What a late CAC annual return costs
The one-off and daily default penalties in CAC's 2021 regulations for companies, business names and incorporated trustees, and how to catch up.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
Most owners discover their CAC filings are behind at an inconvenient moment. A bank asks for a current status report before releasing a facility. A government buyer wants proof the company is in good standing. An investor's lawyer runs a search and finds the last annual return was filed years ago. Suddenly the question is not whether to catch up but what it will cost.
The Corporate Affairs Commission's penalties are set out in a schedule to the Companies Regulations 2021, and they work differently from most tax penalties: a one-off amount plus a charge for every day the default continues. This article sets out the amounts by type of entity, the most serious consequence of long-term non-filing, and a sensible way to bring the records up to date.
The penalty schedule in the Companies Regulations 2021
The Companies and Allied Matters Act, 2020 does not put a naira figure on late annual returns itself. For companies, section 425 leaves the penalty to the Commission, making the company and every director or officer liable to a penalty the Commission prescribes. For business names, section 822(4) makes the owners liable to a penalty and a daily default penalty prescribed in the Commission's regulations.
The figures are in the penalty schedule of the Companies Regulations 2021, which CAC publishes on its portal. The schedule has two columns: a daily default penalty and other, one-off penalties. It lists amounts by type of entity rather than by individual default, so confirm with CAC how it applies them to your late returns. The regulations' cover is dated December 2020, so check for later amendments before relying on the figures below.
Daily default penalties and one-off penalties by entity type
At the time of writing, the schedule sets these amounts:
| Type of entity | Daily default penalty | One-off penalty |
|---|---|---|
| Small company | ₦250 | ₦5,000 |
| Private company other than a small company | ₦500 | ₦10,000 |
| CLG (company without share capital) | ₦500 | ₦10,000 |
| Public company | ₦1,000 | ₦25,000 |
| LLP and LP | ₦500 | ₦10,000 |
| Business name | ₦150 | ₦5,000 |
| Incorporated trustees | ₦500 | ₦10,000 |
The daily figure is the one to watch. A one-off penalty is a fixed cost; a daily default penalty keeps running for as long as the default continues. A return that is a few weeks late and one that is several years late carry the same one-off amount, but very different daily totals.
Whether your company counts as "small" for this purpose depends on the small-company conditions in the Act, which your accountant can confirm.
Business names and incorporated trustees
Business names have their own deadline. Section 822 requires the owner of a registered business name to deliver an annual return not later than 30 June each year, except in the calendar year of registration, with the business's financial statement for the preceding January to December. Miss 30 June and the business-name penalties apply. The full requirement is in business name annual returns by 30 June.
Incorporated trustees, the form many churches, associations and foundations take, sit in the same schedule at a daily default penalty of ₦500 and a one-off penalty of ₦10,000. Voluntary organisations often rely on volunteers to keep up with filings, which is exactly how years can slip by.
Ten years of non-filing and striking off
Money is not the only risk. For companies, section 425(3) of the Act makes failure to file annual returns for 10 consecutive years a ground for striking the company off the register.
A company that has been dormant for a long time, with directors who assumed it no longer mattered, is the typical case. If the company still holds assets, has a bank account or might trade again, being struck off creates far bigger problems than the penalties. The annual return duty itself, with its timing and signatures, is set out in filing your company's CAC annual return.
Catching up: preparing the missing years' accounts
The returns are rarely the hard part of catching up. The financial statements that go with them are. A company files its balance sheet, profit and loss account and notes with each return, and a business name files its January-to-December statement. Each missing year needs its own figures.
Work through it methodically:
- List each year for which no return was filed.
- For each year, establish whether the books exist and are complete.
- Rebuild the missing books from bank statements and source documents, oldest year first.
- Prepare the statements for each year, with your accountant where one is needed.
- File the returns in order and pay the penalties CAC assesses.
Where the books are on Achekam, management accounts show an income statement for any chosen period beside the period before, and a balance sheet at period end, added up from the business's own journals and exportable as PDF or CSV. For a business name, choose 1 January to 31 December for each missing year; for a company, use its own financial year, setting the dates yourself, since the year-to-date preset starts on 1 January.
Keep each year's papers apart. Document Centre is a folder-based store, so a folder per year, holding the bank statements, the prepared statements and the CAC receipts, keeps the catch-up organised and searchable, and any corrected statement saved as a new version keeps the earlier one.
Checking for later changes to the schedule
The figures above come from regulations dated December 2020. Before you budget for a catch-up, check CAC's current schedule, ask whether any relief or amnesty is available at the time, and get the assessed penalty in writing. Then pick the oldest missing year and start there: every day the default continues adds to the daily total.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
