We’ve heard threats from Corporate Affairs Commission to de-register companies in default of Annual Returns Fillings – but, why should you even bother in the first place and how should you do it? Here’s why and how you should file Annual Returns at the Corporate Affairs Commission (CAC) every year.
Annual return is a mandatory statutory requirement for every registered business entity or organisation. Whether you are running an enterprise, Limited liability Company, or incorporated trustee, you are required to file annual returns every year with the CAC. The law requires every company or registered corporate entity to file returns annually in the prescribed form provided not later than 18 months after incorporation. The essence of this exercise is to keep the records of the company up to date and to show that the company is a going concern i.e. not dormant.
Changes in the company such as address, share capital, directors etc. within the year in review as well as the financial activities of the company are some of the information captured in the annual returns form. Where the CAC has reasonable cause to believe that a company is not in operation, the law empowers the Commission to strike off the name of such company from the register of companies after following due process of inquiry as to the status of the company. In reality, not every company the Commission considers dormant is actually dormant but the commission relies on one major criterion for this exercise which is the failure to file annual returns.
Procedure for filing annual returns at CAC
- Completion of annual returns form [CAC 10]
- Payment of prescribed fee for filing; based on category of entity
- Provision of statement of affairs if company is yet to commence business or audited financial statement signed by a chartered accountant and two directors of the company. (Not required for an enterprise).
- An acknowledgement will be issued by the CAC after filing and processing.
Benefits of filing annual returns
- Helps to keep the company or entity’s name on the register at CAC. Occasionally, the CAC carries out a de-listing exercise and the failure to file annual returns is a signal that the company may not be in operation. As such it could be de-listed from the register.
- Filing annual returns when due will prevent businesses from payment of penalties that apply for late filing of annual returns
- It saves time especially in case of an urgent need to obtain a document or process any other application at the CAC. Where annual returns are outstanding, the CAC will not process any application by a registered entity unless the annual returns have been filed up to date and penalties, if any, paid up. Thus, no activity will be permitted on the record of any entity that fails to comply with annual returns. For e.g. an application to obtain certified copies of documents or processing a change of directors will not be processed till annual returns are dealt with.
- Up-to-date annual return filing is usually a criterion for most contract bids in public or private establishments.
If we left anything out or you know more benefits, you can add in the comments – let the conversation continue. Note: You can login with either your Facebook , Twitter or Disqus account to comment.
*Please note that adequate professional guidance should be sought as this does not constitute legal advice and is solely for enlightenment purposes.