By virtue of the Companies and Allied Matters Act (CAMA) 2020, every business or non-profit organization (i.e. business name, company, or Incorporated Trustee) registered in Nigeria, with the Corporate Affairs Commission, is required to file its annual returns regularly and up to date.
In this article, we will be explaining amongst other things, the meaning of annual returns, why it’s important for registered organizations, and the requirements for doing so.
WHAT ARE ANNUAL RETURNS?
Annual returns are a legal obligation required by all types of entities registered with the Corporate Affairs Commission (CAC) in Nigeria, to confirm that they are still existing and operational, as well as provide updates on their records with the CAC.
Annual returns are required to portray the current situation of the organization in question such as; whether or not the membership of the organization has changed or is still as it was at the time of registration, address, financial activities, whether the nature of activities for which it was registered is still the same or there has been changes, etc.
Annual returns are not a form of tax. Taxes are enforced at the Federal level by the Federal Inland Revenue Service (FIRS) and at the State level by the Inland Revenue Service (IRS).
WHO FILES ANNUAL RETURNS?
As provided by CAMA, all entities registered with the Corporate Affairs Commission (CAC) as either a business name, company, Incorporated Trustees, Limited Partnerships, or Limited Liability Partnerships are required to file their annual returns on a yearly basis. Annual returns may be filed through their members.
At the time of writing this article, only accredited agents are permitted to carry out post-registration services including filing of annual returns with the CAC on behalf of their clients. What this means is that should your organization decide to file its annual returns, it must retain the services of accredited agents to file its annual returns.
Only the following are recognized as accredited agents with the CAC;
i. Lawyers and Law firms
ii. Chartered Accountants and Accounting firms
iii. Chartered Secretaries and their firms
WHEN DO I FILE ANNUAL RETURNS?
The Companies and Allied Matters Act provide the timeframe within which all types of registered entities may file annual returns. We’ll the timeframe for each type of entity;
a. When to file annual returns for Incorporated trustees/Non-profits
Section 848 (1) of CAMA states the time for Trustees of associations or non-profit organizations to file their annual returns which is not earlier than 30th June or later than 31st December each year (other than the year in which it is incorporated).
What this means is that where an association or non-profit was registered in July 2022 for instance, such association must file its annual returns for 2023 not later than 31st December 2023. It will not be required to file annual returns in the year it was registered which is 2022.
b. When to file annual returns for a company
Sections 417 to 422 CAMA provides the timeframe within which the various category of companies are required to file annual returns. By category of companies, we are referring to; Private Company Limited by Shares, Company Limited by Guarantee, Public Companies, Unlimited Companies, Companies having Shares other than a small company, Small Companies, etc.
In summary, companies are required to file annual returns once every year and must be filed not later than 42 days after its annual general meeting so long as it does not include the year in which the company is registered or if it is not required by section 237 to hold an annual general meeting during the following year, in that year.
Where a private company limited by Shares (commonly referred to as LLC) is registered in May 2022 for instance, such a company will not be required to file annual returns in the year it was registered until 18 months after registration i.e. October 2023.
c. When to file annual returns as a business name
According to Section 822 of CAMA, all registered business names are required to file annual returns not later than the 30th day of June in each year, except the calendar year in which the business name is registered.
d. When to file annual returns as a Limited Liability Partnership and a Limited Partnership
By virtue of the combined provisions of Section 773 (1) and Section 807 of CAMA, a limited liability partnership and a limited partnership shall file annual returns with the Commission within 60 days of the closure of its financial year.
BENEFITS OF FILING ANNUAL RETURNS ON TIME
The importance of filing annual returns on time cannot be over-emphasized as it has its benefits. Some of them are;
1. Your organization will be exempted from additional penalties for late filing
2. Post-registration changes on the company such as removal of directors, change of company’s name, etc. can only be carried out after annual returns are filed to date.
3. Failure of a business or an organization to file annual returns for a consecutive period of 10 years is sufficient grounds for CAC to strike the name of the company or organization of its register of companies or incorporated trustees.
Filing annual returns with the Corporate Affairs Commission as a registered entity is an essential aspect of compliance for all registered entities and should not be trifled with as the long-term negative implications can be costly if not outrightly undesirable.
Need help with filing annual returns for your company, business name, non-profit, Limited Partnership, or Limited Liability Partnership? You may reach out to us through the Whatsapp icon on the lower right part of this page, or contact us here. Our team of lawyers are on standby to assist you in this regard.