A Guide to Understanding CAC Annual Returns in Nigeria (2023)

The LawField Review

As a business owner in Nigeria, one of the crucial compliance requirements you must fulfill is filing annual returns with the Corporate Affairs Commission (CAC). In this legal blog post, we will delve into the significance of CAC annual returns, the process of filing, and the potential consequences of non-compliance. By understanding the importance of annual returns, you can ensure that your business remains in good standing and compliant with Nigerian corporate laws.

What are CAC Annual Returns?

CAC Annual Returns are mandatory filings that every registered company, business name, and incorporated trustees must submit to the Corporate Affairs Commission each year. These returns provide essential information about the company’s financial status, changes in the management structure, and any significant developments within the organization.

Importance of Filing CAC Annual Returns

Compliance with CAC annual returns is not merely a bureaucratic obligation but also a critical step in maintaining the legal entity of your business. Filing these returns demonstrates transparency, accountability, and good corporate governance. It also allows the government and stakeholders to assess the company’s financial health and adherence to regulatory requirements.

Furthermore, companies that fail to file their annual returns risk facing penalties and possible striking off the register, leading to the loss of the legal entity status. This could expose the company’s directors and officers to personal liability.

Process of Filing CAC Annual Returns

Filing CAC annual returns involves the following steps:

1) Preparation of Financial Statements: Prepare the company’s financial statements, including the income statement, balance sheet, and cash flow statement.

2) Appointment of an External Auditor: The company must appoint a registered external auditor to audit the financial statements. The auditor’s report is a prerequisite for filing the annual returns.

3) Completion of CAC Form: Obtain the Annual Return Form from the CAC website or their office and fill it accurately. The form requires details like the company’s name, registration number, address, list of directors and shareholders, financial information, and auditor’s report.

4) Payment of Filing Fee: Pay the requisite filing fee at an accredited bank and obtain the payment receipt.

5) Submission of Documents: Submit the completed Annual Return Form, financial statements, auditor’s report, and payment receipt to the CAC office.

Deadline for Filing CAC Annual Returns

The deadline for filing CAC annual returns is 42 days after the company’s Annual General Meeting (AGM). If the AGM has not been held, the returns should be filed within 18 months of the company’s incorporation or 9 months after the close of the financial year, whichever comes first.

Consequences of Non-Compliance

Failure to file CAC annual returns can lead to severe consequences, including:

a. Late Filing Penalty: The company will incur a penalty for each year of default.

b. Striking off the Register: The CAC may strike off the company’s name from the register, leading to the loss of its legal entity status.

c. Director’s Liability: Directors may become personally liable for the company’s obligations during the period of non-compliance.

Conclusion

Filing CAC annual returns is a legal obligation that Nigerian businesses must fulfill to maintain good standing and avoid penalties. By understanding the importance of these returns and the consequences of non-compliance, business owners can ensure that they meet their regulatory obligations and safeguard their companies’ legal entity status. For professional assistance with CAC annual returns or any other corporate legal matters, feel free to contact our experienced team at LAWFIELD Barristers and Solicitors.