Introduction to companies account

There are basically two categories of companies namely:

1. statutory companies
2. and registered companies.

Statutory companies

These are state owned companies formed by the special Act of the Parliament. They are not required to submit a Memorandum or Articles of Association, nor are they required to use the word "Limited" after their name. Their activities are mainly governed by the special Act of the Parliament; and the Controller and Auditor General (CAG) conducts the annual audit of their financial statements. The Tanzania Electric Company (TANESCO), Air Tanzania Company Ltd. (ATCL), and Tanzania Railway Corporation (TRC) are examples of statutory companies in Tanzania.

Registered companies

These are companies registered under the Companies Act of the respective country. Registered companies may are further categorised as Private or Public companies, and as limited or unlimited. In Tanzania, Sec.3.- (I) of the Companies Act, 2002 states that "Any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration, form an incorporated company, with or without limited liability".

This categorization is based on the extent to which liability of the company may be extended to the member's (shareholder's) personal property in the event the company is being wound up and the assets of the company becomes insufficient to cover for all the outstanding liabilities. A limited liability company is a company having the liability of its members limited to the unpaid amount on shares held by such members (a company limited by shares); or limited by the amount, its members have agreed to contribute to the assets of the company in the event of it being wound up (a company limited by guarantee). This means, members have committed to contribute certain amount at the time of company's liquidation.

In limited liability companies, the members of the company (shareholders) cannot be held personally liable for the company's debts or liabilities in the event of winding up.

Unlimited Liability Company is a company that does not have any limit on the liability of its members. When the company's property is not sufficient to pay-off its debts during winding-up of the company, the private property of its members can be used for that purpose. In other words, the creditors can claim their dues from belongings of the company members.

This categorization is based on the number of members in a company (shareholders). A private company is a registered company with the following features:

1. Its minimum number of owners/ shareholders (membership) is two and cannot exceed fifty.
2. Is not allowed to offer its shares for subscription to the public;
3. Is not allowed to trade its shares in the stock exchange;
4. Can be a limited or an unlimited company; and
5. Has to get its accounts audited by the certified audit firm and has to file the copies of financial statements with the registrar of companies.

Public companies

are companies which are not private. In Tanzania, the Companies Act, 2002, Sec.3.- (3) States that, a "public company" is a company limited by shares or limited by guarantee and having a share capital, being a company the memorandum of which states that it is to be a public company. The common features of a public company are:

1. Minimum number of owners/ shareholders (membership) is seven and its maximum may exceed fifty;
2. They are allowed to offer their shares to the public at large for subscription;
3. They are required to use the word Public Limited Company, or the abbreviation "PLC" as part of its name;
4. If quoted/listed they are allowed to trade in the stock exchange market; and
5. Has to get its accounts audited by the certified audit firm and has to file the copies of financial statements with the registrar of companies.