Under the Companies Act, 2002, Tanzania recognizes three types of companies: companies limited by shares, companies limited by guarantee (CLG), and an unlimited company. These companies can be classified as either private or public.

A CLG, or a company limited by guarantee, is a not-for-profit business established to serve social, charitable, community-based, or other non-commercial objectives. Instead of distributing profits to members, guarantee companies typically retain any surplus income for reinvestment or use it to promote the non-profit objectives of the business. This model is commonly used by clubs, co-operatives, social enterprises, community projects, membership organizations, and charities.

However, the Tanzanian regulatory landscape changed in 2019. As per The Written Laws (Miscellaneous Amendments) (No.3) Act, 2019, an entity in Tanzania can only be registered as a CLG if it is formed with the objectives of promoting commerce, trade, investments, or any other activity approved by the Minister of Trade.

The amendment refines the Companies Act, specifying that a company, as defined under the Act, is formed for the purpose of investment, trade, and commercial activities. Since a CLG is primarily associated with promoting non-profit causes, the implication is that a company limited by guarantee carrying out NGO activities may no longer be considered a company under the Companies Act, unless it is specifically formed with the objectives of promoting commerce, trade, investments, or any other activity approved by the Minister of Trade.