The company has the choice not to request the total amount of nominal value of shares and the premium for the shares in one lump sum when submitting the application but could instead request it in installments in accordance with the needs. That means shareholders or subscribers can pay the total sum through installments, i.e. upon application for allotment upon a first, second, or last call.

The term “call” can be defined as requesting a sum due in shares. A call can be defined as a demand placed by the shareholder’s company to settle any outstanding debt on shares. The payment can be made in whole or part.

What happens when a call becomes due? The call is due when notice is given to attempt to call. A call may be considered to have taken place when the directors’ resolution passed the call’s authorization.

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Essentials of a Valid Call

1. Board resolution. Before any notice of a call is made, the Board must approve a resolution for it. The Board accepting this call needs to be involved.

2. All calls in Tanzania must be made according to the Memorandum as well as the Articles of Association. Suppose there isn’t a provision made in the Memorandum or Articles of Association. In that case, Table A will be in effect unless the company states explicitly that it would not be adopting Table A.

3. The Companies Act provides that a call must be made uniformly on all shares that fall under the class. For instance, when a call is placed on an ordinary share, the holders must be notified to pay.

4. The call has to be considered legitimately by Directors. A call must be made in the best interests of the firm.

5. The time and place of payment. This should be stated in a Board resolution or a Notice.

Interest Rate

The majority of articles provide the payment of interest on call arrears. If the terms are not stated in the contract, interest is charged following the table. For Tanzania, where the allotment doesn’t determine the interest rate, it will be charged at a minimum of five percent per year. However, directors are granted the authority to waive any interest due entirely and in part.

Forfeiture of Shares

Forfeiture refers to the withdrawal of shares due to the non-payment of any calls made by shareholders on any other basis as provided in the Articles of Association. In forfeiture, the shareholder is liable for the sum he paid and his stake in the share ownership.

If a shareholder cannot pay the allotment or call amount or any portion thereof, the shares he holds could be confiscated by resolutions by the Board of Directors. The forfeiture could also result in the confiscation of shares belonging to the shareholder who defaults for not paying allotted funds.

In the event of confiscation, the member’s name is taken off the member’s register. If the business is shut down in the year following forfeiture, the member would be responsible for the business’s debts.

Surrender of Shares

There isn’t any provision of the Companies Act of Tanzania, including Table A, on giving up shares. The term “surrender” of shares could refer to the return of shares made by shareholders to the corporation. The clause on the surrender of shares could be included in the corporate documents.

If the Company is granted legal authority through its articles, it can allow any surrendering of shares within the following circumstances.

1. Exchange of surrender in exchange for shares with the identical nominal value

2. Surrender if the shareholder is unable to or is unwilling to settle for the shareholder for the unpaid call.

It could also be a means to shorten the lengthy method of forfeiture.

In practice, however, the registrar of Companies in Tanzania allows any surrender of shares, provided a resolution from the Company authorizes the acceptance of the surrender.


The lien can be a lawful legal right secured by any asset that may be used to settle the debt. A company can assert an interest on shares to prevent a shareholder from transferring his shares until his debt is settled with the company. A corporation, as a norm, has no lien on shares of its members. However, articles could state that the company has an absolute claim on the shares of each member for his debts and obligations to the Company. Lien could extend to dividends payable on shares and the amount due to the recipient member with respect to his shares upon the winding-up of the corporation.

Also, note that the Business Registration and Licensing Agency (BRELA) has added a second condition to any application to forfeit shares: the company has to submit an audited financial report in addition to the application. The registrar can only prove himself that his shares weren’t fully paid for and need to be forfeited by examining those audited financial statements of the business.

Shikana Group is a leading legal advisory in Tanzania. We advise our clients on the appropriate ownership entities for the business they need to set up, including enterprises, associations, limited liability companies and joint ventures. Our legal team provides an analysis of the benefits, expenses and risks related with the choice of a specific business entity, in light of our extensive experience assisting worldwide investors coming into the African market place.

For further information, please don’t hesitate to contact us.

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