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LAW 5112 CORPORATE LAW AND

GOVERNANCE

PROGRAMME : MBA CORPARATE

MANAGEMENT

LECTURER : SEME, Y.B.

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TOPIC 1. INTRODUCTION

1.1. Business organizations

There are three forms of businessorganizations:

(i) Sole traders/Proprietors

This is a form of business association

whereby a person trades in his ownaccount. He operates in his name orbusiness name.

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Governing laws:

When a sole trader wants to operate

business in business name he shouldregister the business under BusinessNames Registration Act (Cap. 213 R.E.2002).

The sole traders needs to comply withlaws governing business license,

registration of business with TRA to getTIN Number, payments of Taxes, payNSSF contributions etc.

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Liabilities

A sole trader is personally liable for his

business In case he operates in business name,

both his name and business namemust appear in a suit e.g. Mremi

trading as Air Shengena Enterprises.

ii. Partnership/Firm

It is a relation which subsists between

persons carrying own business in commonwith a view of profit.

Two or more persons agree to carryoutbusiness.

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- Governing laws;-- Law of contract Act (cap. 2002 part x)

- Partnership Agreement /Deed- Common Law rules as enumerated in

decided cases.

- The business association is suitable togroups of professionals such as

Accountants, Doctors, Lawyers etc.

The law requires that members of

partnership should not exceed 20

except for professionals.

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- Liabilities

There is unlimited liability of partners, members of the firm are liablefor acts done by any member that relates to the firm.

(iii) CompaniesAre business organizations whereby two or more persons register and

operate business as a company

1.2.3. FORMATION OF A COMPANYThe Company is formed by registration/incorporation.Before registration, there are documents required to be

submitted to the Registrar of the Companies.A person who prepares the documents is known as a

promoter.Governing Laws;-

The companies Act 2002 (Act No of 2002

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1.2. Meaning and formation of

companiesMeaning of corporation

Corporation is an entity usually businesshaving authority under the law. Companiesare corporations. Once a company is

registered it becomes a person in lawhaving authorities.

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1.2.1. Companies

A company is the association of personswho contribute money or common stockand employed in some trade or businessfor sharing profit or loss arising there

from.It is a type of association in which persons

join together for the purpose of carrying onbusiness.

It is a business entity registered under theCompanies Act, 2002.

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1.2.2. Classification of Companies

There are four types of companies found inTanzania:-

Private Companies

Public Companies

Foreign Companies

State Owned Companies/Parastatal

organizations.

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(i) Private Companies

Private Companies are those companies which

consist of not less than two and not more thanfifty members.

Are Companies with limited number of members

Private Companies are formed by persons with

prior relationships other than businessrelationships.

e.g. Spouses (husband and wife), father/motherand sons, daughters, friends.

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The shares of these companies are notfreely transferable i.e. the transferability issubject to restrictions, control andregulations. Private Companies like other

companies are required to submit for filingannual returns and other statutory fellabledocuments to the Registrar e.g. Changes

of directors, changes of company namesetc.

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(iii) Foreign Companies

These are Companies incorporatedoutside Tanzania and they come in ourCountry as branches of such companies.

e.g. KAJIMA, WIDE ADAMS, KONOIKEetc.

A company is regarded as a foreignCompany if it was registered outsideTanzania even if all subscribes and shareholders maybe Tanzanians.

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The Companies Act 2002 part xiiprovides for procedure for registration ofForeign Companies i.e. (S.434 (1) ofthe Companies Act)

(iv)Parastatal or state owned

companies.

These are Companies which thegovernment has more than 50% share.Normally these are private companies .

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1.2.3. FORMATION OF A COMPANY

The Company is formed byregistration/incorporation.

Before registration, there are documentsrequired to be submitted to the Registrarof the Companies.

A person who prepares the documents isknown as a promoter.