CAC Annual Returns for Registered Corporate Entities

CAC Annual Returns for Registered Corporate Entities: Essential Compliance Guide

When you register a business, company, or non-governmental organization with the Corporate Affairs Commission (CAC), you may wonder what comes next. One crucial obligation is the filing of Annual Returns. This guide will clarify what Annual Returns entail and answer common questions on the topic.

Understanding Annual Returns

Annual returns are a mandatory requirement for every registered corporate entity, regardless of operational status, and must be submitted to the Corporate Affairs Commission (CAC).

These returns differ from annual tax returns and are not financial documents reflecting a company's profits. Instead, they provide the CAC with updated information about a business's activities, composition, and financial position.

Timely and accurate filing of annual returns is crucial to avoid penalties and legal consequences.

Annual Returns vs. Taxes

Annual Returns are not the same as taxes paid to the Federal Inland Revenue Service (FIRS) or the State Inland Revenue Service (SIRS).

Regardless of business activity, you must notify the CAC by filing Annual Returns. Companies can file 18 months after registration and within 42 days after their general meeting.

The fee for Annual Returns is fixed. For instance, a business name with a turnover exceeding ten million Naira pays the same fee as one yet-to-commence activity.

Importance of Filing Annual Returns

1. Regulatory Compliance: Filing annual returns demonstrates that the company is active and maintains its registration status with the CAC.
2. Avoiding Penalties: Late filing attracts default fees, and failure to file for ten consecutive years can lead to delisting by the CAC.
3. Facilitating Post-Incorporation Activities: Up-to-date annual returns are necessary for post-incorporation activities like amending objectives or changing directors.
4. Maintaining Active Status: Entities that do not file annual returns are marked as "inactive" on the CAC portal.

Deadlines and Penalties for Annual Returns

The deadlines for filing annual returns vary based on the type of entity:

• Business Names: Must file by June 30 each year, excluding the year of registration.
• Companies: Must file within 18 months after incorporation and within 42 days after their annual general meeting.
• Incorporated Trustees: Must file between June 30 and December 31 each year.

Failure to meet these deadlines results in penalties and can lead to the company being marked inactive or delisted.

Business Scenario Calculating Annual Returns

Splash Limited, registered in March 2006, did not file annual returns until March 2023. Filing late resulted in penalties:

• For 2007-2021, the fee is N8,000 per year (N3,000 statutory fee + N5,000 penalty).
• For 2022, the fee is N3,000, as it was filed before the June 30, 2023 deadline.

Total cost for filing 15 years of returns:

$(N8,000\times 14)+N3,000=N115,000$

Avoidable excess payment due to non-compliance: N70,000.

Required Information and Documents for filling Annual Returns

Even if your registered entity hasn't commenced business activities, you must file Annual Returns every year (except the year of registration). This filing assures the CAC that your business is still active.

By understanding and adhering to these requirements, you ensure your business remains compliant and operational in the eyes of the CAC.

For Business Names:

• Business details: principal activities, principal place of business, branch addresses.
• Proprietors' details: names, dates of birth, gender, nationality, contact information, occupation, service address, and identification.
• Financial details: annual turnover and net assets.

For Companies:

• Business details: principal activities, principal place of business, branch addresses.
• Annual General Meeting details: date and returns filed within 14 days.
• Principal officers' details: names of the company's secretary and directors.
• Financial details: annual turnover and net assets.
• Persons with Significant Control (PSC): details of those with at least 5% shareholding.

For Incorporated Trustees:

• Association details: name, trustees' names, addresses, occupations, council members, land particulars, constitutional changes.
• Financial details: bank balances, sources of income, trustee benefits, gross and net assets.
• Audited accounts.

Annual Returns Filing Methods and Steps 

Filing annual returns has transitioned to an online process, which requires the assistance of accredited agents. The process involves:

1. Completing relevant forms.
2. Paying necessary fees.
3. Submitting documents to the CAC.

When filing, include:

• Certified copies of balance sheets and profit and loss accounts.
• Auditors' and directors' reports.
• Documents evidencing the payment of fees or dues.

Forms and Documents for Annual Returns

Various forms are required based on the entity type:

• Form CAC 10: Annual Return for a small company.
• Form CAC 10A: Annual Return for a company with shares other than a small company.
• Form CAC 10B: Annual Return for a company limited by guarantee.
• Form CAC 10C: Annual Return of exempted foreign companies.
• Form CAC/IT 4: Annual Return for Incorporated Trustees.
• Form CAC/BN/7: Annual Return for Business Names.

Benefits of Timely and Accurate Annual Reports Filing

1. Legal Compliance: Ensures the company meets regulatory requirements and avoids penalties.
2. Transparency and Accountability: Builds stakeholder trust by demonstrating commitment to good corporate practices.
3. Positive Reputation: Enhances credibility, making the company attractive to investors, partners, and customers.

Consequences of Non-Compliance 

1. Inactive Status: Failure to file annual returns results in the company being marked as inactive.
2. Penalties: Accumulation of default fees and potential delisting from the CAC.
3. Loss of Business Opportunities: Non-compliance can affect eligibility for contracts and deter potential investors.

Conclusion

Maintaining compliance with the CAC's annual return requirements is essential for the smooth operation and credibility of any registered entity in Nigeria. Timely and accurate filing not only ensures legal compliance but also enhances the entity's reputation and trustworthiness in the business community.