Company Law

Annual Returns: Why File?

The position of the Companies and Allied Matters Act, 2020 (“the CAMA) on the filing of Annual Returns by any company/legal entity doing business or duly incorporated in Nigeria is very clear. Section 417 of the CAMA states that “Every Company shall, once in every year make and deliver to the Commission an annual return in the form, and containing the matters specified…”

Section 421 of the CAMA states that “the return shall be completed, signed by a director or secretary, and delivered to the Commission not later than 42 days after the annual general meeting for the year, whether or not that meeting is the first or only general meeting of the company in that year, but the Company may apply to the Commission for extension of time within which to file its annual return for any given calendar year.

Meaning of Annual Return

An annual return can therefore be defined as a statutory document that reveals the true state of a company’s affairs in a financial year. In other words, it can be regarded as the financial records of a company’s dealings in a financial year. The most important point to be noted here is that, the filing of annual return annually is a ‘mandatory’ requirement of the law for any Company doing business in Nigeria.

Also, newly incorporated companies are exempted from filing Annual returns in the 18 months preceding incorporation.

The Importance of Filing Annual Return

  1. It allows for conformation with the provisions of Section 417 of the CAMA.
  2. It confirms to the Commission that the Company is still in business: failure to file annual returns can result in the “inactive” status of the company on the Commission’s portal.
  3. Access to contracts by government, private or public entities.
  4. Post-Incorporation Services: to access any post-incorporation activities such as change of directors, proprietors, trustees, change in registered address and other post-incorporation activities.
  5. It is also pertinent to state that, filing of annual returns by a company shows seriousness to its doing business in Nigeria.

Failure to File Annual Return

The effect of a company’s failure to file its annual returns for a specified year, as pointed earlier, can result in the “inactive” status of the company on the Commission’s portal. Furthermore, the failure to file annual returns for a period of time can result in the strike-off, of the company from the Commission’s portal. The resultant implication of this is that, an order of Court would therefore be required to relist the struck-off company. On the 21st day of February, 2017, the Registrar General of the Commission (as he then was) while speaking with journalists from PUNCHNG stated that “the Commission had delisted 38,000 companies from its register for failure to file annual returns to the Commission; while further adding that “it is only the court that can give an order for the companies to be readmitted back to the register of the Commission”.[1]

In September, 2023, the Registrar-General of the Commission (as he then was) also informed journalists from PUNCHNG that it intends to remove 100,000 companies from its database soon for failure to file annual returns. According to him, he stated that, the companies which had failed to file annual returns in the last 10 years were due to be struck-off from the Commission’s database. He also explained that the companies were entitled to be relisted after payment of the outstanding debts (annual returns filing) and getting an order of court. He further advised companies to ensure timely payment of their annual returns to avoid being struck-off.[2]

Also, the Commission have attached a fine for failure to file annual return in a specified year.

From the foregoing, a serious business owner in Nigeria would understand that, it is better to file its annual returns timeously than going through the rigors of making default payments in lump sum and bringing an application through a Legal Practitioner at the Federal High Court for an order relisting such struck-off company in the Commission’s database.

Requirements for Filing Annual Return

  1. The filing year;
  2. Particulars of the Director (s) and the PSC (Persons with significant control);
  3. Annual Turn-Over;
  4. The Net Asset;
  5. Authentication by either the director or secretary;
  6. Balance Sheet (optional;
  7. Profit and Loss Account (optional);
  8. Auditor’s report (optional).

Conclusion:

The filing of annual returns is a statutory obligation for corporate entities in Nigeria, which purpose is to ensure compliance with the provisions of the Section 417 of the CAMA and also to ensure accountability and transparency to the business conduction by these corporate entities. Also, filing of annual returns timeously by corporate entities ensures that it maintains its “active” status on the Commission’s database.

Corporate entities are therefore enjoined to file its annual returns timeously.

Consult us at More-Law UNLTD – for more information as it relates to the filing of annual returns for any corporate entity, activation of an “inactive” company on the Commission’s dashboard and for legal representations at the Federal High Court for an Order relisting a struck-off company by the Commission.

FOOTNOTES:

  1. https://punchng.com/cac-delists-38000-companies-failing-file-returns/
  2. https://punchng.com/cac-to-delist-100000-companies-from-database/

[1] https://punchng.com/cac-delists-38000-companies-failing-file-returns/

[2] https://punchng.com/cac-to-delist-100000-companies-from-database/