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News 2018-05-13T17:51:15+00:00

Right of Occupancy in Tanzania

The historical background of land tenure, or ownership, in Tanzania can literally be divided into three eras, namely the pre-colonial, colonial and postcolonial eras. During all periods, land has been managed administratively and through various forms of legal tenure systems. Below is a brief history of our country’s land tenure systems.  It’s our hope that this short article will be useful to you

Pre- Colonial Era

The right-of-occupancy in dates back to the pre-colonial era.  Native Tanzanians  owned land communally during this period. Right-of-occupancy was established by traditions and customs in each respective family, clan or tribe, through local leadership. At this time, land was managed or governed and held in trust through chiefs, headmen and tribal elders who had administrative power over land for the community. These powers were eventually limited by the newly introduced German Land Tenure Systems, and later the British, even though the customary tenure continued to exist throughout the colonial era. An instrument was required by which to properly regulate and govern property ownership or the right-of-occupancy,so customary laws were gathered from over 120 tribes of Tanganyika.  This body of laws was used in the administration of land.

Colonial Era

German System  1884 – 1916

During this period, land was no longer owned communally by local people, but was considered sovereign land under the German Empire. Chiefs and native communities that could prove their claim to ownership of the land were granted legal ownership if they had documentation, or they were actively cultivating the land.The remaining land that was occupied or not occupied, was all vested under the German administration through an established land registry system which was used to issue titles of ownership to land.

Through their administration, the German regime passed two laws used to govern land in Tanganyika. These two laws were the Imperial Decree of 1895, and The Land Registration Ordinance of 1903.  Through the above established laws, one could prove ownership of land through an instrument such as a deed, or through cultivation activity. Proof of ownership for cultivated land did not require any document. Uncultivated land that was not otherwise documented, fell under the provisions of the Imperial Decree and was declared sovereign German land.

The land Registration Ordinance of 1903 permitted four categories of conveyances or ownership of land.  These categories included freehold through purchase or public auction, government grant leasehold, un-owned land as may be determined by the Land Commissioner appointed by the Governor and, lastly, the customary tenure at that time.

British System 1917 – 1961

Under the British system, a proclamation was passed in 1920 which facilitated the transfer of land held under the German government to the British in the form of leasehold and freehold. This appropriated land was known as “enemy property” and carried all the previous German terms and conditions contained in the form of leases tenure.  The British administration imposed control through the proclamation of the Tanganyika Order in Council of 1920, under the Foreign Jurisdiction Act of 1890.  This introduced wide scale reception of English laws and marked the beginning of common law system under the land administration.

Three years later, the British administration, under the reception of laws enacted for the first time and the Land Tenure Ordinance of 1923, declared all occupied land in Tanganyika as public land. Even unoccupied land was declared public land under the provisions of this law.  Importantly, for the first time in the Tanganyika territory, the right-of-occupancy was introduced and defined as the right to occupy land.

This law did not receive any amendment until 1928 when the Permanent Mandate Commission of the League of Nations recommended that native people should be recognized with rights to land occupancy.  The British administration implemented this recommendation, redefining the right of occupancy to include the Native Customary Right of Occupancy.

Post Independence to Present

There was no “invention of a will” after independence in terms of the land tenure system.  Rather, there was a substitution of wording within the provisions of the land laws and policies that were used during the British administration system.  Names for the administrators of land and the tenure framework were substituted to better fit the current post independence regime. For instance, in the Land Tenure Ordinance of 1923, the word “Governor” was substituted by the word “President”. Keeping the ordinance as it was under the British administration enabled the post independence government to acquire land from individuals.  The Land Acquisition Act, 1967, Cap, 118, was subsequently enacted to facilitate acquisition by the government and to expedite other provisions regarding land for public interest.

The Land Tenure Transformation

Tanzania’s government converted the previous land tenure into a system of government leases. This tenure transformed land from freehold into government leases of up to 99 years through Freehold Titles (Conversion) and Government Leases Act, No 24. Cap 523 effective from 1964.

After independence, another piece of legislation was introduced through enactment to enhance registration of lands. This law is known as the Land Registration Ordinance Cap 334, and it replaces the former registration system. The disposition of interest in land required consent of the commissioner for lands and consequently the government leases were converted into the right-of-occupancy, effective from 1st April, 1970, through the Government Leasehold (Conversion to Right of Occupancy) Legislation of 1969. This change can be named as the major historical land tenure reform in land history that imposed government leases and brought valuable land under government control in Tanzania.

Some reforms and security of land tenure to the holders of the right of occupancy have been achieved in the land tenure system since 1969, and it will be valuable to discuss these further in a forthcoming article. Major reforms of the 1990s impacted Tanzania’s land sector via its policies and laws, and are vital to understand.  These major reforms were a result of the efforts of the Land Commission, formed by the President to look into all land matters in Tanzania to ensure, among other things, effective land use, involvement, accessibility and sense of ownership for all.  It is against this reform that the land tenure transformation brought about two pieces of legislation that regulate rights and interests regarding urban and village land.  These two pieces of  legislation are called the Land Act No.4 of 1999 and the Village Land Act, No.5 of 1999 respectively, and they form the main land laws applicable to Tanzania land to date.

It can generally be said that the land tenure system in Tanzania has gone through numerous reforms in its history thus far.Tanzania land laws are many and have undergone plentiful amendments, somewhat inconsistently. The legal framework is extremely complex, meaning that conformity and compliance in transactions call for a deep understanding of historical background and our current legal regime. Completing a land transaction requires an understanding of the entire structure of land laws, and all respective regulations in order to arrive at meaningful landed asset protection.  Whether the transaction is for investment or  other purposes, this thorough understanding is certainly necessary.

© Lawbay Advocates
The Firm disclaims all responsibility for any loss, injury, claim, liability, or damage of any kind resulting from, arising out of or any way related to any representation, errors in or omissions from this article and its content, including but not limited to professional inaccuracies and typographical errors.

Are Land Owners Secured in Tanzania

The security of land tenure for holders of right of occupancy in Tanzania under the Land Policy 1995 and the Land Act of 1999 is assured.Tanzania Land Policy came into existence in the 1990’s to ensure a secure land tenure system, and to promote the optimal use of land resources and social economic development.The specific objectives of the policy are discussed in a previous article and include the promotion of equal distribution and access to land by all without limitation,while absorbing customary rights and setting up a land administration and adjudication system.  This policy, along with the Land Commission,brought about the existence of Tanzania’s land Acts, that is the Land Act No. 4 and the Village Land Act No. 5 of 1999 that are in use today.

These Acts place land into three categories which are the village land, General land and Reserved land. All land in Tanzania is public land vested in the president as a trustee on behalf of all citizens. This law vests powers in the president to transfer land from one category to another through established legal procedures which  include a not less than 60days notice specifying boundaries, location, reasons and purpose for the transference of land, as well as a notification to the stakeholders. Compensation is made to any holder of the right of occupancy for the respective land which is being transferred to another category.

The Land Policy of Tanzania provides for a dual system of tenure in terms of its recognition of both customary and statutory rights for land.  These are described in the Land Act as Customary Rights and >Granted Rights >of occupancy.

There are those rights that existed prior to the date of acquisition, revocation or any interference of the existing interest in land, included in the current land tenure system.These pre-existing rights are protected by law.Those that pre-existed and those that are part of the customary right will continue to exist and be protected as such.Those that existed by statutory creation will continue to exist and be afforded equal legal protection.

The Land Act requires that no right of occupancy holder should be relocated or moved to the extent of ruining the purpose for which the Customary Right of Occupancy was granted. Where relocation becomes mandatory,legal procedures shall be complied with, including the customary right of occupancy holders being granted opportunities to harvest their development, Right to Notice, full compensation for loss of interest in land and all exhaustive improvements. Whether the right held by the land owner is customary or the granted right of occupancy, both hold equal legal status and neither is inferior to the other.

According to the Land Act, right to access land is a right for all citizens and non citizens, except that procedures for acquisitions or allocation are different.There are complex legal and administrative procedures for land management and development in Tanzania, and these must be complied with for land occupancy.

The coming into force of the Land Act brought a new genre of rights, now called the Derivative Right, which can be granted to a citizen or non citizen wanting to occupy land,the later for investment purpose. The act mentions the right to occupy land as either a granted right of occupancy or a derivative right of the same. The right to occupy land is granted to citizens with terms and conditions, but without restrictions. A right to occupy land is to be granted to a non citizen in form of a Derivative of the Granted Right of occupancy, and is qualified.Tanzania’s legal framework for foreign ownership of land in Tanzania shall be discussed in a forthcoming article.

The right of occupancy is granted for a specific tenure and term period which could be for 99 years, 66 years or 33 years.Each term can be renewed upon expiry.The right for renewal is not an automatic right.Rather, it is subject to the occupier complying with all the terms and conditions of the right of occupancy in a satisfactory manner including payment of land rent, property tax,protection of land boundaries,adjacent reserved lands,and water sources.

Along with its land tenure system, the Land Act set in place a robust institutional framework for land administration in Tanzania which gives the president full custodian duties on land.It vests upper administrative powers to the minister of land, who administers land rights and management issues through the commissioner.

Under the Act,the commissioner is the administrative professional officer who advises the government on all land matters.The commissioner and the minister for lands are both presidential appointees.The functions of the minister’s office under this law are to formulate land policy and ensure execution of the ministry functions in all matters relating to land, as well as the appointment of the National Land Advisory Council.This council has the duty to review policies made by the minister and advice the ministry on land administration matters.

The administration functionally flows down to the local government authorities,who are concerned with issuance of offer of the right of occupancy.They include Districts Councils, and Village Councils situated within their areas of land jurisdiction.These local government authorities are also responsible for the accountability of the officers as they execute their functions in accordance with the law.

As discussed above,the right to occupy land seems to be granted for a specific term provided within the Land Act,with the right to renewal upon fulfillment of all the terms and conditions provided in the Certificate of Occupancy (CT).This renewal for another 33, 66 or 99 years is not an automatic right, but subject to the holder of the right of occupancy applying for renewal with the relevant land authorities before the same expires After the application for renewal is made the new certificate of occupancy may be granted on the new terms and conditions which the Commissioner may determine before that Right of Occupancy is offered.

The holder of the right of occupancy who desires to renew the right to occupy land should be familiar with various matters that need to be considered as he or she proceeds.Among these are issues of surrender, land use plan, the term and conditions,resurvey etc. This process ought to be undertaken by a land professional who understands the renewal process for the right of occupancy in Tanzania under the Land Act, 1999, and all its relevant regulations.

Generally speaking,the right of tenure constitutes a legal frame work that protects the right of land holders under the Land Act of 1999with relevant regulations and policies.It is of interest to also note that, in the process of administration and management of the earlier stated complex procedures for land management and development,the administrative arm of the government will sometimes intervene in matters of interest for land to land holders in congruence with the existing land laws that need to be complied with for land occupancy in Tanzania.

© Lawbay Advocates

The Firm disclaims all responsibility for any loss, injury, claim, liability, or damage of any kind resulting from, arising out of or any way related to any representation, errors in or omissions from this article and its content, including but not limited to professional inaccuracies and typographical errors.

What Foreigners Need to Know

 The Legal Framework

When The Land Act No. 4 of 1999 came into force on the 1st of May 2001, it restricted the foreign ownership of land in Tanzania. In terms of GN No. 485 of 2001, foreigners are only entitled to own land in Tanzania for investment.

However, Tanzania nevertheless encourages foreign investments in many sectors — including land. To this end, The Tanzania Investment Centre (TIC) was established to provide for more favourable conditions for investors in Tanzania. As a Government Agency for investment, its objective is to promote and facilitate investment.

Land in Tanzania is grouped into the following categories –

(a) general land;

(b) village land;

(c) reserved land.

Each category is regulated by its own specific legislation.

Land Ownership is generally governed by The Land Act No. 4, and The Village Land Act No. 5 of 1999 (including amendments, rules and regulations, guidelines and other relevant laws). Sections 19(2) and 20 of The Land Act No.4 of 1999 permit non-citizens to own land if

  1. it is for investment purposes, and
  2. those investments are regulated by The Tanzania Investment Act No. 26 of 1997.

Foreign investors may be granted

  1. a Right of Occupancy (the duration of which may be 33, 66 or 99 years);
  2. a Derivative Right; or
    A prospective Investor must procure a TIC status to be granted a Certificate of Incentives.
    Only once the investor has such a Certificate in hand can they apply for interests in land.
  3. a Partial Transfer of Interest by a citizen.

The Tanzania Investment Act contains enabling provisions for non-citizens who wish to invest in Tanzania (subject to obtaining necessary consents and approvals from the relevant authorities). These provisions are outlined below.

Categories of Rights for Foreigners

  1. Right of Occupancy:
  • The prospective Investor applies to the TIC;
  • if all requirements are satisfied, the Investor is instructed to pay appropriate fees to the TIC;
  • the TIC issues a Sub-Title (Lease) to the Right of Occupancy to the Investor under Land Registration Act Cap 334.

Our view is that the Sub-Title issued under Land Registration Act Cap 334 contains the features of a lease – with the TIC acting as Lessor and the Investor acting as Lessee.

In practice, the tenure for the Right of Occupancy (granted to the TIC by the relevant Land Authorities) allows the TIC to issue to the investor the same tenure, but for a shorter period. For instance, a tenure granted to the TIC for 99 years, could be granted by the TIC to the investor for 98 years, with a renewable term upon application when the term expires.

  1. Derivative Right:
  • The prospective Investor applies to the TIC;
  • if all requirements are met, the Investor is instructed to pay appropriate fees to the TIC;
  • the TIC issues a Derivative Right (Licence) to the Investor.

‘A Derivative Right’ is defined in the Land Act as “a right to occupy and use land created out of a right of occupancy and includes a lease, a sub-lease, a licence, a usufructuary right and any interest analogous to those interests.”

It is our view that in such a special lease the Lessor retains few obligations. The result is that – provided the Lessee complies with the terms and conditions of the Derivative Right – he shall peaceably and quietly hold and enjoy the land and its improvement during the tenure of his Derivative Right – without interruption (or interference) from the Lessor.

In the unlikely event of a dispute arising in such a case, the mode of resolving it is that of arbitration between Lessor and Lessee, in accordance with the Arbitration Ordinance Cap 15.

  1. Partial Transfer of Interest by a Citizen:
  • The potential Investor enters into an agreement with a citizen for a partial transfer of interest in land;
  • an agreement is submitted to the TIC for registration;
  • a “Lease hold right” may be issued to the Investor.

This arrangement implies a joint venture between a citizen and non-citizen.

  • When obtaining any of the 3 above possible interests in land, foreign investors are not limited to obtaining rights in land listed by the TIC.
  • It is possible to purchase a house or unit from a seller.
  • Once agreement has been reached, the seller is required to surrender the Title to The Commissioner of Lands, who will re-issue the land to the TIC, who will in turn eventually issue a Derivative Right for it.

Caveat Emptor

The laws regulating land ownership in Tanzania are complex. There are also a variety of corporate structures that can be established to maximise the efficiency of investments in land. For these reasons, foreign investors are strongly urged to seek specialist legal advice from experts who know how to navigate and apply the legislation, conventions, and available legal instruments to ensure secure and lucrative investments in Tanzania.

© Lawbay Advocates
The Firm disclaims all responsibility for any loss, injury, claim, liability, or damage of any kind resulting from, arising out of or any way related to any representation, errors in or omissions from this article and its content, including but not limited to professional inaccuracies and typographical errors.

Duties of a Company Secretary in Tanzania

In Tanzania, The Companies Act No.12 of 2002 is the law that stipulates the provisions regarding regulation and the control of companies. When companies are incorporated, they come into existence for a particular purpose.  This purpose is executed and carried out by individuals, as mandated under The Companies Act, who carry out these activities in conformity with their statutory duty.

One of the mandatory requirements during incorporation of the company is the appointment of the company secretary, as authorized under section 14 of The Companies Act. This person is appointed by directors of the company who must take reasonable steps during appointment to ensure that this person has prerequisite knowledge and experience to discharge the functions of the secretary of the company envisaged.

The Companies Act, under section 187, stipulates that before an appointee embarks on the functions of company secretary, directors of the company must have taken reasonable steps to ensure that the same has prerequisite knowledge and experience.  The Companies Act, however, does not stipulate the qualifications and functions for the company secretary.

In some jurisdictions like Mauritius and South Africa, the law, for the purpose of corporate governance, stipulates clear qualifications and functions for the company secretary. However, The Companies Act No.12 of 2002 is not clear about these qualifications and functions, and due to the lack of this clarity, the Act invites ambiguity. It is yet unclear whether section 187(2) of the Companies Act is to be interpreted as having exhausted the qualifications for the company secretary as a person with “requisite knowledge and experience”.

In today’s business environment, practice, and at common law particularly, a company secretary’s functions are primarily ministerial and administrative, rather than managerial. In compliance with the Act, the secretary is mandated to discharge general and statutory functions for the company, including ensuring that the company complies with the statutory requirements of The Companies Act, and conforms to the Articles of Association.

The general functions of a company secretary include his or her presence at all meetings of the company and of the directors. In these meetings, his or her functions include issuing notices of the meetings, making proper minutes of meeting proceedings and conduct all correspondences with the shareholders.  He or she is also in charge of the books of the company i.e. the register of directors and members of the company,  the register of debentures, and making all necessary returns to the registrar of companies like the filing of annual returns, change of address and inform the Registrar of Companies about any changes that have taken place at a particular period in the company through prescribed forms to wit change of directors or members and the like.

The company secretary statutory functions are imposed in a wide range but would include the following:

  • Signing of annual returns
  • Creating directors reports on behalf of the board
  • Completing statutory forms as prescribed by the registrar of companies
  • Prepare the company register
  • Prepare the register of members, directors, secretary and charges
  • Monitor compliance to the company’s Memorandum and Articles of Association
  • Monitor compliance to all other legal requirements under The Companies Act
  • Ensure the safe custody and proper use of the common seal of said company
  • Issue shares certificates to all shareholders.

It is clear that the company secretary’s functions and duties are numerous and are to be construed from the legal avenues. It can be observed that in some jurisdictions the qualifications for a person capable of executing the position of company secretary are defined as possessing the following qualifications:

  • Must have held for three years the position of a company secretary
  • He or she is a member of the Institute of Chartered Secretaries and Administrators, or a member of the Institute of Chartered Management Accountants, or Chartered Association of Certified Accountants
  • A qualified lawyer
  • He or she is a person who appears to the directors to be capable of holding the office, having past experience of a similar position.

It suffices to say that the duties and functions of the company secretary are legal and require a legal professional with the understanding of The Companies Act provisions when executing secretarial functions for the company. Corporate governance brings to the management accountability actions, hence the need for a secretary to effect statutory compliance functions for the company. These functions are designed to protect the shareholders and other authorized officers of the company when carrying out their activities to achieve company objectives for which purpose the companies were formed.

© Lawbay Advocates
The Firm disclaims all responsibility for any loss, injury, claim, liability, or damage of any kind resulting from, arising out of or any way related to any representation, errors in or omissions from this article and its content, including but not limited to professional inaccuracies and typographical errors.

Duties of Company Directors in Tanzania

In Tanzania, all companies are governed and regulated under The Companies Act No 12 of 2002. The Companies Act provides for different types of companies or entities that are formed for various purposes, commercial or non commercial.  The Act further provides for regulations and control of an entity through its officers, who have different duties and obligations as specified through company law. The law regulates the acts of the company stakeholders to include the shareholders, the directors, and the secretary and other officers who are involved in the day to day duties of the company.

For the purpose of management and control, company stakeholders can be divided into three groups or levels which include members, directors and employees.  Members are those who have invested and have equity interest in the company.  Directors are those who are appointed in accordance with The Companies Act for the day to day running of the companies.  Finally, employees, some of whom are officers in management positions in the company. These persons through whom the company operates and executes its objectives are directly or indirectly vested with various duties and obligations for the business affairs of the company within The Companies Act.

The provisions for control and regulation of the company are provided by two main instruments which are The Companies Act and its individual constitution.  The later regulates internal business affairs and how the company members relate and make decisions for the company affairs. The constitution of any company is legally called The Memorandum and Articles of Association.  The Memorandum stipulates company objectives while the Articles of Association provide for the regulation of company members and directors.

Every decision made in the company has to conform and comply with the Memorandum and Articles of Association, and the Companies Act.  Transparency, involvement and accountability are the main pillars of the decision making in The Companies Act for every decision made has to carry the company’s business interest.  The decision making body for a company’s daily operations consists mainly of directors and the company secretary, who pass various decision through resolutions.  The Companies Act has provided duties for directors in any company which include the following.

  1. Duty to act in good faith and best interest of the company

The Companies Act vests directors with powers when acting for the company.  However, they should act honestly and in good faith in the best interest of the company, as provided under section 182 of The Companies Act.

  1. Regards to interest of employees

As stated earlier in the overview of the company’s affairs, employees are the most important integral part of the company.  Therefore, directors are required, under section 183 of The Companies Act, to have regard for the interest of employees when acting in their daily affairs and decision making.  In performing their duties, a director is to look after the interest of employees. Like any other fiduciary duty owed to the company by its directors, this duty to consider the interest of employees is an enforceable duty.

  • Duty to exercise powers for proper purposes

The powers that are vested in directors under The Companies Act are statutorily applied for a proper purpose.  Section 184 of The Companies Act requires directors to apply their powers not for the benefit of what they believe to be in the best interest of the company, but rather the proper purpose of the company.  This section requires directors to exercise powers for the particular purpose for which such powers were given to them, and not for collateral purposes.

  1. Duty of care, skill and diligence

Section 185 of The Companies Act brings accountability to directors to act with great care, skill and diligence when implementing their statutory duties. They are expected to make decisions in relation to this duty and not otherwise.  The liability of negligence of directors may lead them to be liable civilly and possibly criminally, depending on the circumstances of their acts or omissions in relation to the company’s business. A higher level of knowledge in the company’s affairs is expected of a director as a reasonable and responsible person. What is reasonable to a director when acting for the best interest of the company is what would be prudent to a reasonable and responsible person in like circumstances where a decision is being made.

The duty of a director is linked with his or her experience, skill and diligence, according to the meaning of The Companies ActThe Companies Act further stipulates the requirements of age for directors as a duty under section 195 of the Act.  It is unclear whether section 195 of this law implies that experience, knowledge and skill come as a result of a director’s age, though this may be argued from different perspectives. This section requires a director to be a person who has attained an age of 21 years prior to his or her appointment, and 70 years of age for retirement.  It is therefore mandatory for a notice to be included in the Articles of Association regarding the company’s requirement for age of directors.

  1. Duty to avoid conflict of Interest

In The Companies Act, this duty is stipulated under section 209, which compels directors to avoid placing themselves in positions in which their duties to the company will conflict with their personal interest. A director, for instance, may not, without disclosing in a meeting of directors, transact a contract in which he or she might have a direct or indirect interest.  The duty of conflict of interest extends to any circumstance in which directors might be rewarded with benefits or opportunities that arise as a result of the good will of the company, or the company’s information, without consent of the shareholders and directors of the company.  The blue print line in The Companies Act as to when a director is considered to have drawn benefits of the company and triggered conflict of interest is when lack of disclosure to the Board of Directors becomes apparent.  In this case, a fiduciary duty to the company is said to have been breached by the director.

Further, under The Companies Act, Tanzania uses common law principles on corporate governance, some of which are drawn to include the duty to act within their powers.  According to the common law, directors will not exceed the distinct fiduciary duty conferred unto them. When such duty is exceeded, a director is said to have acted ultra vires, meaning he or she has acted beyond the conferred powers.  In this scenario, a director has acted without authorization.  It is illegal to enter into a contract on behalf of the company without conferred powers.

A director is further duty bound to act with independent judgment.  In exercising powers and deciding what is best for the company, directors must use independent judgment without submitting themselves to the instructions of any other person.  Violation of this may lead directors to be liable in their own cause.

It can be conclusively said that  director’s duties are statutory and professional, carrying with them a civil and/or criminal liability when they are not carried out professionally and within the applicable articles of association and laws of a particular jurisdiction.  It is, therefore, mandatory to consider the prerequisite requirements of director’s qualifications before appointment.  Directors are appointed based on The Companies Act, and their professional qualifications, experience, skill and knowledge. The director’s appointment is a professional duty under the provisions of the Companies Act and the principles of corporate governance,   regulation and control, hence should not be taken as an ordinary position. Corporate governance impacts all issues of legal compliance.  It is mandatory for all transactions and daily operations of the company to conform to the relevant statutory requirements under company law.  Thus, the activities of the company are executed by directors for and on behalf of the company. 

© Lawbay Advocates
The Firm disclaims all responsibility for any loss, injury, claim, liability, or damage of any kind resulting from, arising out of or any way related to any representation, errors in or omissions from this article and its content, including but not limited to professional inaccuracies and typographical errors.