MISCONCEPTION ABOUT FILING OF ANNUAL RETURN WITH CAC

There is a trending misconception about the filing of annual returns with the Corporate Affairs Commission. This misconception is borne out of the literal meaning associated with the word “return”.  Some business owners, directors and relevant stakeholders believe that annual return is a form of return of part of the turnover or profits made by the business . To some others, they believe that annual returns should not be filed when a company or business name has not been in business or has not been a going-concern. These beliefs are absolutely wrong. So many Corporate attorneys must have experienced these perspectives or similar perspective from their clients. 

Meanwhile, a consideration of the provisions of Chapter 16 of the Company and Allied Matters Act, 2020 would reveal that annual returns are only a means of updating the Commission of the activities of the company for a particular financial year. A means of submitting the applicable documents as provided by law to the Commission and not a means of returning a part of the company’s profit to the Commission. In practice, filing of an annual return with CAC mostly requires the filing of the relevant forms shown below and filing financial statements for the financial years stating the particulars of turnover and net assets. Meanwhile, business names and small companies are only expected to fill in particulars of turnover and net assets as business names and small companies are exempted from filing financial statements.

Find below, a sample of Annual Return form from CAC portal

Annual Returns – Form

Financial commitment 

The financial commitment that a company is required to incur in the process of filing annual return is the filing fees. That is, N5,000 for companies, and N3,000 for business names. Meanwhile, where an annual return is being outside the time it was supposed to be filed, an additional penalty fee of N5,000 is incurred. It is important to note that annual returns can only be done through a CAC accredited agent, who may charge a fee for his or her services. Furthermore, only legal practitioners, chartered accountant or chartered secretary are eligible to apply to be CAC accredited agent.

See also: FILING OF ANNUAL RETURN

Consequently, the fact that a company has not made any profit or has no turn over should not be a reason why the company or business should not file annual returns. If no turnover, the company should clearly state so in the annual return, and so also the assets. The important thing is that the company or business is stating the financial position of the company and not making a false statement.

An example of annual returns forms is attached below:

This article was written by N. G. Usie, Esq

(Legal Practitioner and CAC Accredited Agent)

Phone Number: +2348034893231

Email: ngusielawfirm@gmail.com