The role of the Corporate Affairs Commission (CAC) in Nigeria in regulating business compliance cannot be overemphasized. The formation and management of businesses are wholly regulated by the CAC which has facilitated the growth and evolution of businesses in Nigeria.
Remarkable reforms and updates has been made to CAC’s policies and regulations which harmonize with Nigeria business and international standards of business. The recent exceptional update made was in 2020 where the Companies and Allied Matters Act (CAMA) was amended.
Another notable reform embraced by the CAC is the digital transformation by introducing the Companies Registration Portal (CAC registration portal). This online platform enables the electronic submission of registration applications, documents, and fee payments. The cost of doing business in Nigeria has greatly deteriorated by embracing this technological innovation.
Business Compliance Meaning
In a general sense, compliance means abiding by a set of rules regulating businesses and companies. For businesses to function legally, they need to comply with CAC regulations, standards, laws, and ethical conduct that apply to the business.
Roles of CAC
1. CAC offers a wide range of educational materials and workshops including guides and tools designed to help entrepreneurs navigate the complex processes involved in starting and running a business. Regular workshops are also organized across the country, providing hands-on opportunities for entrepreneurs to gain practical insights into various aspects of business.
2. The CAC provides valuable support and resources for Nigerian businesses
3. The CAC plays a major role in facilitating business growth in Nigeria. Moreover, the CAC aids businesses in ensuring compliance with necessary regulations, providing guidance on compliance issues, and conducting compliance checks to help businesses stay on the right side of the law.
Business Compliance Documents
The compliance documents for private companies are;
– RC Number: This is the registration number for an incorporated company.
– Memorandum and Articles of Association
– Certificate of Incorporation: Certificate showing that the company is duly incorporated.
– Tax Identification Number: This is a unique identification number issued to taxpayers by the FIRS.
– CAC Status Report: Status of application for registration of a company with CAC.
– You will also need to provide information on at least one director of your business.
– Finally, you will need to identify people who, together, own at least 50% of this business.
For public companies
– Form CAC 1.1: This is the application for registration with the CAC.
– Memorandum and Articles of Association
– RC Number: This is the registration number for an incorporated company.
– Certificate of Incorporation: Certificate showing that the company is duly incorporated.
– Tax Identification Number: This is a unique identification number issued to taxpayers by the FIRS.
– You will also need to provide information on at least two directors of your business.
Documents for Business Name Registration
These are businesses registered with the CAC as Business Names. They have a BN number and are typically sole proprietorship businesses.
Compliance documents are;
– Certificate of Business Name: This is the Certificate showing that the Business Name has been registered with the CAC.
– BN Number: This is the Registration number for the Certificate of Business Name.
– Form CAC BN 1: This is the application for registration of Business Name.
– You will also need to provide the information of at least one owner of the business
Business Compliance Requirements
Upon incorporation and commencement of business in Nigeria, businesses or companies must adhere to specific regulatory requirements with CAC. These obligations includes the following
1. All companies registered in Nigeria are to file their annual returns to the CAC. This is to be achieved within 18 months of incorporation and subsequently on an annual basis. Annual return filing should be accompanied by the Audited Financial Statement/Audited Account of companies for the financial year-end. The deadline for filing annual returns at the CAC is 14 days after the date of the general meeting for the year and in any case, before June of the current year. Failure to file annual returns attracts a penalty of five thousand naira only (₦5,000) for each year of non-compliance depending on whether the company is registered as a small or large company. However, in November 2023, the CAC announced that by April 2024, it would start penalizing companies and their directors for failure to file their annual returns.
2. A person with significant control (PSC), i.e. with 5% interest or more is required to notify the company of its status within 7 days of becoming aware, and the company must in turn notify CAC within one month of receiving the PSC notice.
3. Businesses and companies are directed by CAC to issue all unissued/unallotted shares not later than 31 December 2021. The consequence of non-compliance is that any unissued share capital at the relevant date will not be recognized as forming part of the share capital of the company until it is issued or reduced through the share capital reduction process.
4. Every business and company is required to keep a register of directors’ residential address.
5. Companies and businesses are also advised to review and update their compliance obligations to reflect the changes in CAMA 2020 and Companies Regulations 2021.
Conclusion
As a business owner in Nigeria, it is imperative to understand the role and importance of the CAC for navigating the business landscape and achieving success. The role of CAC though often overlooked, is as critical as the entrepreneurial spirit that fuels the economy.
If the Nigerian marketplace is a bustling bazaar, then the CAC is the vigilant town crier, ensuring order, transparency, and legality.
For more information on business formation and management in Nigeria, you can reach out to us for a free consultation. We also offer legal services in different areas of law ranging from immigration, family dispute and resolution, medical negligence, debt recovery, real estate management, document attestation, and a whole lot of others.
We are eLegal Consultants are ready to journey with you to actualize your dreams. Contact us today.
