Share warrant is a document issued by a company under its common seal, granting its bearer specified shares or stock. Unlike share certificate which is a written document prepared by the company under its common seal and sent to its members containing the number of shares held by such members and the amount paid for the shares, share warrant serves as evidence of share ownership by shareholders.

Share warrant has proven to be a reliable investment strategy due to its advantages as shown below;

• Share warrants can be used as negotiable instruments, since they are transferable equity.
• Banks accept share warrants as security for loan facility because share warrants act as proof for holder’s equity stake in a company that issues such warrant.
• Companies can provide future dividend payments by attaching dividend coupons with the share warrants.

Section 85 (1) of the Companies Act, 2002 allows any company limited by shares, if authorized by its articles of association to issue share warrants stating, amongst other things, that the bearer of the warrant is entitled to shares specified therein. Further, that the company may provide by coupon or otherwise, for payment of future dividends on the shares included in such warrants.

Section 85 of the Companies Act, 2002 has been amended by Section 10 of the Finance Act, 2020 by addition of Section 85 (4) and (5). The amendment requires any share warrant issued or transferred to be subject of approval by the Registrar of Companies. The Registrar has also a duty to maintain all records of share warrants issued or transferred.

This amendment might have been influenced by the following factors;

• Tax compliance requirement – specifically Capital Gains Tax since this kind of tax applies to profit begotten from the proceeds of sale of an asset.
• Vast growth in commercial trade undertakings – like in many other jurisdictions, this factor has prompted Tanzania to make such amendments in an effort to promote commerce.

However, in some jurisdictions share warrants are still transferable by mere delivery and registration is not necessary.

Henceforth, share warrant issuance and transfer in Tanzania is subject to approval by the Registrar of Companie. This position aims at ensuring that the Registrar maintains proper records of the same pursuant to section 85 of the Companies Act, 2002 as amended by Section 10 of Finance Act, 2020.