Protection of the Interests of a Deceased Member(s) of a Company under the Tanzania Companies Act

The death of a company member may give rise to legal and procedural challenges, particularly where the deceased held a substantial interest in the company.

These challenges are often compounded by alleged irregularities in the relevant company’s management or records that may prejudice the interests of its members, including those of the deceased. In most cases, critical issues arise regarding the extent to which a deceased member’s estate, through its legal personal representatives, can safeguard interests of the deceased and seek remedies for such irregularities under the law.

The Companies Act, Chapter 212 Revised Edition 2023 (the Companies Act) provides remedies for when a company’s affairs are being ran in a manner that is prejudicial to its members including those of a deceased person through filing a petition of unfair prejudice.

This legal update examines the statutory framework and judicial interpretations governing the protection of deceased members’ interests by a legal representative, focusing on membership rights, the transmission of shares, and the remedies available to legal personal representatives in the event of alleged irregularities that might have been effected in the register of the company.

Unfair prejudice: Nature and scope of the remedy

A petition for unfair prejudice is a statutory remedy that enables a member of a company to apply to court where the affairs of a company are being conducted in a manner that is oppressive, unfairly prejudicial, or disregards the interests of some members of the company.

Section 236 (3) of the Companies Act confers broad discretionary powers on the Court to grant such relief as it considers just and equitable in cases of unfair prejudice, including:

(a) regulating the conduct of the company’s affairs in the future;

(b) requiring the company to refrain from doing or continuing an act complained of by the petitioner or to do an act which the petitioner has complained it has omitted to do;

(c) authorising civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct; and

(d) providing for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company’s capital, or otherwise.

Individuals with locus standi to bring petitions for unfair prejudice

Unfair prejudice proceedings may be instituted by the following persons:

(a) a member of the company, being a person, whose name is entered in the register of members; and

(b) a person who is not a member of the company, but to whom shares have been transferred by operation of law.

Who can bring a claim under unfair prejudice as a member of the company?

Section 236 (2) of the Companies Act allows a person who is not a member of a company, but to whom shares in the company have been transmitted by operation of law, to file a petition for unfair prejudice. This provision is relevant to legal personal representatives who seek to bring claims on behalf of a deceased member where the company’s affairs are being conducted in a manner that is unfairly prejudicial.

Several judicial decisions have clarified the circumstances under which a legal personal representative may bring claims under unfair prejudice. In the case of Kalokora Bwesha (as Administrator of the Estate of the Late Ali Abdul Mufuruki) and Another v Wananchi Group Tanzania Limited and 5 Others, Misc. Commercial Application No. 31312 of 2025, the Court held that a non-member of a company may file a petition for unfair prejudice where they are a legal personal representative of the deceased and the deceased’s shares have been transmitted to them by operation of law.

It is worth noting that a mere appointment as a legal representative through letters of administration or probate is not sufficient to confer locus standi to bring a petition under unfair prejudice. The shares of the deceased must be transmitted to the legal personal representative in accordance with the prescribed company and legal procedures for the legal personal representative to acquire locus standi.

Practical steps to be taken by the legal representatives in protection of the deceased’s interests

To protect a deceased member’s interests, legal personal representatives must take timely steps within the statutory framework and the company’s internal procedures, including:

(a) secure formal appointments as administrators where there is no probate, or obtain a grant of probate or letters of administration in respect of the deceased member’s estate;

(b) review the company’s Memorandum and Articles of Association (MemArts) to ensure compliance with procedures governing share transmission;

(c) notify the company of the appointment by submitting relevant documentation, including probate or letters of administration;

(d) invoke statutory remedies under section 236 of the Companies Act where the company’s affairs have been conducted in a manner that unfairly prejudices the estate’s interests; and

(e) seek recourse to the courts, which may authorise representatives to act on behalf of the deceased member, or, where appropriate, in the name of the company, to protect the deceased’s interests.

Conclusion

While the Companies Act provides a framework through which legal personal representatives may protect the interests of a deceased member, the effectiveness of these remedies is closely tied to compliance with procedural requirements governing membership and share transmission. As such, the law strikes a careful balance between preserving the integrity of the company’s register and ensuring that estates are not left without recourse in the face of prejudicial conduct, with courts playing a critical role in maintaining this balance.