Company Voluntary Winding Up - Law and Procedure in Tanzania

05/01/2022, 12:31 Company Voluntary Winding Up: Law And Procedure In Tanzania
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WINDING UP: LAW

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TANZANIA
posted on May 15, 2017 | under Articles
An in depth analysis of the laws applicable on voluntary
winding up
COMPANY VOLUNTARY WINDING UP: LAW AND
A partial breakdown of other modes of winding up
PROCEDURE IN TANZANIA
posted on March 8, 2017 | under Articles
1.0 Introduction
BREAKTHROUGH ATTORNEYS’ OVERVIEW OF THE
TANZANIA’S BUDGET FOR THE FINANCIAL YEAR
Winding up is defined by the Black’s Law Dictionary, 9th Edition, to
2020/2021
mean the process of settling accounts and liquidating assets in posted on June 23, 2020 | under Articles
anticipation of partnership or corporation’s dissolution. In a
winding up procedure, the assets of the company are used to
LITIGATION LAW UPDATE: WHAT LITIGANTS
settle the liabilities of the creditors and its members prior to
SHOULD KNOW REGARDING THE RECENT
dissolution of the company.
AMENDMENTS TO THE TANZANIA CIVIL
PROCEDURE CODE, CAP. 33 R.E. 2002; VOLUME I.
Dissolution refers to the act of bringing to an end the existence of a posted on June 29, 2019 | under Articles
company. It is an event which immediately follows liquidation or
winding up of a company.
UPDATE ON TANZANIA SUCCESSION LAW:
PROBATE AND ADMINISTRATION OF ESTATES LAW:
1.1 Modes of Winding Up
PROTECTION OF BONAFIDE PURCHASER OF A
PROBATED ASSET IN TANZANIA
There are two modes of winding of a company in Tanzania: posted on December 10, 2018 | under Articles
1. Winding up by the Court (compulsory winding up).

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HOME ABOUT US PRACTICING AREAS TEAM RESOURCES CENTRE CAREERS CO N TACT
A T T O R N E Y2.S Voluntary Winding up
P O P U L A R N E W S P O STS
By Members
By Creditors TANZANIA SOCIAL SECURITY LAW UPDATE: THE
GOVERNMENT INTRODUCES A BILL FOR MERGER
OF EXISTING SOCIAL SECURITY SCHEMES IN
This article shall examine voluntary winding up mode only. TANZANIA.
posted on November 23, 2017 | under News
1.2 Applicable Law

NEWS UPDATE: THE OFFICE OF THE ATTORNEY
The Companies Act, 2002 (Act No. 12 of 2002). GENERAL IN TANZANIA UNDERGOES
RESTRUCTURING
2.0 General conditions for Voluntary winding up (Sec. 333) posted on March 7, 2018 | under News
i. Expiration of the period fixed by the articles or occurrence of the CYBERCRIMES ACT 2015 TANZANIA: THE
event which the articles provide for expiration upon its occurrence CHALLENGE IN THE HANDS OF BOTH CORPORATES
followed by a resolution for voluntary winding up. AND INDIVIDUALS
posted on May 9, 2015 | under News, Recent News
ii. Passing of a resolution that the company be wound up

voluntarily. A QUICK LOOK INTO REGULATORY SYSTEM IN
MERGERS AND ACQUISITIONS IN TANZANIA
posted on January 29, 2016 | under News
iii. Passing of a special resolution to the effect that the company,
by reason of its liabilities, cannot continue its business and that it
is advisable to wind it up. A QUICK LOOK INTO INTELLECTUAL PROPERTY
LAW IN TANZANIA
2.1 Notice of Resolution to Wind Up posted on April 28, 2016 | under News
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A resolution to wind up the company has to be published in the

Gazette and also in some newspaper circulating in Tanzania within
14 days from the date of its being passed by the Company
M O N T H LY N E W S A N D A RT I C L E S
2.2 Declaration of Solvency
Monthly News and Articles

This refers to a declaration by the directors that they have made a
full inquiry into the affairs of the company and they have formed Select Month
an opinion that the company is able to pay its debts in full within
the prescribed period not exceeding twelve months from the
commencement of the winding up.
2.3 Validity of the Declaration of Solvency
A valid declaration of solvency must comply with the following:
a. It has to be made within 30 days immediately preceding the

date of passing of the resolution to wind up the company and is
delivered to the Registrar for registration before that date.
b. It has to contain a statement of the company’s assets and

liabilities as at the latest practicable date before the making of the
declaration.
2.4 Commencement of Voluntary Winding Up
Time for voluntary winding up commences immediately after

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company.
3.0 Members’ Voluntary Winding Up (Sec. 340-345)
This happens when the company is solvent and capable of paying

its liabilities in full but resolves to voluntarily wind up its business.
A declaration of solvency stating that the company is capable of
paying its debts in full on being wound up is mandatory for
members’ voluntary winding up.
3.1 Procedure:
i. Convene a Board meeting whose agenda is to pass a resolution

for voluntary winding up and a declaration of solvency.The
declaration of solvency has to be registered with the Registrar
before convening a general meeting for voluntary winding up of
the company.
ii. Convene a general meeting within 30 days after passing of the

resolution to voluntarily wind up and declaration of solvency by
the Board.
iii. Appoint a liquidator at the general meeting for voluntary

winding up of the company.
iv. Publish the resolution for voluntary winding up in the Gazette

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v. The Liquidator calls upon creditors of the company for

settlement of their claims against the company.
vi. The Liquidator issues a notice for a general meeting at least 30

days before specifying the time, place and purpose of the meeting.
The notice has to be published in the Gazette and a circulating
newspaper in Tanzania. The purpose of the meeting is for
determination of an account of winding up report from the
liquidator.
vii. The Liquidator submits to the members an account of the

winding up, showing how the winding up has been conducted and
disposal of the assets of the company. The liquidator gives
explanation of an account of winding up in details to the
members.
viii. The Liquidator, within 14 days after the general meeting,

submits to the Registrar a copy of an account for winding up and
minutes of the meeting which deliberated on the liquidator’s
winding up report.
ix. The Registrar on receiving the account and returns from the
liquidator on winding up; shall register them and on expiration of
three months from registration of the same, the company shall be

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E dissolved.
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4.0 Creditors’ Voluntary Winding Up (Sec 348 – 355)
This happens in a situation where the company is not solvent and

no declaration of solvency is made and filed with the Registrar.
4.1 Procedure:
i. Publish a notice for creditors’ meeting in the Gazette or a

circulating newspaper.
ii. Convene a creditors’ meeting for passing a resolution for

voluntary winding up.
iii. The directors must draw up a full statement of the position of

the company’s affairs together with a list of the creditors of the
company and estimated amount of their claims to be laid before
the meeting of the creditors and appoint one of the directors to
preside over the meeting.
iv. The creditors and the company at their respective meetings

may nominate a person to be a liquidator for the purposes of
winding up the affairs and distributing the assets of the company,
and if the creditors and the company nominate different persons,
the person nominated by the creditors shall be the liquidator, and
if no person is nominated by the creditors the person, if any,

A T T O R N E Y S nominated by the company shall be the liquidator.
v. The creditors at the creditors’ meeting may, if they think fit,

appoint more than five persons to be members of a committee of
inspection, and if such committee is appointed, the company may
(with the creditors’ approval) such number of persons as they
think fit to act as members of the committee. However, the
majority of the members shall be persons appointed by the
creditors.
vi. In the event of the winding up continuing for more than one
year, the liquidator must summon a general meeting of the
company and a meeting of the creditors at the end of the first year
from the commencement of the winding up, and of each
succeeding year, or at the first convenient date within three
months from the end of the year or such longer period as the
Registrar may allow, and shall lay before the meetings an account
of his acts and dealings of the conduct of the winding up during
the preceding year.
vii. As soon as the affairs of the company are fully wound up, the
liquidator must make an account of the winding up, showing how
the winding up has been conducted and the property of the
company has been disposed of, and thereupon shall call a general
meeting of the company and a meeting of the creditors for the
purpose of laying the account before the meetings and giving any
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A T T O R N E Y S explanation thereof.
viii. Within 14 day after the date of the meetings, or, if the
meetings are not held on the same date, after the date of the later
meeting, the liquidator shall deliver to the Registrar a copy of the
account, and shall make return to him of the holding of the
meetings and of their dates.
ix. The Registrar on receiving the account and, in respect of each

such meeting, the returns, must immediately register them, and
on the expiration of three months from registration thereof the
company shall be deemed to be dissolved.
5.0 Powers of the Court in cases of voluntary winding up
i. It may appoint liquidator where the appointed liquidator is not

acting.
ii. It may remove the liquidator and appoint another liquidator on
justifiable cause being shown.
iii. On an application of the Liquidator or contributory or creditor,

it may determine any question arising in the winding up of a
company and it may exercise, as respects the enforcing of calls,
the staying of suits or other legal proceedings or any other matter,
or any of the powers which the Court might exercise if the

A T T O R N E Y S company were being wound up by the Court.
6.0 Effects of Voluntary Winding Up
a. Company ceases to carry on its business except so for as may be

required for the beneficial winding up thereof.
b. Board of Director’s power ceases on appointment of a

liquidator in case of members’ voluntary winding up.
7.0 Conclusion
The Corporate Department at Breakthrough Attorneys

recommends companies in insolvent situations to opt for
voluntary winding up instead of compulsory winding up by the
Court. This is because Directors will be exonerated from liability
for wrongful trading under Section 384 (1) of the Companies Act,
2002. This Section applies to Directors who continue doing
business in an insolvent Company. It is advisable for Directors to
opt for voluntary winding up other than continuing with the
business of the Company which is likely to be insolvent.
Furthermore, voluntary winding up is a simple, cost effective and

expeditious exercise compared to compulsory winding up which
involves court intervention. Court process is often complex,
expensive and time consuming. Breakthrough Attorneys, therefore
commends companies to opt for voluntary winding up for

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liquidation.
Important Notice:
This publication has been prepared for general guidance on

matters of interest only, and does not constitute professional
advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No
representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this
publication, and, to the extent permitted by law, Breakthrough
Attorneys, its members, employees and agents do not accept or
assume any liability, responsibility or duty of care for any
consequences of you or anyone else acting, or refraining to act, in
reliance on the information contained in this publication or for any
decision based on it.
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05/01/2022, 12:31 Company Voluntary Winding Up: Law And Procedure In Tanzania

WINDING UP: LAW

IN TANZANIA NEW REGULATIONS ON WORK PERMITS IN

1. Winding up by the Court (compulsory winding up).

1.2 Applicable Law

ii. Passing of a resolution that the company be wound up

A resolution to wind up the company has to be published in the

Monthly News and Articles

2.3 Validity of the Declaration of Solvency

A valid declaration of solvency must comply with the following:

a. It has to be made within 30 days immediately preceding the

b. It has to contain a statement of the company’s assets and

2.4 Commencement of Voluntary Winding Up

Time for voluntary winding up commences immediately after

3.0 Members’ Voluntary Winding Up (Sec. 340-345)

This happens when the company is solvent and capable of paying

i. Convene a Board meeting whose agenda is to pass a resolution

ii. Convene a general meeting within 30 days after passing of the

iii. Appoint a liquidator at the general meeting for voluntary

iv. Publish the resolution for voluntary winding up in the Gazette

v. The Liquidator calls upon creditors of the company for

vi. The Liquidator issues a notice for a general meeting at least 30

vii. The Liquidator submits to the members an account of the

viii. The Liquidator, within 14 days after the general meeting,

three months from registration of the same, the company shall be

4.0 Creditors’ Voluntary Winding Up (Sec 348 – 355)

This happens in a situation where the company is not solvent and

i. Publish a notice for creditors’ meeting in the Gazette or a

ii. Convene a creditors’ meeting for passing a resolution for

iii. The directors must draw up a full statement of the position of

iv. The creditors and the company at their respective meetings

if no person is nominated by the creditors the person, if any,

v. The creditors at the creditors’ meeting may, if they think fit,

ix. The Registrar on receiving the account and, in respect of each

5.0 Powers of the Court in cases of voluntary winding up

i. It may appoint liquidator where the appointed liquidator is not

iii. On an application of the Liquidator or contributory or creditor,

or any of the powers which the Court might exercise if the

6.0 Effects of Voluntary Winding Up

a. Company ceases to carry on its business except so for as may be

b. Board of Director’s power ceases on appointment of a

The Corporate Department at Breakthrough Attorneys

Furthermore, voluntary winding up is a simple, cost effective and

commends companies to opt for voluntary winding up for

This publication has been prepared for general guidance on

66 BTA House, Plot No. 331/00

Msasani Road, Oysterbay,

P.O. Box 72838

Dar es Salaam, Tanzania

Our Office Directions

SIGN UP FOR NEWSLETTER

Copyright © 2022 · Breakthrough Attorneys ·

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