Annual Returns Requirements
Annual Returns filings are a requirement for registered entities around the world, Nigeria inclusive. It involves submitting updated information about the Entity’s financial status, proprietors and principals officers, its activities, and overall governance structure. In Nigeria, the Corporate Affairs Commission [“the Commission”] requires these informations to be filed within specific periods to keep the Commission abreast of the Entity’s activities, alongside the general public.
Timeline for Annual Returns Filings
There different timelines for filing of annual returns with the Corporate Affairs Commission, depending on the type of Entity involved. Business Names are not required to file Annual Returns for its year of incorporation, while companies are not required to file Annual Returns until eighteen months after incorporation.
For Business Names: The Companies and Allied Matters Act requires every person, Firm, or Corporation which carries on business in Nigeria under a registered Business Name to file its Annual Returns on or before the 30th day of June in each year, except the year of incorporation. This means that every registered Business Name is not required to file Annual Returns for the year it was registered with the CAC.
For Companies: The Companies and Allied Matters Act requires every company to file its annual returns after eighteen months from time of registration of the company with the Commission.
Reasons Why Registered Entities File Annual Returns with the Corporate Affairs Commission
The Corporate Affairs Commission requires all registered entities in Nigeria to file their annual returns so that the Commission will know the state of affairs of the Entity, from its finance position, to the details of its proprietorship/shareholding, to its business dealings. This is also to enable the public know and understand the details of the companies they are dealing with.
Entities that File Annual Returns in Nigeria
- Companies
- Businesses registered as sole proprietorships, partnerships, Firms
- Associations [Incorporated Trustees, Non-Governmental Organizations]
Required Information needed to file Annual Returns
The information required to file annual returns in Nigeria differs, depending on the type of Entity involved.
For Business Names:
The following information is required for individuals and firms who carry on business under Business Names to file their annual returns:
Details of the Business
The following information is required: principal activities of the business, principal place of business, branch address if any,
Details of Proprietors
The proprietors can be individual proprietors or corporate partners. The details needed includes the full name of all the proprietors, their dates of birth, gender, nationality, phone number, email address, occupation, service address, residential address [this is optional], valid means of identification.
Annual Turnover and Net Assets
The proprietors are required to provide full details of the turnover of the business of the year of filing the Annual Returns, together with the Net Assets value of the business. The values are provided in Naira [₦]. Take note that the “Annual Turnover” is the total sales a business made within a year through the sales of goods and/or services—in other words it is the total amount of cash flowing through the business for the year. On the other hand, the “Net Assets” is the value of the monetary worth of the business.
The filing for the Returns must be authorized by a proprietor, partner or any authorized person of the business.
For Companies:
Companies are required to fulfill the following requirements when the company wishes to file its Annual Returns with the CAC:
Details of the Business
The following information is required: principal activities of the business, principal place of business, branch address if any.
Details of Annual General Meeting
The company is required to provide the date of its last annual general meeting. It is a compliance requirement for the company to then files its Returns within fourteen days from the date of its annual general meeting.
Details of Principal officers of the company
The principal officers include the company’s secretary and directors—this information is required. It should be noted however, that filing Returns is not the forum to change the principal officers of a company with the CAC.
Particulars of Turnover and Net Asssets
The company is required to provide full details of the turnover of the business of the year of filing the Annual Returns, together with the Net Assets value of the business. The values are provided in Naira [₦].
Details of Persons with Significant Control [PSC]
The PSCs are persons with significant control of the company’s shareholding, and this means persons who hold minimum 5% shareholding percentage of the company’s shares. In other words they are person who control the company, and the CAC requires that their details are updated at the time of filing Returns each year.
Companies are not required to file annual returns until after eighteen months from the date of incorporation.
For Incorporated Trustees:
Associations registered as Incorporated Trustees are required to file their Returns not earlier than the 30th of June or later than the 31st of December in each year, with the Corporate Affairs Commission. Their Returns must contain and show the name of the association, the names, addresses and occupation of the trustees on record, members of its council or governing body, particulars of land held by the Body during the year, and any changes in the constitution of the association during the previous year.
Details of Trustees and Particulars of the Governing Council
For each year of filing Returns, the personal details of the trustees of the Association must be included, and these include their names, addresses, phone numbers, emails, positions [for the members of the Governing Council], occupation, and valid means of identification.
Details of Bankers and Finances
The trustees of the Association are also required to provide the details of the Association’s Bankers, the bank balances of the Association as at the Financial Year end, Sources of Income for the year, Trustee benefits during the year, and the Association’s gross & net assets, valued in Naira.
Audited Accounts of the Association
When an Association which is registered as Incorporated Trustees are filing their Returns, such Returns should be accompanied by the audited accounts of the Association for the year they are filing the Returns for.
Who can File Annual Returns for Registered Entities in Nigeria
To facilitate the ease of doing business in Nigeria, the Corporate Affairs Commission floated a Post-Incorporation portal where Returns and other post-incorporation matters can be carried out on behalf of companies, firms and associations. Only accredited individuals [lawyers, chartered accountants, chartered secretaries] and accredited Firms [law firms, accounting firms] can perform duties on the post-incorporation portal. To that effect, you should hire the services of accredited Firms or individuals to carry out your filings with the Commission. At Kabbiz Legal & Advisory, we are accredited CAC agents and can help your Entity with its filings.
Benefits of Filing Annual Returns in Nigeria
- Active Status on CAC records: When a registered Entity files its annual returns as and when due for each year of operations, the Entity will be marked as “Active” on the Commission’s portal. This will, at first glance, showcase to the public that the Entity is a functional going concern and still carries on operations in the Federal Republic of Nigeria.
- Credibility: Prompt filing of annual returns builds credibility with stakeholders and potential business partners carrying out due diligence checks on your registered Entity when they want to do business with you. Your Entity’s updated records shows transparency on the part of your Entity, and this can engender confidence in your stakeholders and allow them to make informed decisions about your Entity because your Entity’s details are up-to-date, including its financial records.
Effect of Failure to File Annual Returns
- Striking off name from Register: Failure of a registered Entity in Nigeria to file its Annual Returns for a consecutive period of ten years is grounds for the Corporate Affairs Commission to strike out the name of that company, business name, or incorporated trustees from the Register of registered entities.
- Payment of Penalties: Failure of a business, Firm, Corporation or Company to file its Returns with the Corporate Affairs Commission will lead to penalties for late filing of the Returns for each year of default. The default fee payable for default is set by the CAC and must be paid whenever the Entity wishes to pay for its Returns to meet up with its compliance requirements.
Actionable Steps for Filing Annual Returns in Nigeria with the Corporate Affairs Commission
As a company or business owner in Nigeria with its entity registered as a going concern in Nigeria, it is important to keep to compliance requirements set out by the Commission in order to keep your Entity updated and to avoid penalties and sanctions.
At Kabbiz Legal & Advisory, we will be happy to guide you on all relevant processes required to keep your company or Association updated with the Commission. Please check below for our contact handles to see how we can advise you on your Entity’s compliance requirements.
This article is provided for information purposes only and does not constitute legal advice. For more information, or to seek more information and advice on the contents of this article, we invite you to reach out to us and we will be delighted to provide additional details and guidance. For further enquiries, kindly send an email to kingsley.ani@kabbizlegal.com or call us on +234864231176, or alternatively click the link here to chat us on WhatsApp.
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