ALL YOU NEED TO KNOW ABOUT ANNUAL RETURNS AND INACTIVE BUSINESSES
Every company is expected to ensure that their company, business, or Not for Profits Organisation (NFPO) comply with laid down rules and regulations set by the federal republic of Nigeria. Upon incorporation of a business name, company or not for profit organization, they are a set of rules expected to be complied with by organizations, which could be a code of cooperate governance for their respective sectors, industry-specific laws amongst others. The major law governing companies in Nigeria is the Companies and Allied Matters Act 2020 (CAMA).
One of the major and mandatory regulatory compliance common to all companies, businesses and NFPO’s is the filing of annual returns. Annual Returns is a yearly statement made by an entity to the Corporate Affairs Commission (CAC).
On 28th December, 2023, CAC issued a public notice stating that from 1 January 2024, the full penalties prescribed in the Companies and Allied Matters Act, 2020 and the Companies Regulations 2021 will be implemented for late filing of annual returns, which was later postponed to April 1st 2024.
The public notice stated that companies their directors and officers should note that the commission shall henceforth proceed against directors and officers of companies who fail to file their annual returns including companies that failed to file before it was delisted or struck off.
Benefits of Filing Annual Returns.
- Filing of annual returns is statutory under CAMA 2020 and failure to comply has its consequential effects on the business.
- It enables the company to evaluate the activities that was ventured into for the year, while also reviewing the financial position of the company.
- Filing annual returns enhances transparency and accountability in the company.
- The corporate entity is able to have an up-to-date record with the commission upon filing of the annual returns.
- Another importance of filing annual returns is that it certifies that the company is still operating.
- Filing of annual returns can be a prerequisite to the award of some contracts and grants.
- It boosts the public confidence in the business, and also prevents payment of lump sums of unfiled annual returns.
Timeline for Filing Annual Returns
It is worthy of note that failure to file the annual returns will result in payment of penalties, which vary, depending on the type of corporate entity. The table below contains the various types of annual returns to be filed by the different corporate entities and the timelines as provided by the Companies and Allied Matters Act, 2020.
| Type of Corporate Entity | Timeline |
| Business name | On or before 30th June of every year. |
| Company (Private/Public) | Within 14 days after the annual general meeting. |
| Incorporated Trustees | Not earlier than 30th June and not later than 31st December every year. |
| Limited Liability Partnership | Within 60 days of close of the financial year. |
Consequence of failure to file annual returns.
Where a corporate entity fails to file annual returns, the following are the consequences of such:
- Financial penalty for each year of default.
- The directors or trustees, depending on the corporate entity can also be held liable for the failure to file annual returns.
- The business can be struck out from the company register
- The company status will be “Inactive” on the CAC companies registration portal.
Required Documentation for Filing Annual Returns
The required documents for filing of annual returns varies depending on the type of business, but it generally contains the name of business, financial statement, assets and liabilities acquired during the financial year, the particulars of members of the company (name, email, address, means of identification, date of birth, and phone number) among other important reports, based on the structure of the business. The process of filing and obtaining approval for filing annual returns usually take 3- 5 working days.
Conclusion
The importance of filing Annual Returns cannot be overstated. As a business owner, it is mandatory to schedule this task annually. With the many demands of running a business, it’s easy to overlook this requirement. That’s where an accredited agent can help. At Millenium Attorneys, we are accredited CAC agents, ready to assist you with all your CAC filings. To commence the process of your annual returns, you can reach us at c.Sunday@millenniumattorneys.com or millenniumattorneys@gmail.com or 08162413913
