SHAREHOLDERS DERIVATIVE ACTIONS: A REVIEW OF THE TANZANIAN LEGAL FRAMEWORK

This article critically examines the efficacy of Tanzania’s legal framework for shareholder derivative actions. Established under the Companies Act Cap 212 R.E 2023, the derivative action was intended to empower minority shareholders and strengthen corporate governance by providing a direct avenue to redress wrongs committed by company controllers. This review systematically analyses the statutory provisions against their practical application in Tanzanian. It argues that while the legislation provides the necessary procedural doorway, its operationalization is hindered by significant ambiguities and obstacles. Key issues explored include the procedural intricacies that may deter legitimate claims, the overly broad judicial discretion in granting leave and the financial burden on shareholders (i.e., minority). The article posits that these challenges potentially render the remedy inaccessible and undermine its intended purpose as a check on directorial misconduct. By highlighting the gaps between legislative intent and practical reality, this review contributes to the discourse on corporate law reform in Tanzania and suggests targeted amendments to create a more robust and effective derivative action regime.