CORPORATE AFFAIRS COMMISSION TO STRIKE OFF 100,000 COMPANY NAMES FROM ITS REGISTER FOR FAILURE TO FILE ANNUAL RETURNS
The Corporate Affairs Commission has made public its plan to remove the names of one hundred thousand companies that have failed to file their annual returns in the last 10 years. This announcement was made during a training on the Use of the Beneficial Ownership Register (BOR) in Lagos by the Registrar-General of the CAC, Alhaji Garba Abubakar. Hence the companies that are contained in the compiled list face possible de-registration from the register for their continuous default.
What are Annual Returns?
Generally, annual returns are documents containing the financial reports of a company or a corporate body that are filed with tax authorities to ascertain the amount of tax payable to the government for a specific tax year.
In Nigeria, they are yearly reports that are made by companies and corporate bodies to the CAC, to keep them updated about a business’ activities, structure, and financial stance. This report gives the CAC information on the current activities of the company, and determines the amount payable by the company. Failure to file this annual report and pay the required fees attracts legal penalties and default fees. Where a default to this effect is continuous for 10 years, the company faces the risk of being delisted.
The Essence Annual Returns
The importance of annual returns cannot be overemphasized. They play a key role in the evaluation of the financial performance of a company, and give the relevant regulatory bodies and investors an insight into the fiscal activities of the company. Below are the importance of Annual returns:
1. Financial Performance Evaluation:
Annual returns give an overview of a company’s fiscal performance within the year, including specific information on revenue, expenses, profits, and losses. It also assists the company compare its present performance with past performance and identify strengths and weaknesses.
2. Investment Decision Making:
The information contained in annual returns provide an insight into the financial strength of the company to aid investors in making the right decisions on where to allocate their funds to yield the best results. These returns are usually compared with the different assets of the company, and investment options to better shape investment decisions.
3. Compliance With legal Requirements:
Annual returns are among the legal requirements of the CAC for companies incorporated in Nigeria. Compliance with these requirements, keeps the company in good standing with the relevant regulatory bodies, and enables the company to evade legal penalties or possible dissolution.
4. Transparency and Accountability:
Publishing annual returns enhances the culture of accountability and transparency among the human components of a company. It keeps the members, creditors and other stakeholders in the know of the financial affairs and activities of the company, by holding the management of the company accountable for their actions.
5. Creditworthiness:
Banks and other financial institutions often use a company’s annual returns to access its creditworthiness upon receipt of loan applications. A company with positive annual returns has a higher chance of loan approval from these institutions.
6. Assessment Against Competitors:
Annual returns also serve as a yardstick for the assessment of the financial performance of a company against its competitors to assess it market stance and competitiveness.
Conclusion
Annual returns are the yearly financial statements of a company that are filed in compliance with legal requirements. This implies that a failure to submit them attract legal penalties such as default fees and eventual de-registration for continuous default. Hence, they are a must-do for companies and corporate bodies. At In-Charge Solutions Limited, we assist companies to file their annual returns, and other necessary post incorporation processes. Contact us today to avoid being eventually delisted by the CAC.
