A Standard Form Contract is an agreement that contains standardized, non-negotiated provisions for the supply or sale of goods and/or services. These are usually in preprinted forms i.e. sales receipts, contract of services and facility letters, to mention but a few. One of the main reasons to introduce standard business terms in consumer contracts is that they reduce transaction costs by eliminating the need to negotiate the various terms and conditions of a contract for each instance a product is sold or a service is rendered. Essentially, the objective of having these Standard Form Consumer Contracts registered by the Fair Competition Commission (the FCC) is to prevent unfair contractual terms and frequent consumer injuries and losses.

Part II of the Standard Form (Consumer Contracts) Regulations, 2014 of the laws of Tanzania published under Government Notice Number 305 of 2014 (the Regulations) defines all the technical aspects of contractual obligations. One amongst them includes the standardized contractual terms whereas a producer or trade association, for the purpose of establishing a sound order of trade and prevent unfair contractual terms from circulating, may prepare a set of standard contractual terms to be used in a particular field of trade.

What are the Specific Requirements of Standard Form Consumer Contracts?

The requirements for standard form consumer contracts include:

• being expressed in a specific period; and
• specify the producers' obligations (manufacturers, suppliers, sellers, service providers, and operators).

One amongst the specific requirements of the Standard Form Consumer Contracts is that producers are obliged to state on their goods and services information regarding the nature of the goods and service, way of advertising, way of offering it and signing it. Lastly, they are also required to provide consumers with their rights, duties and obligations. A detailed specific Standard Form Consumer Contracts requirements are provided under Part III of the Regulations.

Registration of Standard Form Consumer Contracts.

Any person or body corporate that uses standard business terms and conditions (manufacturers, suppliers, sellers, service providers and operators) in a contract is required to register the contract (with the FCC) by filling SFC Form No 1. The FCC is vested with the authority to review and endorse the Standard Form Consumer Contracts. The procedures laid down for registration of Standard Form Consumer Contracts include filing SFC Form No.1 with the FCC within twenty-one days before the conclusion of a contract and afterwards, the said form shall be reviewed within fourteen days by the FCC as per Regulation 19 (1) of the Regulations. Thereafter, the FCC may approve or disapprove the standard business terms as provided under Regulation 21( 1) of the Regulations.

What amounts to unfair terms in Standard Form Consumer Contract?

Unfair terms include contractual terms that cause a significant bargaining imbalance between a seller and a buyer and do not legitimately protect the interest of the seller and cause financial or non-financial harm to consumers. The unfairness of the contractual terms shall be assessed by taking into consideration the nature of the goods or services for which the contract was concluded. For instance, in order to determine fairness one ought to ask themselves these questions:-

• Can the provider change important terms of the contract without your consent?
• Is there a disclaimer clause?
• Can only the provider decide whether the contract has been breached?

Further, the Regulations insist on the use of plain language so that the terms can be reasonably and clearly expressed and eventually for the terms to be understood. Part V of the Regulations points out all technical aspects on unfair terms, assessment of unfair terms, language, and effect of unfair terms.

Who can lodge a Complaint to The FCC?

Any person or body corporate can lodge a complaint to the FCC by filling form SFC No. 2 alleging contravention of the provisions of the Fair Competition Act No. 8, 2003 and the Regulations. Although, one should bear in mind that the FCC shall not entertain a complaint if a similar complaint or part of it is pending before any competent authority or was previously determined by any competent authority.

The Procedures laid out by the Regulations.

Upon receipt of the complaint, the FCC shall notify the producer in a manner set out in form SFC 3 of the First Schedule to the Regulations. The producer will be given seven days to reply in a manner set out in form SFC 4 of the First Schedule of the Regulations. The FCC shall proceed to hear the complaint within twenty-one days from the date of receipt of the reply from the producer. Any person aggrieved by the decision of the FCC may, within twenty-eight days from the decision, appeal to the Fair Competition Tribunal.

What are Unfair terms?

The Regulations provide an exhaustive indicative list of unfair terms used in Standard Form Consumer Contract. Examples of such unfair terms include (a) contract terms that allow a provider of goods or services to alter the contracts without consumer consent i.e. “we may change subscription fees, terms and conditions at any time without prior notice”; (b) contract terms that confuse the agency arrangements that apply and seek to unfairly release the agency from liability for any failure to perform the contract i.e. “agency’s errors and omission are exempted”. Some of the unfair terms provided by the Regulations include a provision by which the producer is relieved of the statutory requirements to give notice to the other party to perform or to fix a period of performance, limitation of liability for other losses caused by the negligence of the producer, the producer’s obligation to bear the expenditure necessary for supplementary performance in particular costs of carriage, a provision by which a producer is entitled to receive payment of a penalty in the event of non-performance or late acceptance of performance.

Overall, the Regulations intend to enable suppliers and consumers to understand and equip them with the aptitude on how best they can learn and use the knowledge to mitigate unfair trade practices in the market.

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.

Background

Many countries around the world are now implementing rules and regulations on disclosure of beneficial owners and Tanzania is amongst one of them.

Through the passing of various legislation, such as the Finance Act Number 8 of 2020 (hereinafter referred to as “the Finance Act of 2020”),rules on disclosure of beneficial owners were introduced to theCompanies Act Number 12 of 2002 (hereinafter referred to as “the Companies Act”). In addition, the Finance Act 2020 amended the Anti-Money Laundering Act, Chapter 423, Revised Edition of 2019, the Trustees’ Incorporation Act, Chapter 318, Revised Edition of 2002 and the Income Tax Act, Chapter 332, Revised Edition of 2019 (hereinafter referred to as “the Income Tax Act”) by establishing provisions relating to beneficial ownership rules.

The main aim of disclosing a beneficial owner of an asset or interest in an entity is to curtail and/or prevent offences such as money laundering, tax evasion, and other illegal practices, and to also increase transparency in legal business activities within a particular jurisdiction.

Concept of Beneficial Owners

A beneficial owner is a person and/or group of individuals who enjoy the benefits of ownership even though the title thereof belongs to someone else, who, either directly or indirectly, has or have the power to vote or influence the underlining transactional decisions through the arrangement made. These arrangements (as stated under section 3 of the Income Tax Act), include an action, agreement, course of conduct, dealing, promise, transaction, understanding or undertaking, whether express or implied, whether or not enforceable by legal proceedings, and whether unilateral or involving more than one person.

The Finance Act of 2020 has defined a beneficial owner as a natural person who: -

1. who directly or indirectly ultimately owns or exercises substantial control over an entity or an arrangement;
2. who has a substantial economic interest in or receives substantial economic benefit from an entity or an arrangement directly or indirectly whether acting alone or together with other persons;
3. on whose behalf an arrangement is conducted; or
4. who exercises significant control or influence over a person or arrangement through a formal or informal agreement.

The above definition has also been incorporated under section 4 adding to section 3 of the Anti-Money Laundering Act, section 7 adding to section 2 of the Companies Act, section 25 (c) adding to section 3 of the Income Tax Act, and section 76 by adding section 1A to the Trustees’ Incorporation Act.

Beneficial Ownership Requirements under the Companies Act

There shall be delivered a statement in the prescribed form (Company Form 14b found under the Companies (Forms) Rules) containing the subsequent particulars that are accurate and up to date records of beneficial owners as stated under section 8 of the Finance Act which amends section 14 (2) (b) of the Companies Act, of such company which shall include:-

• full name, including any former or other name;
• date and place of birth;
• telephone number;
• nationality, national identity number, passport number, or other appropriate identification;
• residential, postal and email address, if any;
• place of work and position held;
• nature of the interest including the details of the legal, financial, security, debenture, or informal arrangement giving rise to the beneficial ownership; and
• oath or affirmation as to whether the beneficial owner is a politically exposed person or not.

Register of Beneficial Owners

Companies in Tanzania are now required to have a register for beneficial owners and to notify the Registrar of Companies (hereinafter referred to as “the Registrar”), who shall also establish and maintain a register of beneficial owners at the Companies Registry as stated in section 16 of the Finance Act of 2020. This means that, the information held by the Registrar will be available generally to specific competent authorities in Tanzania and public access to such information is limited unless stated otherwise. The various competent authorities include, the Tanzania Revenue Authority (hereinafter referred to as “the TRA”), the Financial Intelligence Unit, Government institutions responsible for overseeing the economic empowerment of Tanzanian nationals, and any other national competent authority.

Through the register, the TRA can now have more insight into the economic reality of all corporate arrangements in respect of various entities when undertaking tax audits, assessments and investigations. Income tax, including the withholding tax, is now chargeable and payable by both the beneficial owners and/ or non-resident through their agents or representatives who receive income be it directly or indirectly, as long as it derives in Tanzania.

Consequences of failing to make the requisite disclosures

It is mandatory for persons seeking to register new companies in Tanzania to ensure that their respective beneficial owners (if any) are identified and their details and/or particulars are  submitted to the Registrar at the time of incorporation. A person who fails to file beneficial ownership detail commits an offence and thus liable to a fine of not less than TZS 5 million but not exceeding TZS 10 million.

The Registrar has the power to refuse to register any document of a company that is required to be registered under the Companies Act if he is not satisfied that the company has provided accurate and up to date information on the beneficial owners of the company, which, in turn, may prevent a company from taking certain essential corporate actions.

Conclusion

Anonymity, in certain circumstances, enables many illegal activities to be performed or to take place as they may go unnoticed by law enforcement authorities. Such illegal activities include tax evasion, corruption, money laundering, financing of terrorism. etc. Thus, there are valid reasons as to why it is important to implement different laws to identify beneficial owners’ information that will be available and accessible by certain Government authorities.

By Nuruh Mwandambo - 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.

A cooperative society is an association or organisation that is formed by people of common interest who voluntarily come together and pool resources to promote their welfare. These can be in a form of a primary society, secondary society, an apex, and/or a federation.

The legal framework regulating cooperative societies in Tanzania dates back to 1932 when the first legislation was coined. The Co-operative Societies Act of 1932 was introduced in the then Tanganyika by the colonial government with a view of controlling cooperative societies in Tanganyika.

Thereafter, there have been several other legislations and amendments culminating to the new Cooperative Societies Act Number 6 of 2013 of the laws of Tanzania (the “Act”).  

The Act, primarily among other pertinent matters, provides for the establishment of the Tanzania Co-operative Development Commission (hereinafter referred to as “TCDC’). The TCDC is assigned with the registration and operation of cooperative societies; promotion of co-operative development and other matters incidental to or connected thereto. In the course of implementing the Act, the Government of Tanzania is required to provide and create a conducive social, economic and legal environment for the development and prosperity of cooperative societies in Tanzania.

In view of eradicating poverty in Tanzania, the TCDC is also mandated to oversee the management and operations of cooperatives societies and to ensure compliance to the fundamental principles and best practices of cooperatives. It is also responsible for coordinating the promotion and supervision of cooperative development activities, with the Registrar of cooperatives being its Chief Executive Officer.

The fundamental principles regulating cooperative societies include, but not limited to: -

•          voluntary and open membership;
•          democratic member control;
•          member economic participation;
•          autonomy and independence;
•          education training and information;
•          co-operation among cooperatives society; and
•          concerns for community.

The appropriateness or otherwise of a cooperative society’s rules and by-laws is determined by adherence to the above principles.

Types of Registration of cooperative societies

The TCDC is empowered to issue the following types of registrations, namely: -

• agricultural cooperatives which are designed to deal with crop production, collecting, processing, marketing, distribution, and any such activities as may be provided for in the Regulations and by-laws;
• cooperative financial institutions;
• consumer cooperatives designed to deal with wholesale and retail business amongst members;
• industrial cooperatives for production, manufacturing, and sale of goods;
• housing cooperatives designed to deal with building, construction, and housing programs for members;
• livestock cooperative societies designed to deal with the needs of members in animal husbandry, livestock keeping, and dairy farming;
• fisheries cooperative societies designed to deal with fishing, processing, and marketing of fish and other sea products;
• producers' cooperatives for agricultural, forestry, or other natural products;
• mining cooperatives designed to deal with mining operations and mineral marketing; and
• such other cooperatives as may be established.

Process of Registration

An application for registration is made in the prescribed form (reflected in the second schedule under Cooperative Societies Regulations issued under Government Notice No. 272 of 2015) to the Registrar as stated under section 30 of the Act, and is accompanied by the following documents: -

• four (4) copies of the proposed by-laws of the society, signed by all the applicants;
• a report of a feasibility study or project writeup indicating the viability of the society; and
• such other information concerning the society as the Registrar may require.

Upon registration, a society becomes a separate legal entity as one of its characteristics, with the limited liability of its members and with the capacity to enter into any agreement and to purchase or sell properties in its name, among others. Death, insolvency, or mental illness of a member does not affect the existence of a cooperative society.

Thus, a cooperative society is a unique form of business organization that is partly private and partly public, but essentially different from both private enterprise and public enterprise used by people and businesses for their mutual benefit.

It should also be noted that the provisions of the Companies Act, Chapter 212 of the laws of Tanzania and the Business Names (Registration) Act, Chapter 213 of the laws of Tanzania, do not apply to societies registered under the Act as stated under section 143of the Act.

By Nuruh Mwandambo - 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.

­­­­­­­­­­­­­­­­­­There are new developments in Tanzania regarding the qualification of a chairperson of a Disciplinary Committee hearing disciplinary charges against an employee accused of misconduct.

The High Court (Labour Division) in a recent decision of Lucy Mandara vs. Tanzania Cigarrete Company Limited, Revision Number 185 of 2020 delivered by the Honourable Judge Aboud on 1^st April 2021 addressed scenarios where the chairperson of a Disciplinary Committees is outsourced to hear disciplinary charges against an employee.

It is worth noting that, Guideline 4 (2) of the Guidelines for Disciplinary, Incapacity and Incompatibility Policy and Procedure of the Employment and Labour Relations (Code of Good Practice) Rules published under Government Notice Number 42 of 2007 (the “Guidelines”), does not cater for such a scenario. That is, where an employer can outsource a person to chair a Disciplinary Committee, but rather, it only stipulates that a Senior Manager should be appointed as the chairperson of the Disciplinary Committee.

This new decision captures such a circumstance, and what employers should take into consideration when outsourcing for such services.

Brief facts of the case:

The employee in question was accused of gross insubordination and gross negligence by the employer. Thereafter, the employer constituted a disciplinary committee which was chaired by the employer’s private lawyer, who at that time provided legal services to the Employer on a routinely basis. The outcome of the hearing of the disciplinary committee lead to the termination of the employee’s contract of employment. Aggrieved by the termination, the employee referred the matter to the Commission for Mediation and Arbitration (“CMA”). The CMA found that the applicant was fairly terminated substantively, however, on the part of termination procedures, the Arbitrator was of the view that the applicant was not afforded the right of representation, and accordingly, awarded her six (6) months’ salary and a certificate of service as compensation for the procedurally unfair termination. The employee being unsatisfied by the Arbitrator's Award, filed to the High Court (Labour Division) an application to revise the Arbitral Award.

The Court’s decision:

The Court, benched by Honourable Aboud, J., observed that the Chairperson of a disciplinary committee in a disciplinary hearing involving an employee accused of misconduct should be a Senior Manager or Management Staff of the employer as accorded in the Guidelines 4 (2) of the Guidelines. However, in the circumstances were there are no Senior Managers qualified to chair the Disciplinary Committee, the law allows employers to outsource a competent person to act as a chairperson of the Disciplinary Committee, provided that the person elected is impartial, completely neutral and not on the payroll of the employer.

The Honourable Judge further elaborated that, a private advocate who is engaged by an employer to provide legal services and is on the payroll of the employer, does not qualify to act as a chairperson to the Disciplinary Committee regardless of whether he/she is employed by the employer. The Honourable Judge stated that “is my view the law envisaged the situation where the employer does not have the required senior manager, for instance when it is a small company with no enough senior managers to handle the matter or for any other reasons. Then the employer can find someone from outside that particular office who possess the qualities to chair the committee.”

Conclusion:

Although the law is silent on the matter of outsourcing for a chairperson of a Disciplinary Committee, it still anticipates that employers can still outsource in circumstances where the company lacks adequate senior management in cases of small or start-up companies or when the senior managers available are unsure of their impartiality. However, when the employer decides to outsource, they should ensure that the person elected to chair the Disciplinary Committee outside its employment structure is completely impartial, neutral and is not on their payroll.

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 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.