The Corporate Affairs Commission (CAC) of Nigeria has threatened that 50,000 companies could be removed from its register very soon for failing to file their annual returns. Mr Bello Mahmud, the Registrar General of the Commission, revealed that defaulters would face this punishment after due processes of notifications have been followed as prescribed by law.
The annual return is a requirement of the Companies and Allied Matters Act (CAMA)- Section 370 to 378, that must be fulfilled by all registered firms. It requires every company to prepare and file returns at the CAC every year in the CAC 10 form obtainable at the commission. Defaulters of this directive risk the punishment from the commission as contained in the CAMA and penalties sub-section of the CAC site (shown below).
The commission also added a fine of N100 per day to the penalty listed above.
Since its inception, the CAC has delisted 9, 347 companies for failure of filing their annual reports. For decades, many firms have defaulted in this requirement. Counting the gains of firms’ compliance to the country, public affairs analyst, in 2014 Dr. Boniface Ahunwan noted, it is not only a mechanism to generate revenue for government, but a veritable way of ascertaining whether a registered business is active or dormant.
Out of over 1.2 million registered companies with the CAC, 623,659 companies representing 49%, have never complied to the directive of the commission since their registration, said Mahmud. Although the commission noted that it understands that erring firms must have been affected by economic strains of the country, the body has devised measures to ensure compliance. Collaborating the means of enforcement is the organization of enlightening campaigns and the arrangement of revenue agents to advise defaulting companies.
He further said that partial erring firms will be pardoned on conditions of denial of services of the commission until annual reports are updated. However, for non-compliant ones, they will be de registered after all procedures have been satisfied.
The delisted firms would be seen as non-existent by the commission and the Federal Government. The firms can choose to file a suit against the commission, but will only be relisted when it has fully met all the requirements of the CAC by updating its records and paying the penalty fees before returning to business.
There are benefits attached to compliance by companies. As highlighted by a corporate commercial legal practitioner, it helps to keep an entity’s name in CAC register. Compliance allows a company to avoid being penalized and incurring extra spending because of penalty fees.
Filing an up-to-date annual return can also be a ticket for many private and public establishments bid for contracts most especially government contracts. It also saves time in case of a pressing need to obtain a document or process any other application at the CAC.