In Nigeria, it is a statutory requirement for all businesses, private limited companies, and trustee organisations to file annual returns every year. This is in accordance with the Companies and Allied Matters Act (CAMA) 2020, which states in Chapter 16 that all companies in Nigeria must submit the prescribed form with the necessary information to the Corporate Affairs Commission (CAC).
The only exception is companies with one member, which are exempted from filing annual returns according to Section 421 (2) of CAMA 2020. Newly incorporated companies have 18 months from incorporation to submit their first annual returns, while established companies must file their returns within 42 days of their annual general meetings. Therefore, it is necessary for companies in Nigeria to file their annual returns on a yearly basis.
Importance of filing annual returns
The filing of Annual Returns is an essential part of business operations. It is necessary for companies to stay current with their post-incorporation services from the CAC such as filing for Certified True Copies (CTC) of Incorporation documents, increasing share capital, making changes to business objects or registered addresses, and changes to directors, partners, or trustees. Filing Annual Returns on time and paying any applicable penalties in full is required to receive any post-incorporation service from the CAC.
Furthermore, the majority of contractual bids in public or private sectors usually require an up-to-date yearly report from the entity as a major pre-requisite for compliance. It is essential for companies to keep their records updated in order to satisfy this obligation.
Annual Returns also serve to inform the Commission of a company’s ongoing existence, referred to as a ‘going concern’, and keep the company’s name on the CAC register. Additionally, a business that is fully compliant and up to date with its Annual Returns will be able to demonstrate trustworthiness during due diligence checks with CAC, allowing investors to quickly and confidently obtain information about the company.
In conclusion, filing Annual Returns is a vital factor in ensuring a company’s post-incorporation services are processed in a timely manner and that the company is seen as a reputable entity.
Implications of failing to file your annual returns
The implications of not following the law when it comes to filing annual returns are outlined in Section 425 of CAMA 2020. This provision stipulates that companies and their directors or officers may face a penalty at the discretion of the Commission. In addition, the Commission is empowered to delist a company from the Register of Companies if it fails to file yearly returns for a period of ten years. This is based on the presumption that the company is inactive.
Those who disagree with the removal of the company’s name from the register may appeal to the court at any time before the expiration of 20 years from the date of the notice of removal, on the condition that the court is convinced that the company was indeed operating at the time of the striking off. To make such an appeal, a formal letter must be written to the CAC’s Registrar General (RG), detailing the reasons why the annual return was not filed on time. Supporting documents such as all payable dues and updated company records must also be provided. If the application is accepted, a relisting certificate will be issued to the company.
Olamide Oyetayo
The information provided in this article aims solely to educate readers generally. It does not establish an attorney-client relationship with our law firm or constitute legal counsel. Please contact us directly for any specific legal assistance required.