FAQ About Smartbiz Enterprise

What are Annual Returns?

An annual return is not the profit your company made in a year, it is not a financial document, but rather a yearly statement by an active registered business name or company which is meant to keep CAC updated about the company’s activities, composition, and its financial position.

Chapter 16 of the Companies and Allied Matters Act (CAMA 2020), covers everything pertaining to filing returns.

Section 418 of CAMA 2020 states:

The annual return by a company having shares other than a small company shall contain with respect to the registered office of the company, registers of members and debenture holders, shares and debentures, indebtedness, past and present members, directors and secretary, the matters specified in Part I of the Seventh Schedule to this Act, and the return shall be in the form set out in Part II of that Schedule or as near to it as circumstances admit.

Simply put, it is an application to show the regulatory commission that the company is still active in business.

Failure to perform this over a period of years will lead to a heavy fine and may also lead to the delisting of your company.

There are some misconceptions about an annual return in Nigeria. Some companies, most especially sole proprietorship, believe that they might be heavily taxed if they continue to file annual returns with the CAC. This is not true

Here is a scenario…

Mr Goodness (not real name) registered Granula Enterprise (Business Name) in February 2006, but since then he had never filed an annual return and in 2021 he’s ready to do the needful.

In this situation, Mr Goodness will have to file returns from August 2007 till 2021, that’s 14 years (5137 days).

5137 * 150 = 770550

The above excludes the service charge of an accredited agent.

When to file annual returns:

Limited Liability Company (LLC) and Business Name, and every registered business in Nigeria are expected to file their annual returns with the Corporate Affairs Commission not later than 30th June every year.

The only exception to this is when the calendar year in which the business name is registered does not end by December.

When Should a New Business Start To File Annual Returns In Nigeria?

Usually, a newly incorporated company is given the grace of the first 18 months while Business Name is given 12 months before filing a return.

What this means is that a company that was incorporated in January 2020 will have to start filing beginning from July 2021.

Although, the older companies are expected to file their return not more than 42 days after its Annual General Meeting.

Consequences of Failing To file annual returns

Three things will happen if you fail to file annual returns with the Corporate Affairs Commission (CAC):

1) Your company may be delisted if you failed to do so for several years

2) You will pay a fine if you want to reactivate your company name which will be more than the actual return

3) You will find it difficult to apply for a government contract or government credit facility. Now that you know the importance of filing annual returns of your company, see below what you need to get it done

Key Requirements for Filing of Company Annual Returns

A photocopy of your Business Certificate

A copy of the Company’s CAC Form 7.

A photocopy of the Memorandum of Association

Before the commission went digital, applicants would have to download CAC Form 10 or obtain it at any of their branch offices, but the online issue resolution has invalidated this method, as such you don’t need to go for an assessment at CAC office any longer. All you need are the requirements and an accredited agent.

Take away

1) Filing of annual returns doesn’t only save you the yearly penalties by CAC, it also shows that you are law-abiding

2) It will also give you an edge when accessing government loan

3) Annual returns is completely different from tax payment.