On CAC Annual Returns Payable by Registered Corporate Entities
The annual returns are a mandatory requirement for every registered corporate entity, whether or not the entity has commenced operations, and is payable to the Corporate Affairs Commission (CAC). It is not the same as annual tax returns.
It is important to understand that the CAC annual return is not a financial document that reflects a company’s profits for the year. Rather, it’s a yearly statement required by the Corporate Affairs Commission (CAC) that keeps them updated about a business’s activities, composition, and financial position.
Failure to file can result in penalties and undesirable consequences. So, it is essential for registered corporate entities to file their annual returns on time and provide accurate and updated information to the CAC
Filing of the CAC annual returns demonstrates to the regulatory commission that the company is still active and conducting business, and keeps the company’s registration status up-to-date while avoiding penalties or legal consequences.
Default in paying at the appropriate time attracts annual default fees.
Furthermore, the annual returns must be up to date for an entity to expedite any post-incorporation activities at the Corporate Affairs Commission (CAC), examples of which include amendment of objectives, adding or changing of directors or trustees, and the modification of initially registered details.
There are annual deadlines for the payment of the annual returns depending on the type of the registered corporate entity.
A 10-year consecutive payment default can put the entity at risk of being delisted/ de-registered by the Corporate Affairs Commission (CAC).
When an entity’s annual returns are not up to date, its online status on the portal of the Corporate Affairs Commission is set to “inactive.” After updating the annual returns, this must be formally communicated to the Corporate Affairs Commission (CAC) for a change of the inactive status to active.
BUSINESS SCENARIO
Lamp Tea Enterprise was registered in March 2006 as a Business Name, but has never filed an annual return.
The principal of the business decides to file her returns in March 2023.
Year 2006 is officially exempted, being the year of registration.
Means she’ll need to file years 2007 to 2021, 15 years in total.
If she had filed each year’s returns at the appropriate time, the annual returns payable per year would have been N3,000 (Rates as of March 2023).
N3,000 * 15
N45,000
But due to this late filing, a penalty of N5,000 in addition to the statutory N3,000 applies to each year from 2007 up to 2021 (i.e. N8,000 payable per year with the exception of the year of registration.)
Then N3,000 is payable for 2022 (i.e. no penalty applies to year 2022 because it is being filed before June 30 2023, the deadline.)
Therefore, the total cost for filing the annual returns for the business are is follows:
(N8,000 * 14) + N3000 (for 2022)
N115,000
This translates to an avoidable N70,000 in excess being paid for the 14 years of non-compliance or default.
EXTRA CHARGES
The following constitute the payable extra fees.
- The cost of transactions payable to the payment platform which by current rates stand at about N200 per transaction.
- The professional fees payable to CAC-accredited agents (lawyers or accountants) charged according to their discretion.
It’s important to note that the annual statutory fees charged by the Corporate Affairs Commission are higher for Limited Liability Companies.
Statutory fees for LLC is N5000
Penalty fees for each year is N5000 if it is a small company ( A small company is a one that the annual turnover is 25 million naira and less)
Penalty fees for each year is N10000 if it is “a big company,” i.e. annual turnover is more than 25 million naira.
CAC-accredited agents may also charge professional service fees which differ from agent to agent according to the discretion of each individual.