By Uchechi Ezenyirioha

A healthy amount of financial prudence is required of corporate organizations in Nigeria. The practice of this includes, ensuring compliance with Accounting records and financial statements and making necessary returns to regulatory authorities one of which is the Filling of Annual returns.

DEFINITION 

An annual return is a mandatory requirement every enterprise, private limited company, or incorporated trustees in Nigeria must fulfil at least once in every year by making and delivering to the Corporate Affairs Commission (CAC) a return in the prescribed form containing the specified matters relating to the organization in accordance to the provisions of the Companies and Allied Matters Act (CAMA). It is a statutory obligation to confirm that the corporate organisation is a going concern and a means to regularly update their records at the CAC registry.^[1] A very vital importance is that filing of the annual return by a company helps to notify the CAC on the current situation of the Organization, in terms of Membership, address, financial activities and other compliances within a financial year.

THE LAW ON FILING ANNUAL RETURNS

The Companies and Allied matters Act provides for the mandatory requirement of filing annual returns by every corporate organisation registered in Nigeria. Section 370-378 of the Companies and Allied Matters Act (CAMA) provides for the payment of the annual returns and punishments.

The Law provides thus:

Every company shall, once at least in every year, make and deliver to the Commission an annual return in the form.^[2]

Section 55 of Companies Income Tax Act specifically makes it clear that ALL companies, registered with the CAC must file returns irrespective of tax exemptions conferred on their income. This helps to encourage transparency, accountability and to keep record of all functioning organisations, operating within the country.

FILING OF ANNUAL RETURNS

When is annual return due?

As the name implies, an annual return must be made every calendar year (i.e. annually). The obligation to file commences after 18 months of incorporation and must be completed within 42 days after the Annual General Meeting for the year^[3]. Once this obligation arises, it subsists even after a conversion, re-registration and change of name. The returns is filed in a prescribed form with accompanying documents at the Corporate Affairs Commission.

In practice this means that organisations file annual returns not earlier than 30th June or later than 31st December every year except the year the organisation was incorporated^[4]. 

COMPLIANCE REQUIREMENTS FOR FILING ANNUAL RETURNS

CAC FORMS^[5]

FORM CAC 10: Annual Return for a small company

FORM CAC 10 A: Annual Return for a company having shares other than a small company^[6].

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 Trustee.

FORM CAC/BN/7: Annual Return for Business Name.

For Business Name^[7]:

• A copy of the Business registration certificate
• A copy of the CAC form BN 1
• Download FORM CAC/BN/7
• Fill the form properly
• The annual return shall be signed by the proprietors, and where a company is a proprietor, by a director and secretary of the company
• Submit the completed form for verification and assessment
• Pay the required annual returns fee to the authorised bank
• Keep receipt/teller as evidence of payment
• An acknowledgement will be issued by the CAC after filing and processing is completed

For Companies^[8]:

• A copy of the Company’s Certificate of Incorporation
• A copy of the Company’s Form CAC 1.1
• The Company’s Audited Statement of Accounts^[9]. In practice, where the company has not commenced business activities, the annual returns form is accompanied by a Statement of Affairs in lieu of the Audited Annual Account laid to the Members at the general meeting.^[10]
• Download either form FORM CAC 10 or FORM CAC 10A as the case implies.
• Fill the form properly and sign as indicated on the form
• Attached your Company’s Statement of Affairs or Audited Statement of Accounts duly signed by the Director and Company’s Secretary.
• Submit the completed form for verification and assessment
• Pay the required fee to the authorised bank
• Keep receipt/teller as evidence of payment
• An acknowledgement will be issued by the CAC after filing and processing is completed

For Incorporated Trustees^[11]:

• Copy of Certificate of Incorporation
• Copy of form CAC/IT1
• Completion of annual returns form CAC/ IT4
• An audited financial statement signed by a chartered accountant and two trustees of the organisation or a statement of affairs, in cases where the organisation is yet to commence operation Submission of completed documentation.^[12]
• Payment of filing fees
• An acknowledgement will be issued by the CAC after filing and processing is completed

FEES

DOCUMENT TO BE ANNEXED TO FILING OF ANNUAL RETURN

In the process of delivering an annual return to the CAC, by virtue of Section 375(1)(a)(b), certain documents are to be annexed to the annual return filing^[14] and these documents include the followings:

1. A Written copy, certified both by a director and by the secretary of the company to be a true copy, every balance sheet and profit and loss account laid before the company in general meeting held in the year to which the returns relate (including every document required by law to be annexed to the balance sheet); and
2. A copy, certified as aforesaid, of the report of the auditors on, and of the report of the directors accompanying each balance sheet.
3. Other documents evidencing the payment of all necessary fees or dues may also be annexed.

BENEFITS OF FILING ANNUAL RETURNS^[15]

1. Compliance will aid the maintenance of good organisational structures in the organization as it encourages a culture of record keeping and 
2. It puts compliant organizations on good standing with the Commission 
3. Accurate and updated records of said organisations will be accessible to the commission and for any due diligence being conducted which gives room for transparency and accountability.
4. Filing annual returns with the Corporate Affairs Commission when due helps to keep the organisation’s name on the commission’s register, saves time in situations where an organisation needs a post-incorporation service or documents from the commission and also prevents organisations from payment of penalties that apply for late filing of annual returns.

FAILURE TO FILE ANNUAL RETURNS

a.     PENALTY

Failure to file annual return by a corporate body may attract various consequences, which includes the payment of the default fees by the defaulting company^[16].

b.    AN OFFENCE

By virtue of section 378 of CAMA If a company required to comply with any of the provisions of sections 370 to 376 (filing of annual returns) of the Act fails to do so, the company and every director or officer of the company who is in default shall be guilty of an offence and liable to a fine.

c.     POST- INCORPORATION FILING

An essential requirement for any Post Incorporation filing is an Up-to-date filing of Annual returns. Any post-incorporation filing at the Commission by the company in default may not be processed i.e. when a company goes to the CAC to deal with any post incorporation matter, the commission may not give any audience to such defaulting company until the annual return of such company has been duly filed^[18].

d.    DELISTING OF A DEFUNCT COMPANY

By virtue of section 525 of CAMA, Where the Commission has reasonable cause to believe that a company is not carrying on business or in operation, it may treat the company as a defunct company and strike the company’s name off the register of companies.

CONCLUSION

Annual returns are an essential requirement of any corporate organisation in Nigeria. Failure to file will result in unavoidable sanctions. Other that it being a mandatory requirement of the Law it also aids in good corporate governance as it demonstrates accountability and transparency in a compliant organisation.

^[1] C.S. Obuanya –Essentials of Corporate Law Practice in Nigeria page 439

^[2] Section 370 of Companies and Allied Matters Act, 2004 (as amended)

^[3] See: Section 213, 370 and 374 of Companies and Allied Matters Act, 2004 (as amended)

^[4] https://nnngo.org/filing-of-annual-returns-march-2019/ accessed 10.04.2020 12pm

^[5] These forms may be downloaded free of charge on the Corporate Affairs Commission website at: https://www.cac.gov.ng/?s=annual+returns+

^[6] By virtue of section 351 of the Companies and Allied Matters Act, 2004 (as amended), a company qualifies as a small company in a year if for that year the following conditions are satisfied:

1. It is a private company having a share capital;
2. The amount of its turnover for that year is not more than n2 million or such amount as may be fixed by the corporate affairs commission;
3. Its net assets value is not more than n1 million or such amount as may be fixed by the corporate affairs commission;
4. None of its members is an alien;
5. None of its members is a government or a government corporation or agency or its nominee; and
6. The directors between them hold not less than 51 per cent of its equity share capital.

^[7] https://ta-ng.com/2/procedure-for-filing-annual-returns-in-nigeria/ accessed 12.04.2020 1pm

^[8] Ibid

^[9] You need the service of a licensed practising chartered accountant for this.

^[10] C.S. Obuanya –Essentials of Corporate Law Practice in Nigeria page 440

^[11] https://618bees.com/article/255-do-incorporated-trustees-need-to-file-annual-returns accessed 12.04.2020 12:30pm

^[12] https://nnngo.org/filing-of-annual-returns-march-2019/  accessed 13.04.2020 3:15pm

^[13] https://sidebrief.com/filing-annual-returns/ accessed 14.04.2020 10am

^[14] With the exception of Small companies and Unlimited companies 

^[15] https://nnngo.org/filing-of-annual-returns-march-2019/ accessed 13.04.2020 3:15pm

^[16] Section 378 of Companies and Allied Matters Act, 2004 (as amended)

^[17] https://sidebrief.com/filing-annual-returns/ accessed 14.04.2020 10am

^[18] https://www.mondaq.com/Nigeria/CorporateCommercial-Law/758380/Guidelines-For-Filing-Annual-Returns-In-Nigeria   accessed 14.04.2020 11:22am