conviction is be liable to a fine not exceeding Tanzania Shillings Five Hundred Thousand (TZS500,000/=) or to imprisonment for a term not exceeding twelve months or both. Also, the Gaming Act prohibits conducting any gaming operation on unlicensed premises subject to which upon conviction an offender shall be liable to a fine not exceeding Tanzania Shillings Five Hundred Thousand (TZS500,000/=) or imprisonment for a term not exceeding twelve months or both.

By Diana Bahesha – 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.

In 2017 significant changes were introduced by the Government of the United Republic of Tanzania (hereinafter referred to as “the Government”) in the mining sector. One of the key changes which were introduced was the free carried interest shares to be issued to the Government in companies which either hold Mining Licences and Special Mining Licences. This article seeks to highlight the operational aspects of the free carried interests shares and the right to participate in the mining operations of these companies by the Government. This specific introduction is found in section 4 (1) of the Mining Act, Chapter 123, Revised Edition of 2019 of the laws of Tanzania (hereinafter referred to as “the Act”).

FREE CARRIED INTEREST SHARES

Since the introduction of the free carried interest shares under section 4(1) of the Act, stakeholders in the mining sector, which include holders of Mining Licences and Special Mining Licences, shareholders of such companies, potential investors of these companies as well as financiers, have been eagerly waiting for the methodology determining how this provision would be implemented by the Government. This wait came to an end on 30^thOctober, 2020 when the Government introduced the Mining (State Participation) Regulations of2020 (hereinafter referred to as “the Regulations”) vide Government Notice Number 939 of 2020.

Regulation 5 (1) of the Regulations provides that the Treasury Registrar shall acquire, on behalf of the Government, not less than sixteen percent (16%) non-dilutable free carried interest shares in the capital of a mining company (a company incorporated under the Companies Act No. 12 of 2002, Chapter 212, Revised Edition of 2019 of the laws of Tanzania) and any other person holding a Mining Licence or Special Mining Licence.

Further, Regulation 5 (2) of the Regulations provides that, the Treasury Registrar on behalf of the Government, may also acquire, in total, up to fifty percent (50%) of the shares in a mining company and any other person holding a Mining Licence or Special Mining Licence commensurate with the total tax expenditure incurred by the Government in favour of a mining company or a person holding Mining Licence or Special Mining Licence. It is important to state at this point that the term ‘mining company’ has been defined under the Regulations to mean a company holding a Mining Licence or Special Mining Licence issued under the Act.

Regulation 5(4) of the Regulations provides that in every two (2) years after the commencement of the Regulations the Government shall review the tax expenditure enjoyed by a mining company or a person holding Mining Licence or Special Mining Licence in determining the number of shares to be acquired by the Government. Under Regulation 4(5) of the Regulations, computation of Government shares shall base on an amount of tax expenditure enjoyed by that mining company up to the date of computation divide by the market value of shares at the date of computation.

MODE OF PAYMENT OF INTEREST ON SHARES OF THE GOVERNMENT

According to Regulation 9 (1) and (2) of the Regulations, the Treasury Registrar shall determine the mode of payment of profit resulting from non-dilutable free carried interest shares or other additional  shares to the Government and, in doing so, the Treasury Registrar shall notify in writing the mining companies or any other person holding Mining Licence or Special Mining Licence on the procedures of payment of profit resulting from non-dilutable free carried interest or other additional shares to the Government.

LEGAL IMPLICATIONS ON FREE CARRIED INTEREST SHARES

The Government by holding sixteen percent (16%) or more of non – dilutable free carried interest shares in the capital of a mining company or any other person holding a Mining Licence or Special Mining Licence shall enjoy the following additional rights:-

1. The right to be issued with shares certificate as evidence of title over a number of shares held in a mining company;
2. The right to be registered in the members’ register of a mining company which shall be kept at its registered office within Tanzania;
3. The right to participate in the mining company’s statutory meetings, including annual general meetings and other meetings and to vote, participate in the governance of such company;
4. The right to access to the mining company’s reports relating to its accounts, directors’ and auditor’s reports and to receive dividends; 
5. The right to appoint a director to represent Government’s interest subject to the provisions of the mining company’s Memorandum and Articles of Association;
6. The right to participate in the decision to remove of a director in a mining company;
7. The right to automatic allotment to it of shares of a mining company without direct financial contribution by cash or otherwise for the value of shares; and
8. Actual ownership of the non - dilutable free carried interest shares from the start, receive a proportionate share from any repayment of either equity, shareholding loan or third-party loan.

On the other hand, Regulation 11(1),(a),(b) of the Regulations gives the Government respite from any obligation to subscribe to shares neither to show readiness or commitment to take up shares or stock by actually subscribing to the Memorandum and Articles of Association nor contribute to any equity capital, repayment of shareholder loan(s) or third-party loan.

The free carried interest shares to the Government shall be allotted or issued to it as part of state participation in the mining operations of these companies. The free carried interest shares to the Government shall be deemed to be fully paid up shares at the time of its allotment or issuance. According to Regulation 13 (1), (2), (3) of the Regulations, the Government shall be allotted or issued the free carried interest shares as part of the state’s participation in that particular company’s mining operations and such shares shall be deemed as fully paid up at the time of its issuance of allotment and shall remain so throughout the lifetime of the mineral right held by that particular mining company. 

Furthermore, according to Regulation 14 (1) of the Regulations, the Minister responsible for Mining Affairs, in consultation with the Minister responsible for Finance, may issue specific or general directives to the Treasury Registrar or any mining company on proper administration of the Government’s shares in the mining company or a person holding mining licence or special mining licence. This then has the potential of allowing the Government, to either extend or reduce the implications and application of the Regulations to mining companies or a person holding a Mining Licence or Special Mining Licence.

  

By Said Nassor Salum- Advocate 

Shabnam Nabeel Satchu- Lawyer

  

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.