Instead of paying additional fine of N5,000 for each year you missed for failing to file annual returns for your business, wouldn’t you rather begin to do the needful before it turns to thousands of naira?
So, filing a company’s annual returns with the Corporate Affairs Commission (CAC) is very important if you don’t want your company to be delisted.
If you have registered your business with Corporate Affairs Commission (CAC), it means that you have actually legalized the existence of the business. However, you need to understand that the registration of the business, either as a business name, partnership, or a limited liability company, is just the first step. After the registration, it is statutorily required that you should file the annual returns of your business every year. If your business is a new one, your business is due for the first filing of annual return after the end of the first 18 months. (For clarification, waiting till the end of 18th month before filing your first annual return does not mean you will not file for the period. The only year you won’t file for is the year of incorporation). For instance, if you registered your business or company on 30 July 2021, you will wait until after 18 months (Feb 2023) before you file your first annual return which will cover year 2022. That is, you will not file for the year 2021 which is the year of registration. But you will need to file for the year 2022.
What is Annual Return?
Just as the name implies, an annual return is a yearly statement made by entities registered with Corporate Affairs Commission about their composition, activities and financial positions to the Commission in accordance with the provisions of Company and Allied Matters Act (CAMA) 2020.
Chapter 16 of the Companies and Allied Matters Act (CAMA 2020), covers everything pertaining to filing returns.
Section 418 of CAMA 2020 states:
The annual return by a company having shares other than a small company shall contain with respect to the registered office of the company, registers of members and debenture holders, shares and debentures, indebtedness, past and present members, directors and secretary, the matters specified in Part I of the Seventh Schedule to this Act, and the return shall be in the form set out in Part II of that Schedule or as near to it as circumstances admit.
Simply put, it is an application to show the regulatory commission that the company is still actively in business.
Failure to perform this over a period of years may lead to delisting of your company. To know if the record of a company is up to date on the database
Timelines for Filing of CAC Annual Returns
Some business owners have misconception about the filing of returns of their business. They erroneously believe that they don’t need to make any filing if their business has not commenced operations.
When should a company file CAC annual returns? What the Company and Allied Matters Act (CAMA) specifies is that every entity registered with Corporate Affairs Commission as a business name, private or public company (either limited by shares, guarantee or unlimited), incorporated trustees, or partnership must file their first returns with the Commission after 18 months of its incorporation.
Subsequently, if your business is a business name, you must file the returns for the business on or before 30th June every year. This provision is contained in section 822(1) CAMA 2020. According to the provision of Section 421(1) of CAMA 2020, limited liability companies are required to file their annual returns with Corporate Affairs Commission within 42 days after their annual general meeting whether or not the meeting is the first or the only general meeting that the company held in the year. For clarification here, Corporate Affairs Commission expects annual returns to be delivered to the Commission within 14 days of the annual general meeting. For organizations registered as incorporated trustees such as clubs, non-governmental organizations, and non for profit institutions, they are required to file their annual returns not earlier than 30th June and not later than 31st December every year. For a Limited Liability partnership (LLP) and Limited Partnership (LP), the annual returns must be filed with Corporate Affairs Commission with 60 days of the closure of its financial year.
How Much Does It Cost to File Annual Returns?
The cost of filing returns with CAC depends on some factors such as the legal structure of your business, the size of your business if you registered as a limited liability company, whether your company is private or public liability company, and your timeliness of filing the returns. For instance, you don’t file your annual returns within a stipulated period, you will need to pay penalty for late filing. Penalty is actually avoidable. The only way to avoid paying penalty is to ensure that you file your annual returns on time.
Below are the fees for the filing of CAC annual returns in Nigeria.
|
|
Business Name |
Limited Liability Company |
|
Annual Return fee |
N3,000 |
N5, 000 |
|
Penalty for Late Filing |
N5, 000 |
N10, 000 |
|
Total for late filing |
N8, 000 |
N15, 000 |
|
Daily Penalties* |
N150 |
N500 |
*Daily Penalty may occur in certain circumstances. It is important you allow professionals to guide you so that you don’t commit unnecessary blunders.
In addition to the fees above, you will still
need to pay agency fee. The agency fee is for the accredited agent. Click here to view Agency fee
Here is a scenario…
Mr Gbade (not real name) registered Gbade Enterprise (Business Name) in February 2009, but since then he had never filed an annual return and in 2024 he’s ready to do the needful.
In this situation, Mr Gbade will have to file returns from August 2010 till 2024, that’s 14 years.
14 X N8,000 = N112,000
NOTE: The above excludes the service charge of an accredited agent.
How to File CAC Annual Returns
How do I file CAC annual returns? Filing of annual returns with the Corporate and Affairs Commission is done online now. This means that you don’t need to carry any physical document to CAC’s office again. However, to file annual return, you might need to engage an accredited agent to assist you with the process. Nevertheless, let me quickly explain the process of filing annual return of business names here.
When you approach any CAC accredited agent to file the CAC annual returns of your business name for you, you will be given an annual return form to fill. In the form, you will need to provide the registration number, name, general nature, and registered address of the business. Other useful information you will fill include the following:
- Branch Address of the Business (if any)
- Annual Return Details: In this section, you will state the year the annual return relates to and the financial year end/accounting year end. You will also supply information regarding the turnover and the net assets of the business.
- Particulars of Proprietor/Partners: This is the section where you will provide the information about the proprietor and partners of the business name.
- Particulars of Corporate Partner (if any). If your business named is joint owned by a corporate body, you will fill the name, registration number, and address of the corporate body.
- Authentication: This is where the name and email address of the proprietor, partner or any person that authorized the annual return.
When you make available all the above information, the CAC accredited agent can then take it up from there. After the agent has filed the annual return, CAC will either query or approve it. If queried, reason for the query will be given. If approved, the agent can then download the acknowledgement letter and then apply to the Corporate Affairs Commission for the business name to be make active.
How long does it take a business to become active after annual returns is filed? It takes between 3 – 10 days before the business becomes active on CAC website. You can visit our FAQs page for more details.
Importance of Filing CAC Annual Return
Why must you file the CAC annual returns for your business? You need to make the annual filing for the following reasons:
- It is statutorily required: It is the provision of the laws as contained in the Companies and Allied Matters Act (CAMA) 2020 that every entity registered with Corporate Affairs Commission as a business name, private or public company (either limited by shares, guarantee or unlimited), incorporated trustees, or partnership should file their annual returns with the CAC. Therefore, filing of the the annual returns means that your business or organization complies with the law. It is important to note that this is different from tax returns to Federal Inland Revenue Service.
- It grants business access to post incorporation services: A company may not have access to post incorporation services from Corporate Affairs Commission. Such services include request for Certified True Copy (CTC) of incorporation documents, increase in share capital, change to directors, partners, and trustees, change of business objects or registered address etc. If you have not been filing the annual returns and you require any of the post incorporation services, you will be asked to complete the filing, pay the filing fees and all the accrued penalties first. This can actually cause you some delays.
- It confirms the going concern status of the business: The only way to convince Corporate Affairs Commission that your business is operating is by ensuring that you file the annual returns when due. If you fail to file the return when due, the status of the business or organization will show “inactive”.
- It gives a company ability to bid for contracts: Proof of CAC annual returns is one of the requirements for bidding for contracts in some private and public establishments. This means that without this proof, your company will not be considered for such bids.
- It enhances public confidence in your organization: Individuals and corporate entities usually conduct due diligence on organizations they want to invest in or do transactions with. Without annual returns, Corporate Affairs Commission will not be able to provide meaningful information about your company.
Misconceptions About Annual Return
When it comes to filing of annual returns with Corporate Affairs Commission, I have come to the conclusion that, a lot of people assume too much. I want to use this article to clarify some grey areas about CAC annual returns.
Some of the common misconceptions are:
- Annual returns are only for large companies: Some people believe that annual returns are only required for large corporations. However, all registered companies, including small and medium-sized enterprises (SMEs), are required to file annual returns with the Corporate Affairs Commission.
- Annual returns and tax returns are the same: There is often confusion between annual returns and tax returns. CAC annual returns are filed with the Corporate Affairs Commission to update the company’s information, while tax returns are filed with the relevant tax authorities to report the company’s income and tax liability.
- Filing annual returns means the company is up to date with CAC: Some business owners assume that once they file their annual returns, they are fully compliant with the CAC. However, compliance involves other obligations, such as filing changes in the company’s structure, directorship, or shareholding when they occur.
- It’s a one-time filing: Some entrepreneurs mistakenly believe that they only need to file annual returns once. In reality, annual returns must be filed every year.
- No consequences for late filing: Some business owners underestimate the significance of timely filing or may think there are no consequences for filing annual returns late. However, there are penalties for late filing, which may accrue to a large amount until the returns are submitted.
- It’s a complex process: People often assume that filing annual returns is a cumbersome and time-consuming process. While it does involve some paperwork, the process can be straightforward, especially with the assistance of professionals who are familiar with the requirements.
- Only lawyers can handle annual returns: While engaging a lawyer can be helpful in handling legal matters, filing annual returns can be done by any CAC accredited agent like chartered accountant and chartered secretary.
- Foreign companies are exempt from annual returns: Foreign companies operating in Nigeria are not exempt from filing annual returns. If a foreign company is registered in Nigeria, it must comply with the requirement to file annual returns as well.
Implications of Failure to File CAC Annual Return
Failure to file CAC annual returns comes with penalty. Apart from the financial penalty which comes with failure to file annual returns for your business, Corporate Affairs Commission may decide to strike out the name of the business from their register. Once the name of a business has been deleted from the company’s register, it means that the business no longer exist. This makes the business name to be open for any interested party to register. However, if CAC delists the name of your business, you have the right to apply to the court to order for the restoration of the name to the register. If your application is successful, you will still need to file the returns and pay all the applicable filing fees and penalties.
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