The Corporate Affairs Commission (“CAC”) is the only Nigerian agency established for the regulation and management of business entities registered in Nigeria. The popular notion is that the CAC is only interested in the regulation of companies as it has not shown much interest in ensuring the viability of all other business entities under its purview. Business names (“BN”) and incorporated trustees (“IT”) are the only other entities regulated by the CAC asides from limited companies.
The CAC is responsible for enforcing compliance with the requirement for both forms of businesses to file their annual returns at the end of every accounting year. For a BN, Section 587 of the Companies and Allied Matters Act (CAMA) provides that it must file its annual returns for the preceding year not later than the 30th day of June of every year it does business. This requirement excludes the year in which it was registered. For an IT, under Section 607 of the CAMA, its annual returns must be filed between 30th June and 31st December of the year, excluding the year in which it was incorporated. A late filing of annual returns by a BN or an IT attracts a penalty of N2,500 and N5000 respectively. In the case of an IT, a further daily penalty of N5 for every day of default is payable by each trustee until the annual returns are filed. An IT is also required to file its audited accounts with its annual returns form.
The CAC has power to deregister entities which have defaulted in the filing of annual returns for an unduly long period. Evidence of having filed up to date annual returns attracts potential investors and confirms compliance with regulatory requirements. Proof of the filing of annual returns is also a usual criterion for most contract bids in public or private establishments.
Other than the penalties payable by a defaulting entity, failure to file up to date annual returns results in the CAC suspending any subsequent filings by the entity; such as a change in registered address, business object, proprietor (or trustee) or name. Given the need for all entities to file a notification of such changes with the CAC especially for transactional purposes such as opening of bank accounts, BNs and ITs are advised to adhere strictly to the requirement for filing annual returns.
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