In 2002, according to an article by Mkono & Co. written in 2005, Tanzania adopted the Capital Markets and Securities Act Guidelines on Corporate Governance Practices to bring its corporate governance framework in line with international standards. The guidelines include recommendations regarding the responsibilities and qualifications of the board of directors, equitable treatment of shareholders, and minority shareholders' rights. Furthermore, as noted in a 2006 article by Van Winkelhof, minority shareholders' rights are protected under the 2002 Companies Act, which came into force on March 1, 2006. In 2006, the World Bank conducted a Project Appraisal Document on a Proposed Credit of $US15 Mil to Tanzania, of which $2.6 Mil were allocated to developing the financial markets, and promoting good corporate governance. Despite the information above, there is insufficient publicly available information regarding Tanzania's compliance with the Principles on Corporate Governance developed by the Organization for Co-operation and Development. The Dar es Salaam Stock Exchange is the only regulated securities market in Tanzania, and was formed following the enactment of the 1994 Capital Markets and Securities Act, and the establishment of the Capital Markets and Securities Authority.

General Overview

According to a 2005 article by Mkono & Co., the main regulatory framework for corporate governance in Tanzania is provided under the 1992 Public Corporations Act, the 1994 Capital Markets and Securities Act, and the 2002 Companies Act, which came into force on March 1, 2006. In 2002, Tanzania adopted the Capital Markets and Securities Act Guidelines on Corporate Governance Practices to bring its corporate governance framework in line with international standards. The guidelines contain recommendations regarding the responsibilities and qualifications of the board of directors, equitable treatment of shareholders, and minority shareholders' rights. Minority shareholders' rights are also protected under the 2002 Companies Act, as noted in a 2006 article by Van Winkelhof. Furthermore, Tanzania has established a Corporate Governance Institute, as stated in a 2003 report by Rabahi. In 2006, the World Bank conducted a Project Appraisal Document on a Proposed Credit of $US15 Mil to Tanzania, of which $2.6 Mil were allocated to developing the financial markets, and promoting good corporate governance.

The Dar es Salaam Stock Exchange (DSE) is the only regulated securities market in Tanzania. It was formed following the enactment of the 1994 Capital Markets and Securities Act and the establishment of the Capital Markets and Securities Authority (CMSA). According to a 2004 U.S. Department of Commerce (DoC) Country Commercial Guide Report, the CMSA has set the maximum limit to foreign participation in any single company listed on the DSE to 60 percent. There are currently 10 listed companies on the DSE.

In its 2008 Doing Business report, the World Bank rates investor protection in Tanzania in 2007 as being below the OECD average, but above the regional mean. The Investor Protection Index is a subcomponent of the World Bank's 2008 Doing Business Indicators, and consists of three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index) and shareholders' ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index). The indexes range between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection. Tanzania scores 3.0 in the disclosure index against a regional average of 4.9 and an OECD average of 6.4. It scores 4.0 in the Director Liability Index against a regional average of 3.8 and an OECD average of 5.1 and 8.0 in the Shareholder Suits Index against a regional average of 6.3 and an OECD average of 6.5.

The Principles

Principle I: Ensuring the Basis for an Effective Corporate Governance Framework

II

There is insufficient publicly available information regarding Tanzania's compliance with this Principle. According to Mkono & Co. (2005), the main regulatory framework for corporate governance in Tanzania is provided under the 1992 Public Corporations Act, the 1994 Capital Markets and Securities Act, and the 2002 Companies Act, which came into force on March 1, 2006. Mkono & Co. add that, in 2002, Tanzania adopted the Capital Markets and Securities Act Guidelines on Corporate Governance Practices to bring its corporate governance framework in line with international standards. The guidelines contain recommendations regarding the responsibilities and qualifications of the board of directors, equitable treatment of shareholders, and minority shareholders' rights. Minority shareholders' rights are also protected under the 2002 Companies Act, as noted in a 2006 article by Van Winkelhof. Furthermore, Tanzania has established a Corporate Governance Institute, as stated in a 2003 report by Rabahi.

Principle II: The Rights of Shareholders and Key Ownership Function

II

As noted in Mkono & Co. (2005), shareholders' rights are provided under the 2002 Companies Act, including the power to vote at general meetings and approve decisions made at the director level. Minority shareholders' rights are also protected under the 2002 Companies Act, including the "right to apply to court to prosecute, defend or bring an action in the name of and on behalf of the company or any of its subsidiaries", according to Van Winkelhof (2006). However, the available sources do not directly address Tanzania's compliance with this principle.

Principle III: The Equitable Treatment of Shareholders

II

According to the 2005 Mkono & Co. report, listed companies are required to ensure equitable treatment of shareholders, including minority shareholders. Minority shareholders' rights are also protected under the 2002 Companies Act, including the "right to apply to court to prosecute, defend or bring an action in the name of and on behalf of the company or any of its subsidiaries", according to Van Winkelhof (2006). However, the available sources do not directly address Tanzania's compliance with this principle.

Principle IV: The Role of Stakeholders in Corporate Governance

II

There is insufficient publicly available information regarding Tanzania's compliance with this Principle.

Principle V: Disclosure and Transparency

II

As noted in the 2005 Mkono & Co. report, the Capital Markets and Securities Act Guidelines on Corporate Governance Practices require the disclosure of information on companies' performance through regular annual reports. Furthermore, shareholders are entitled to "receive information on voting rules and procedures, to participate and vote at the general shareholders meeting, place items on the agenda, and ask questions or seek clarification on the company's performance". According to a 2005 World Bank Report on the Observance of Standards and Codes (ROSC) on Accounting and Auditing, Tanzania adopted the International Financial Reporting Standards (IFRS), the International Accounting Standards (IAS), and the International Standards on Auditing (ISA) in 2004. However, the National Board of Accountants and Auditors (NBAA) is unable to function effectively as a regulator and professional accountancy body. Hence the World Bank insists on establishing an independent oversight body. However, the available sources do not directly address Tanzania's compliance with this principle.

Principle VI: The Responsibilities of the Board

II

According to the 2005 Mkono & Co. report, the Capital Markets and Securities Act Guidelines on Corporate Governance Practices require defining the appointment, qualifications, responsibilities, and remuneration of the board of directors. However, the available sources do not directly address Tanzania's compliance with this principle.