Annual Returns: Meaning, contents, when needed & more

The Corporate Affairs Commission (CAC) mandates all registered organizations, from incorporated trustees to business names and companies to file annual returns with it. The essence of filing annual returns is to keep track of the activities of the organization as well as to check if the organization is still in operation (a going concern).

There are over a million registered organizations in Nigeria since 1960, and the possibility of the CAC tracking all organisations may be a task that’s too difficult to pull off. The introduction of the annual returns allows the CAC to track the activities of organizations across Nigeria. The same standard is practised in most African nations and the world.

What are annual returns?

Annual returns are documents detailing the functionality and the changes, if any, that has taken place in a company in the past year sent from a company to the CAC.

The annual return is accompanied by, among others, the balance sheet of the company, the financial statement and the register of members of the company

When should the annual returns be filed?

The Companies and Allied Matters Act 2020 (CAMA 2020) provides that the annual returns be filed at least once every year following the form set by the CAMA 2020. the forms for filing annual returns are as follows:

a. Form CAC 10: Annual return for a small company;

b. Form CAC 10 A: Annual return for a non-small company;

c. Form CAC 10 B: Annual return for companies limited by guarantees;

d. Form 10 C: Annual Report of exempted foreign companies;

e. Form CAC/IT 4: Annual Return for incorporated trustee; and

f. Form CAC/BN/7: Annual Return for a Business name.

Companies that are newly incorporated, need not make an annual return for the year of incorporation nor in the year following the registration. 

Companies must also know that the annual return must be filed within 42 days after the annual general meeting of the company for that year. 

Contents of the annual returns

The contents of the annual returns are as stated on the annual return forms to be filled by companies and returned to the CAC through the CAC portal. Each form for annual returns contains varying requirements needed by the CAC, nonetheless, we shall state the requirements for non-small companies. 

1. The registered office address

The registered office address of the company is significant to making the annual returns. CAC would ordinarily want to inquire if the company still operates a business at the office address registered at incorporation or a branch address.

2. The Registers of the company

The CAC would also inquire where the company’s registers are kept. The CAMA provides that the company’s registers should be kept at the registered or branch offices of the company.

3. The share capital of the company

The amount of the share capital of the company, the number of shares to which it is divided as well as the allocation of the shares must be stated in the annual returns. This allows CAC to keep track of the company’s changes in ownership structure.

Other items the CAC would require, in relation to, a company’s shares are the number of shares taken from the company up-till-date, the amount called up on the share capital each year, the total amount unpaid and others. 

4. A list of members of the company

The CAC requires a separate list containing the names and addresses of the members of the company as of 14 days after the annual general meeting for which the annual returns are being made. The number of shares held by each member must also be indicated. 

Signing and delivery of the annual return

The annual return is signed by two directors or a director and the secretary of the company. The annual return must be accompanied by the following:

a. The audited financial statement by the directors of the company;

b. A copy of the company’s financial statements including balance sheet, five years financial summary and others;

c. A private limited liability company shall also send a statement with the annual return of the company indicating that the company has never called the public to subscribe to its shares. 

Amending an annual return

After the annual returns were placed for filing in the CAC portal, an error can be identified in the return. When this occurs, the CAC would not allow a withdrawal of the filed annual return, to change this error, you’d have to file an amended annual return to the CAC.

When doing this, it must be clearly stated that the annual return is an amendment to the original annual return earlier made. 

Default in filing annual returns

The CAMA 2020 provides consequences for failure to file annual returns to the CAC. The consequences range from fines to an actual 3 non-recognition of active status for companies and finally an outright removal or deregistration of the company. 

The CAMA 2020 also imposes a default fine on all the directors and officers of the company. It is not a defence that the company or the director responsible for filing annual returns skipped or honestly forgot to file, the CAMA 2020 expressly provides that on the lapse of 42 days after the annual general meeting, the penalty shall be met, even if the mistake were an honest one. This reason makes the annual return filing a religious one that must be obeyed by the book.

Court orders on annual returns

The court can order that a default be made good by the company without imposing a fine. This is possible upon an application to the court by a member, or creditor to the company stating the default was caused by an innocent mistake.

When the court makes this order, the court can either impose a fine, thereby rejecting the application, or may accept the application and order the filing to be made at a specified time to the CAC.

Conclusion

Companies’ affairs can be a bit hectic most times with corporations trying to beat the odds and take leverage on the everyday changing market. The CAC always wants to remain in the loop on any change made to the structure and the functionalities of a business. To keep up with the fast-changing ways of companies, annual returns have become a suited option for the CAC. 

This article offered all the information there is to know on annual returns in Nigeria, when they should be made, their contents, and others.

Frequently Asked Questions (FAQs)

What is a small company?

A small company is the following:

1. A private limited liability company;
2. It has an annual turnover of no more than 2 million Naira;
3. It has a net asset value of not more than 1 million Naira;
4. None of its members is a foreigner, the government or an agency to the government; and
5. The directors of the company held not less than 51% of the company.

When do business names file annual returns?

Business names file annually not later than 30 June every year.

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Richard Okoroafor

Richard Okoroafor

Richard is a brilliant legal content writer who doubles as a finance lawyer. He brings his wealth of legal knowledge in corporate commercial transactions to bear, offering the best value that exceeds expectations.

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