In Nigeria, the Companies and Allied Matters Act (CAMA) governs the operations and regulations of companies. One of the obligations under CAMA is the requirement for companies to file annual returns and make necessary payments.
Many business owners have been working under the mistaken belief that once their company is registered with CAC, they have done all that is required of them by the law. The registration of a company with CAC is just a starting point to the journey of legalizing an entity be it enterprise or limited liability company or incorporated Trustees.
There are other compliances that companies need to meet after registration with CAC and one of it is the filing of Annual Returns. Once a company is registered with CAC, CAC gives such company grace period of 18months (1year 6months). Immediately after this grace period every company is expected to fill its annual returns yearly. This is pursuant to section 370 0f CAMA 2020.
Business owners are required to file their Annual Returns as at when due to avoid the consequences that will follow from failure to file it.
Annual Returns is not same thing as Tax! Tax is regulated by FIRS or State IRS depending on the type of entity. Annual Returns is regulated by Corporate Affairs Commission CAC. The two are different in all ramification.
Every company registered in Nigeria is required to file an annual return with the Corporate Affairs Commission (CAC). The annual return provides information about the company’s shareholders, directors, and other relevant details. This filing is meant to keep the CAC updated on the current status of the company.
The annual return should be filed within 42 days after the company’s Annual General Meeting (AGM). The AGM is a meeting held by a company’s shareholders to discuss matters like financial statements and the appointment of directors. Section 374 of CAMA 2020
The annual return typically includes information about:
Changes in the company’s share capital, if any.
Details of the company’s directors, shareholders, and secretary.
Address of the company’s registered office.
Details of the company’s charges (if applicable).
A statement of the company’s affairs, including assets and liabilities.
Along with filing the annual return, companies are required to pay the prescribed filing fees. The fees depend on various factors such as the type of company eg Enterprise or Limited Liability Company, the share capital, and the size of the company eg small company.
Consequences of Non-Compliance: Failure to file annual returns and make necessary payments can result in penalties, fines, or other legal consequences. It can also lead to the company being struck off the register, which means the company will lose its legal existence. As we all know CAC recently published names of companies that will be struck off the register if they fail to pay Annual Returns within 3months from the date of publishing.
WHAT ARE THE REQUIREMENTS FOR THE FILING OF ANNUAL RETURNS IN NIGERIA?
Completion of Annual Return Form: To pay annual returns, a company needs to complete the appropriate Annual Return Form issued by the Corporate Affairs Commission (CAC). The specific form number and format can vary, so it’s important to use the correct one. Note this process is done online and must be done by an accredited agent with CAC
Financial Statements: The company is typically required to attach its financial statements to the annual return form. These financial statements should include the balance sheet, profit and loss statement, and other relevant financial information. The financial statements should reflect the company’s financial position as of the end of its financial year.
Updated Company Information: The annual return form should contain accurate and up-to-date information about the company. This includes details about the company’s directors, shareholders, secretary, registered address, and share capital. Any changes in this information should be appropriately reflected in the annual return.
Filing Fees: The payment of annual returns involves paying the prescribed filing fees to the CAC. The amount of the filing fees can vary depending on factors such as the type of company, the share capital, the size of the company and the time of filing same
Submission Deadline: The annual return form and the associated payment should be submitted to the CAC within 42 days after the Annual General Meeting (AGM) of the company. The AGM is a meeting where the company’s financial statements are presented to the shareholders, and it takes place within the first 6 months after the end of the financial year.
Penalties for Late Filing: Failing to submit the annual return form and make the necessary payment within the stipulated time frame can result in penalties and fines. These penalties can accumulate over time, so it’s crucial to adhere to the filing deadlines.
Consequences of Non-Compliance: If a company consistently fails to file its annual returns and make the required payments, it could face serious consequences such as being struck off the register, which means losing its legal existence. Additionally, directors and officers of the company could face personal liability for the company’s obligations.
In conclusion, many companies engage the services of legal professionals, CAC accredited Agents, or accountants to ensure accurate and timely filing of annual returns and compliance with all regulatory requirements. If you are in need of an Accredited agent with CAC, contact us.