Can a shareholder legally lend money to their own company and charge interest like a bank? While shareholder loans are a common method of financing businesses in Tanzania, they come with important legal and tax implications that many investors and companies overlook. A recent court decision highlighted that charging excessive interest on shareholder loans may render the agreement unlawful and unenforceable. This article examines the legal position on shareholder loans in Tanzania, the requirement for reasonable interest, and the risks companies and shareholders face when such arrangements are improperly structured.
