Filing Annual Returns in Nigeria: All You Need to Know
Campfires Law Firm | 8th August, 2023
Campfires Law Firm | 8th August, 2023
Both business and non-profit organisations1 may have different organisational structures and financial objectives. However, they share a common aspect, which is generating income through the services or products they offer, or causes they represent. Whether the goal is to reinvest the income back into the organisation, benefit the owners, or achieve specific targets, the truth remains that these businesses record financial returns regularly and these returns are often accounted annually.
An annual return represents the total earnings of an organisation over a year, considering all expenses incurred. It reflects the return on investments, objects, or activities during a specific financial year. The primary purpose for assessing and preparing annual returns is to assess and evaluate the organisation’s performance over a 12-month period.
Annual Returns in Nigeria
In Nigeria, every incorporated organisation is obligated to submit annual returns every 12 months to the Corporate Affairs Commission (CAC or “the Commission”). However, newly-incorporated organisations have the flexibility to file their returns after 18 months from the date of incorporation.2
Limited Partnerships (LPs) and Limited Liability Partnerships (LLPs) must pay their annual returns within 60 days from the end of the previous financial year.3 On the other hand, Business Names, Companies, and Incorporated Trustees must file their annual returns for the previous year by June 30 of the following year.4 If an organisation fails to meet the June 30 deadline, they may still file their returns, but they will be subject to a late filing penalty. The penalty varies depending on the type of organisation. For example, Business Names and Small Companies have to pay a penalty of N5,000 for each year of default, while Incorporated Trustees and LLPs must pay N10,000 for each year of default.5 Regardless of the late filing penalty, companies must file their annual return within 42 days of the company’s general meeting.6
Why File Annual Returns?
Filing annual return, and on time, has always been of significant importance. This importance has witnessed enormous increase now that an incorporated organisation must have its annual returns filed and up to date to have any post-incorporation requests or needs approved. Examples of such requests include changing the organisation’s name, address, object, increasing share capital, adding or removing shareholders, directors, trustees, or proprietors, editing details of existing stakeholders, obtaining letter of good standing.
Another crucial reason to file annual returns is to ensure the company’s name remains in the Register of Companies with the Commission and to maintain active status. Failure to file annual returns for 10 consecutive years could lead to the company’s name being removed from the register of companies.7 By filing annual returns, not only does the Commission stay informed about the organisation’s continuous existence, but it also instills confidence in business partners or sponsors who conduct due diligence, knowing that the organisation complies with regulatory requirements.
Requirements to File Annual Returns
The filing requirements for annual returns vary among incorporated organisations. Nevertheless, here is a comprehensive checklist that covers all possible scenarios and organisations:
- Name, registration number, address and object of the organisation.
- The share capital of the organisation, the number of shareholders, and the shareholding of each shareholder (for a company).
- The full name, physical/service address, phone number, e-mail address, gender, date of birth, occupation of each shareholder, director, proprietor, trustee of the organisation.
- Signature, means of identification, and identification number of each shareholder, director, proprietor, trustee of the organisation.
- The financial year start and financial year end (the financial year) of the annual returns in perspective, usually from January 1 to December 31.
- The turnover and the net asset (profit) of the organisation within the financial year in perspective.
Recommendation
Including the assistance of a skilled corporate lawyer or corporate law firm in your checklist for filing annual returns is just as crucial as ensuring timely filing. Make sure to prioritise these aspects during the annual returns filing process.
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END NOTES
- These include Business Names, Companies, Incorporated Trustees, Limited Liability Partnerships, Limited Partnerships.
- Section 237(1)(a) of the Companies and Allied Matters Act, 2020.
- Section 773(1) of the Companies and Allied Matters Act, 2020.
- Sections 417, 822(1), and 848(1) of the Companies and Allied Matters Act, 2020.
- Fifteenth Schedule to the Companies Regulations, 2021.
- Sections 421(1) of the Companies and Allied Matters Act, 2020. However, on the Company Registration Portal (CRP) of the Commission, the requirement is to submit the annual return within 14 days of the company’s general meeting. This inconsistency needs to be addressed.
- Section 425(3), and 692(3) and (4) of the Companies and Allied Matters Act, 2020.
| Contributor: UJONG OKPA
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