Reflections on shareholders’ protection in Tanzania through derivative claims. A comparative legal analysis with Mauritius
Authors: Habiye Yusto Lucian , Gunputh Rajendra Parsad , Pudaruth Sameerchand , Mtaki Cornel Kinanila 
Published: January 2025

Purpose

This paper aims to examine the effectiveness of Tanzania’s legal framework in protecting shareholders’ rights through derivative claims, conducting a comparative analysis with Mauritius to highlight legislative strengths and areas for improvement.

Design/methodology/approach

This study used a library-based (black-letter law) research methodology, emphasizing the systematic examination of authoritative legal texts, including statutes, case law and secondary sources, to assess Tanzania’s framework for derivative claims. The research is grounded in the Enlightened Shareholder Value (ESV) theory to evaluate shareholder protection mechanisms. A comparative legal methodology complemented this approach, drawing insights from Mauritius’s Companies Act 2001, which shares parallels with Tanzania’s legal system due to their common law heritage. Key databases such as Google Scholar, Emerald Insight, JSTOR and institutional libraries from the University of Dar es Salaam and the University of Mauritius were used to access a broad range of historical and contemporary legal texts. Thematic coding was applied to organize findings into major areas such as applicant eligibility, procedural requirements and cost barriers.

Findings

The study reveals significant gaps in Tanzania’s framework for derivative claims, including procedural ambiguities such as the undefined “reasonable notice” for initiating claims, restrictive eligibility criteria for applicants and inadequate financial provisions for shareholders pursuing litigation. These challenges undermine the accessibility and efficacy of derivative claims in protecting shareholder rights. Conversely, Mauritius provides clearer statutory guidelines, broader eligibility for applicants and explicit cost indemnity provisions, making derivative claims more accessible and effective. The findings underscore the need for Tanzania to adopt similar reforms, such as defining procedural requirements, expanding applicant eligibility to include employees and mandating comprehensive cost coverage. These measures would align Tanzania’s framework with global best practices, enhance corporate governance and strengthen shareholder protections.

Originality/value

This study provides a critical and in-depth analysis of Tanzania’s shareholder protection framework through derivative claims, offering unique comparative insights and proposing targeted legislative reforms aimed at strengthening corporate governance and safeguarding shareholder rights. By identifying key procedural and substantive gaps, such as the ambiguity surrounding notice requirements and the limited financial accessibility for pursuing claims, the study delivers actionable recommendations that address these deficiencies. Moreover, the paper serves as a practical resource for policymakers, legal practitioners and scholars, bridging theoretical discourse with pragmatic solutions to foster equitable corporate governance. The findings hold particular value for jurisdictions facing similar challenges, illustrating how comparative legal insights can guide the development of tailored reforms to enhance shareholder protection and promote sustainable corporate governance.