The Concept of filing Annual Returns to CAC by all registered Business Names, Limited Liability Companies and Incorporated Trustees is actually a very simple concept but many proprietors and directors do not understand it, leading to high level of non-compliance.
This write-up will explain the principles of filing Annual Returns to CAC in a very simple language to enable anybody that reads it to understand the concept
Purpose of Filing Annual Returns
The main purpose of filing Annual Returns to CAC after registration is to enable CAC to know the organisations that are still in operation after they are registered. Without filing returns every year, CAC would have no way of knowing whether an organisations that it registered is still in operation or not.
Secondly, if Annual Returns are not filed, CAC would not be able to issue Report of Good Standing, which is a very inportant independent information document to Investors, Creditors, Intending Shareholders, and other parties interested in an organisation. Information provided in Annual Returns enable CAC to provide this very important document to those who need it.
Requirement for Filing Annual Returns
Annual Return is not all about paying money to CAC. As a matter of fact, the money paid to CAC while filing Annual Return is very small. The following information are provided while filing Annual Returns:
x Business Information
x General Nature of Business
x Principal Place of Business
x Branch Address(s), (if any)
x Annual Return Details (Total Turnover and Net Assets)
x Authentication (person providing the information)
x Presented for Filing by (the agent presenting the information)
You will see from the above that the information required are pretty straight forward. The only Annual Return details involved are your yearly Turnover and Net Assets. It does not require the submission of a full audited account (for small companies). This is the major fear of most small companies, that they will be required to engage a professional to prepare an audited account for them before they can submit Annual Returns to CAC. This is not true.
We have articles on very simple ways to calculate your yearly turnover and net assets which you can read from our website if you subscribe to our newsletter.
What Happens if You Don't File Annual Returns?
It is imortant to note that CAC gives you a grace period of 18 months after registration before you start filing Annual Returns.
However, when you are due to start filing Annual Returns, CAC expects you to file them or you face sanctions. The sanctions are many and come in different forms. Some of them are as follows:
x. If you fail to file, even one, Annual Return past the due date, your organisation will be listed as Inactive. Inactive means that though you are still a registered organisation, in the eyes of CAC, you are no more in operation.
x. Annual Returns of previous years do not go away. Rather, they attract 100% or more penalties. Therefore, if you fail to submit your Annual Return past the due date, you will still submit it in future with the required fee and a penalty fee, equal to or more than 100% of the required fee. This means that the earlier you submit your Annual Returns the better for you.
x. If you want to do any post registration/ incorporation filing like; Change of Name or Address, Adjustment of Share Holding, Change of Directors, opening a new bank account, etc., you will be required to clear the backlog of your Annual Retuns and return your company to Active status before you can do any of that. That such times, the financial burden will be so much that you will regret not filing them when they were due.
x. If you owe Annual Returns for up to 10 years, the law allows CAC to delist your organisation and cancel the Certificate of Registration/ Incorporation. Your company will then become an unregistered company and another person can apply for and be given the approval to register your organisation's name. Recently, CAC published the names of 94,000 organisations all over the country which they intend to delist from their database, if they do not clear their Annual Return submission during the grace period.
x. There are other sanctions like blocking the bank accounts of Inactive organisations, which CAC has not started implementing but of which they can start implementing anytime, at their own convinience.
How Do You Submit Your Annual Returns?
Annual Returns are submitted either through i. CAC offices nationwide ii. Through Accredited Agents and iii. Through other agents who have been given access to Accredited Agent Portals by the accredited agents themselves.
Gizmo Digital Support Services can help you to submit your Annual Returns if you click the button below and provide the necessary information required.
How Much Do You Pay with Your Annual Return Filing?
If you look carefully you will see that I have avoided mentioning financial figures. This is on purpose. When an Agent helps you to submit your Annual Returns, he/she adds his own fees because he/she needs to run his/her own office. However, being a competitive service, an agent knows that if he/she charges too much, his/her clients will migrate to other agents. Secondly, how much you pay depends on the number of years that you are owing.
Conclusion
When you submit your Annual Returns as at when due, the financial requirements will be very small and easy to bear. You will not be guessing what your Turnover and Net Assets for several past years were and more importantly your company will always remain Active on CAC database.
Remember, your unsubmitted Annual Returns will not go away, rather they will multiply with penalty fees and other unpleasant conditions. It is wise to submit your Annual Returns to CAC promptly.
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