Sima Beach Ltd.

 5°50'39.41"S

 38°49'23.44"E

Frequently Asked Questions

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To date Mike, Ushwin, Christina and Adrian have built and enjoying visits.
Plans are underway to build either a waterhole or saltlick nearby.
Recently discussions have been had with investor wishing to start parachute safaris in the future from Zanzibar
Opportunity still available to establish a camp on the site.
Restaurant/Bar/management office investment potential (also gives rental opportunity for dwelling owners)
In the interim containers have been moved to a suitable position so as to build a meeting place/bar atop.
Anyone wishing to get involved please get in touch. (Do you put your number???)
If in Tanzania Annabel will be glad to show you the property - what's app +255 784 632 529.

FAQ

The following is a copy of a mail from our new shareholder Daniel Passon with my comments in red under teach question.

Hi Guys,

We have another shareholder joining us in Sima.

His name is Daniel Passon and he is from Germany. His wife is from Russia and they are both currently working in Ethiopia.

 For reasons of transparency I copy his letter below with all his concerns and my reply in red under each question.

Dear Mike, Dear Ushwin,

 Here my questions now:

- What is the role of Steve Atwell? He is a share B holder with quite some shares but obviously no director. Which power has he got in the company, e.g. in terms of decision making regarding share A holders or the use of the communal land?

 In Tanzanian law all companies must have a Tanzanian national as a majority shareholder. Steve is a Tanzanian passport holder.

He is originally from Zimbabwe and has been living in Tanzania for the past 17 years.

See his Fish Eagle Point Camp here…

http://www.fisheaglepoint.com

 He agreed to the position as majority shareholder but has no say in the company. All his shares are held in trust in Ushwins office with signed transfer forms.

 - Can you already give me an indication regarding the expected shared costs, which will become obligatory beyond the annual rent? I understood that participation in the club house, stable, etc. are voluntarily but what about e.g. security. I also understand that solar electricity and water purification is planned (what I welcome very much) - any cost estimation on these things?

 Apart from the fixed land rent charges which has been discussed in a previous post the other charges will be those which have been agreed to be communal.

 One such example maybe a communal biogas project.

For information on this I will personally be consulting Rob Dodson.

rob@wildlifeworks.com  one of our shareholders.

 Having security for a 100 acre plot without fences would be unnecessary and prohibitively expensive at this juncture.

On the other hand we will need someone in permanent residence down there for general chores and to be there when any of us wish to visit.. Two people would probably be better suited  and the cost of this going by Kenyan costs today would be around 10,000/- per person per month. With other expenses attached to having these guys there I would conservatively estimate that it would be more like 15K p/p/p/m making the total 360,000/- per year.  

ie around $400 per share holder per year.

To be conservative one should budget for all expenses at Sima Beach at US$1k per year. Any left over after a year we can carry forward for the following year.

However, when one of us starts building these two staff would be working on the site as builder’s laborers and their wages must be borne by the shareholder whose building they are helping construct.

So in effect the $400 per year would only apply if no one was to build, which will not be the case.

Once a personal building has been constructed the onus of security during and after completion would be the responsibility of that owner.

I am sure though many of us will come to an understanding between neighbors to share many of these costs.

As for the solar and water purification that will be at the expense of the individual for each of their own places.  

eg. Those building the clubhouse will be responsible for the above mentioned. If the next shareholder builds the next plot down from the clubhouse he/she will be responsible for their own lighting and water and paths to their own place from the clubhouse.

Questions about actual costs for water and solar would be better directed at Torben who has done this in his Satao Camp.

sataocamp.com

After talk to Torben recently he indicated that solar can range from anywhere between US$1k to US$2.5k depending on the needs you require. At the same time he told me he was supplying hot water to two tents for US$1.5k

More info re water purification can be found here..

Fcubed.com.au

This is the company I personally will be using for my water needs.

 - I read and understood the Five years limit for completion of building commencing on date of sale. However, I am not sure whether I fully understood the club house issue in regards to building on your own footprint. If shareholders participate in the club house, the building period for their own dwelling on the footprint will be waived. However, if the clubhouse is sold on to a camp operator then a one year build rule will be introduced on their lease. Does it mean that for individual shareholders, the total building period for their footprint could potentially shorten to 2 years if a camp operator takes over the club house after 1 year of sale of the footprint?

 Very good and pertinent question.

There are many variables which make this rule difficult.

My reasoning in this is that if at the moment Should Torben or someone else decide to take up the camp operator option he/they are going to require as much accommodation as possible.

I would have thought that it would be in all our interests to have our houses/cottages/bandas up and running as quickly as possible for our own financial rewards. Having a construction site on the plot for any length of time can be in no ones interest.

Also those affected by this rule will also have just been reimbursed by the eventual camp owner and have sufficient funds at their disposal to build their own place quickly.

I do welcome constructive criticism on this point.

I also point out that the option to take over the clubhouse is two years, therefore the build time would be three years not one.

 - Any idea how much a building like the "tent with a view" would cost in Tanzania?

 If you are talking about the main TWAV building we are having a budget of US$7k per person for our clubhouse which should be a similar structure.

I have had commitment from seven on us to join the clubhouse project. Ie US$50k which I am sure would be more than enough to complete what we want.

If on the other hand you are referring to the cottages at TWAV my estimate would be around US$20k for a very nice comfortable abode.

 - Any specific requirements for a German/European passport holder to become a shareholder in Tanzania? 

 No.

 - We will try to visit the plot as soon as possible but due to other travel plans it could become June or even August this year (as travelling between March and end of May would probably not very pleasant in the rainy season). You already suggested a payment which could be paid back in case we find something unsuitable. What about an upfront payment of 50 %?

 No problem.

 - The river is a little worry and I saw on your page that others have already taken some concrete steps towards river bank protection. (I have some concrete experience with a 20 km mountain river bank protection from my time in Afghanistan ;). What will happen in case the river will start changing directions again and eats the footprints on the river bank or even worse the dwelling already built by this time?

 We are currently analyzing this problem and have on hand a German water engineer who has promised to help.

Talking with him I see no problem providing we invest a little on preventative measures.

We will have to talk of this amongst all of us before going ahead with anything.

Should the worst occur we have 100 acres and any affected owner would be allocated another footprint of his/her choice.

 - I read: All leases issued by Sima Beach Ltd will be in a single name. Those wishing to be in a partnership will have private agreements between themselves for their own business relationships. Understood. The company will keep this position in case I would internally share with my wife or a friend?

 The company does not wish to involve itself with internal arguments between spouses or shareholders in partnership. I have personally had a project on our own plot here in Tiwi that has been the subject of a problem like this and has had legal ramifications that have now been going on for 4 years.

We have no control over relationships between friends or spouses who wish to divide something up. Hence we only wish to deal with single entities.

 - With whom would I start to negotiate the paperwork?

 Ushwin.

 - Last but not least: The general vision... From our discussion and your page I read that it's not a speculative investment (very good!), it has an ecological orientation (very good!) and the design of buildings will have to suit the area and local stile (very good!). However, I also read understand and hope that things will not be "dead capital" but the directors and the company will actively manage the investment and seek to cover costs (e.g. by safari rent outs) or even make some small profit. I would very much welcome this kind of active orientation rather than seeing no further developments in the coming years. This by no means implies that I would like to see some kind of "flashy holiday resort" coming up but I would also not like to invest in a piece of soil where after 20 years there is still not more than a tent :)

 This is the very reason that we have included the building time clauses. Also check the faq as this future projects subject has already been addressed.

 Ok, I think that's basically my questions. Pardon me if something has already been covered in your FAQ.

 Looking forward to reading your reply. Have a nice weekend.

 Cheers,

 Daniel

 P.S. Henri Baronet has in principle agreed to at least build the club house. I expect if things go ok he will commit himself to continue building privately for each individual.

Failing this I have just been introduce to a young Mr. Bowles who has just completed a lodge in Tanzania and is very keen on our project.

 

Torben
1) With new structure the Class B shareholders have full control of the company and the assets as have 75% of the shares.
This also entitles them to make any changes whatsoever in relation to all operations of the company without reference to any of the other shareholders.
I understand the reason for this and if you and Ushwin are the owners in perpetuity then I trust you to make decisions to our benefit. HOWEVER, the conditions then go onto say that class "B" shareholders can sell their shares at any time.
This means you and Ushwin could sell to some guy who decides he does not want us there and he can with complete control of the company dilute our investment to nil.
I feel strongly that the Class B shares cannot be sold without agreement of all shareholders (A & B) and that class A shareholders are given pre-emptive rights on purchasing those shares, the same way all class A shares are under pre-emptive rights option.

Mike
You have made many points in one here. I will answer best I can separately.
a:
Yes, Ushwin and I do want control over what happens down there but the lease each Class A shareholder has is with the company and regardless of who owns or runs the company that shareholder is protected by this lease.
Once this lease is signed it is law and no director can change it.
If you check my first draft again you will see the following....
=========================
Directors
Directors alone have rights and say over common land outside 70 meters of any private footprint or camp area.
==================================================
Reading this backwards means directors have no say over the area within 70 meters of the shareholders footprint.
What happens inside the footprint is written in stone by the lease and no future Class B shareholder can change the original lease.
Given that some future scenario might necessitate the changing of the lease I would propose to add that should this become so all shareholders get to vote on this, each with only a single vote regardless of footprint ownership.

b:
Apologies for the oversight.
I completely agree with this and will rewrite to state that Class A and other Class B shareholders must be given pre-emptive rights should Class B shares become available for sale.
I would not agree though to allow Class A shareholders to control Class B shareholders rights to sell.

Torben
2) OK with the 5 years limit on building, however what happens at 5 year point.
This must be stipulated in original document and acknowledged by buyer.

Mike
I think this is covered below. If not please add to it.
==========================================
Buyback
Company buyback is at original price plus average compounded CBK interest rate for the year of sale.
If company does not accept then “a” class shareholders must be offered shares at market price.
===============================
Torben
3) What is the fly camp 10 to 15 km's upriver?


Mike
I have noticed when searching the area around Sima Beach on Google Earth to the west that the river winds up into the hills.
If you look carefully you will notice no habitation, it is still basically Game Park.
It is actually bordering the Game Park as the river is the boundary for the park.
Also has an elevation of 100 meters so the views from up there will be stunning.
My idea here is to seek permission from the village to lease an acre up there and put up a small fly camp about one comfortable days walk from our plot.
About 10/15 kms up the river.
I have done many walks through Africa and it is one of the most popular items on many of my past itineraries.
I would love to set out one Friday and walk to this camp and find when I got there my dinner was ready and my tent was up.
A few other comforts come to mind as well. eg. Something cold with a cork in it!
I understand that this might not be everyone's cup of tea but if there are others interested we can share the costs.
It would also be an attractive and profitable addition for those who eventually pay to come and stay at Sima.
This idea is by no means compulsory to others.


Torben
4) "Directors to receive reasonable remuneration not exceeding 30% of total clear profit on common land use" -
I think this needs further clarification and explanation.
Do Directors have to work for this, is it paid as salary or dividend and if dividend how without other shareholders being paid.
This can get messy so need to ensure Ushwin looks at this to ensure we structure it correctly and then should be put to shareholders in a way they do not feel their service charge will be financing fat incomes for directors.
Again with earlier clause (1) if class B shares were sold to wrong person we would all be in serious trouble…..

Mike
I do not envisage the directors receiving any salary at all!
However should one come up with something that will benefit the community as a whole he/she should be rewarded.
This is to encourage directors to be pro active and not many will be so without some remuneration as a stimulus.
I am not talking high rise here.
Sima plot is 100 acres. If we all build on our allocation we still will not have covered even 2 acres or 2% of the total plot.
What happens if in ten years Rob Dobson says, "Let me plant indigenous trees on 5 acres in the North Western corner and I will give you $10,000 a year"?
Or someone comes and takes the Camp option and needs a spot at the back to welcome guests from the airport?
This is only a small example but whoever puts all the work into making something green happen should be rewarded, especially if it turns a profit.
If he or she does nothing he or she gets nothing.
I have stipulated that this reward not exceed 30% of the clear profit with the balance going toward our common needs whatever they may be.
This whole idea was to encourage those in charge to think out of the box.
Not really to make a fortune.

Torben
5) Regarding the fixed annual charge difficult to make it per shareholder as each shareholder owns different no of shares and there are also two classes of shareholders.
If 10 shares is the lowest denomination allowable then charge would need to be based on per 10 shares in order to ensure charges were apportioned fairly.
Would this be chargeable to class A and B shareholders or only Class A shareholders.
You also cannot have one person with 9 footprints and houses paying the same charge as a shareholder with 10 shares and one house.
Please note that the annual charge is likely to be reflective of costs of running development which need to be apportioned according to land ownership and usage.
If the common areas are somehow put to use and are utilising a lot of communal costs then these would also need to be paid by whoever controls the common areas (I.E the company).
It is very important that this is really looked into in a lot of detail to take into account shares, land tenure, plot development (hse or camp/hotel), communal areas etc…..
Although it seems simple at outset as development mushrooms and people start investing in buildings and lifestyle and parameters change these eventualities would need to have been considered or it will become a muddle and end up causing upset all round.

Mike
I believe that if you have one footprint or 10 footprints we are all going to share equally the enjoyment of being in Sima Beach.
I also do understand where you are coming from.
So I propose this.
There are 12 names on the Class A shareholders list.
The land rent is approx. $3,500 per year.
i.e. Just under $300 per year. I do not find this amount exorbitant for anyone involved in this project.
However in all fairness I say that in the beginning this amount should be shared by all of us until multiple buildings come into play.
The moment a shareholder erects a second structure his portion of this cost be borne proportionally.
The costs should be linked to buildings not footprints.

P.S.
One thing I did miss out in the lease agreement was the ability of Class A shareholder to be able to sell a single footprint after two years.
Must be offered back to the company first, then to the Class A shareholders, then to the general public failing any of the former options taken up.
I have now changed this to only apply to the first footprint a person sells.
The second and subsequent footprints should be offered firstly to the "A" class shareholders then failing a sale then on to the open market.
I would add that any new buyer be cleared by a majority vote of directors.

Hope all of this makes sense.
Cheers
Mike

E&OE

 This was from Iris 30/9/15