The Corporate Affairs Commission (CAC) is the regulatory body responsible for the formation and management of companies in Nigeria. One of the statutory obligations of registered companies with the CAC is the payment of annual returns. This is an important requirement for the compliance and sustainability of businesses in Nigeria.
Annual returns refer to the filing of financial statements and other relevant information of a company with the CAC on an annual basis. It is a mandatory requirement for all registered companies, and failure to comply can lead to penalties or the revocation of the company’s registration. The annual returns must be filed with the CAC within 42 days of the company’s Annual General Meeting (AGM).
The payment of annual returns is crucial for several reasons, some of which include:
1. COMPLIANCE WITH REGULATORY REQUIREMENTS: Payment of annual returns is a regulatory requirement that all registered companies in Nigeria must comply with. Non-compliance can lead to penalties, revocation of the company’s registration, and other legal consequences.
2. PUBLIC RECORD OF COMPANY INFORMATION: Filing annual returns with the CAC ensures that the public has access to the company’s up-to-date information, including its directors, shareholders, financial statements, and other relevant information. This promotes transparency and accountability and helps to build public trust in the company.
3. MAINTENANCE OF THE COMPANY’S LEGAL STATUS: Payment of annual returns is essential to maintain the legal status of the company. A company that fails to file its annual returns for a consecutive period of time may be struck off the register of companies. This can have serious consequences for the company, including the inability to engage in legal transactions, inability to access loans, and other financial support.
4. ACCESS TO FINANCIAL SUPPORT: Companies that comply with regulatory requirements such as payment of annual returns are more likely to have access to financial support, including loans and other forms of financial assistance. This is because compliance with regulatory requirements is an indication of good corporate governance and financial management.
5. TRAVELLING REQUIREMENTS: It is also important to note that Embassies now require companies to present their active company documents as evidence of their legal standing. An “inactive” status could result in Embassies not considering a company as an eligible business for visa applications.
In conclusion, the payment of annual returns to the Corporate Affairs Commission is a legal requirement that is essential for the compliance and sustainability of businesses in Nigeria. It promotes transparency, accountability, and good corporate governance, and helps to maintain the legal status of the company. Companies should ensure that they file their annual returns on time to avoid penalties and other legal consequences. It is also important to note that an “inactive” status could result in Embassies not considering a company as an eligible business for visa applications, tenders, or other services.
Therefore, Nigerian companies should prioritize payment of annual returns as part of their corporate compliance obligations. This will help to ensure the continued growth and success of their businesses.
Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.
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Tolulope Oguntade Regville Associates info@regville.com 08065111667