EVERYTHING YOU NEED TO KNOW ABOUT ANNUAL RETURNS AS A REGISTERED ENTITY IN NIGERIA

Below is a conversation we had with a prospect few hours ago that inspired this blog post.

Client : “Hello Barrister”

Lawyer:  “Hi Mr K”

Client: “I’m having difficulties setting up my corporate account at the bank because one of the directors of the company doesn’t live in Nigeria and we are finding it difficult processing his Bank Verification Number (BVN). However, we’ve been told that the other alternative available is to have the director who stays in the United States removed from the company. Can your firm help us with this?”

Lawyer: Yes, we can. When was the company registered?

Client: Since 2019

Lawyer: Has the company filed annual returns since it was registered?

Client: No, the company hasn’t been in any form of business since registration

Lawyer: I understand. But the company ought to file its annual returns regardless of whether or not it has been in business. In Nigeria, annual returns is an obligation imposed by law on registered companies, business names and incorporated trustees to confirm that the registered entities in question are a going concern. It is required to be filed with the Corporate Affairs Commission. It would be difficult to carry out any changes with your registered company, business name or non-profit organization if the latter’s annual return hasn’t been filed up to date.

Client: Is it a form of tax? I’m asking because I have applied for Tax Clearance Certificate earlier.

Lawyer: The annual returns is not a form of tax. Taxes are filed with the Federal and State Inland Revenue Services where applicable. As mentioned previously, annual returns are simply a way of informing the Corporate Affairs Commission (i.e. the government agency where your company was registered) that your organization still exists and is in operation.

As a business owner, having your company registered isn’t enough, ensuring that your organization’s annual returns is filed as at when due is very important.

There are consequences for failure to file annual returns such as;

1. Such organization would be liable to pay penalty. The longer the delay for filing, the higher the penalty fees to be paid.

2. Your business name, company or non-profit organization would be unable to carry out any post registration filings such as; change of name, removal of directors of a company, increase in shares of a company, removal of members of a board of trustees, etc.

3. Failure to file annual returns for a consecutive period of 10 years is a ground for striking the name of a company off the companies’ register. See section 425 (3) Companies and Allied Matters Act. Under the Companies and Allied Matters Act, the Corporate Affairs Commission (CAC) can assume a Company or non-profit organizations’ failure to file annual returns as an indication that they are no longer a going concern, and may proceed to strike off the name of such entity in the Company’s registry and have it published in a Gazette, thereby making such company or non-profit organization dissolved.

Client: When should my company file annual returns?

Lawyer: Registered companies are obligated to file annual returns after 18 months of incorporation/registration and must be filed within 42 days after the company’s annual general meeting for the year. In the case of registered business names, it is to be filed not later than 30th June of every year. For non-profits (categorized as Incorporated Trustees), annual returns are to be filed not earlier than 30th June or latter than 31st day of December each year other than the year in which it was incorporated.

Client: Alright, this is clear to me now. I think I’m ready to file my annual returns. What do you need to enable us commence the process?

Lawyer: To file annual returns, you are required to provide the following;

a. Financial statement (where applicable)

b. A copy of company, business name of non-profit’s CAC registration documents to aid with completing relevant annual return forms

c. Statutory fees

 

CONCLUSION

If you’ve had previous doubts or concerns about annual returns or you are about having your company or non-profit registered in Nigeria, I hope find this post useful?

Having your company, business name or non-profit registered with the Corporate Affairs Commission in Nigeria isn’t enough. To maintain your organizations’ name on the Commission’s register, you must endeavor to file relevant returns as at when due. This would save time and money in situations where your organization needs to conduct other services with the Commission after registration.

Need to make further enquiries or need help with filing annual returns for your company, business name or non-profit organization? Our firm has a dedicated team of legal experts who can assist you in this regard. Simply reach out to us through any of our contact information here and we will be delighted to assist you.

Cynthia Tishion
Cynthia is a lawyer and currently serves as Head of Corporate / Commercial Services at LEX – PRAXIS. With her passion for business and entrepreneurship, she is actively engaged in creating awareness on the legal aspect of businesses through various platforms such as writing, public speaking engagements.

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