16/04/2024
ANNUAL RETURNS
Annual returns are a formal record of a company's financial activities and operations over the past year, which are to be submitted and filed to the Corporate Affairs Commission (CAC).
Annual returns play a crucial role in the corporate governance and regulatory compliance of companies and businesses in Nigeria. In August, 2023, the Corporate Affairs Commission (CAC) announced to delist over 91,000 companies for failure to file Annual returns to the commission. https://businessday.ng/news/article/cac-plans-to-delist-over-91000-companies-over
It is important to note that Annual Returns to the CAC is totally different from filing of Tax returns with the respective state and federal Internal Revenue Service which also is a requirement. The filing of Tax returns may be calculated based on profit or loss margin of the respective company. To simply put, filing of Annual Returns to the CAC shows that the business is ongoing whether it declares a loss or profit of the previous year and failure to file the annual returns sends a message that the business is not active in Nigeria and could prevent such business from access to loans, grants, international collaborations/partnership etc.
HOW TO IDENTIFY IF A BUSINESS HAS NOT FILED ITS ANNUAL RETURNS.
Where a registered entity has not filed its annual returns up to date, the status of the entity is indicated as 'INACTIVE”. When a registered entity has filed its annual returns up to date, the status of the entity is indicated as “ACTIVE”. You can check the status of your business with the commission via the CAC search website.
WHEN SHOULD A BUSINESS FILE ITS ANNUAL RETURNS?
Newly registered businesses are exempted from filing annual returns within the first 18 months of incorporation. After this period, they are to file their annual return annually to the CAC.
BUSINESS NAME: A registered business must file its annual returns on or before the 30th June of the year, else it attracts a penalty. Section 822(1) CAMA 2020 (Supra)
LTD/PLC: Every registered company (Private/Public Limited by Shares or Unlimited) is required not later than 42days after the Annual General Meeting for the year. Section 421(1) of the Companies and Allied Matters Act, 2020. Failing which, every director and officer of the company shall be liable to a penalty prescribed by the commission. Section 425(1) of CAMA (Supra).
LLP: Shall file within 60 days of closure of its financial year Section 773(1) CAMA 2020
LP: not stated but it is safe to assume that Annual returns must be filed on or before 30th June in each year.
INCORPORATED TRUSTEES: Non-governmental organizations, clubs, and not-for-profit institutions which are registered as Incorporated Trustees are required to file annual returns not earlier than 30th June or later than 31st December each year except in the year in which it is incorporated. Section 848(1) CAMA 2020 (Supra).
HOW TO FILE YOUR ANNUAL RETURNS?
1. Keep a record of account expenditures (profit/loss)
2. Determine the current asset/value of the company
3. Ensure to follow the regulatory guidelines of the Corporate Affairs Commission
WHERE TO FILE ANNUAL RETURNS?
The Corporate Affairs Commission has made the filing of annual returns seamless on their post incorporation website which can be accessed and filed personally via theb post incorporation website. However, navigating the relevant procedures of filing the annual returns accurately might be tricky, so it is advisable that you contact an accredited agent of the commission to assist you in the facilitation of the process.
Stay updated for more legal tips.
