Daily Law Tips (Tip 758) by Onyekachi Umah, Esq., LL.M,
ACIArb(UK)
![image](/2021/03/sjk.jpg")
Introduction:
One of the last federal laws made in December 2020, is the Finance
Act. It is was signed by President Buhari on 31 December 2020 but
came into force on 1st day of January 2021. The law has made
laudable improvements on the Nigerian tax system and ushered in 80
amendments that affected 13 existing federal laws. Popular changes
brought in by the new Finance Act includes; the increase of Value
Added Tax from 5% to 7.5%, creation of the Unclaimed Funds Trust
Fund and the Crisis Intervention Fund of N500 Billion, Exemption of
low-income earners (earners of minimum wage or less) from personal
income tax, reduction of import duty on Tractors from 35% to 5%,
and reduction of import levy on Cars from 30% to 5%. Among the laws
affected is the Companies and Allied Matters Act; which is the law
that establishes the Corporate Affairs Commission (CAC) and its
activities; including, registration of business entities and
not-for-profit entities as well as their post registration changes,
among other things.
![image](/2021/01/payne-alex.jpg")
Incorporate law practice, my team and I have received severally
inquiries from business entities concerning the filling of annual
returns to the Corporate Affairs Commission (CAC) and the changes
brought by the Finance Act. Many are wondering if the new Finance
Act has truly exempted some certain business entities (Business
Names and Companies) and Not-For-Profit entities from filing annual
returns to the CAC. This work answers the question; “Does the New
Finance Act Exempt Companies from CAC Annual Returns?”.
The CAC, Annual Returns and the New Finance
Act:
Ordinarily, every entity registered at the CAC must file annual
returns to the CAC every year to confirm the existence of the
entity and where annual retune is not filed, huge penalties follow;
including de-registration of the entity by the CAC. Presently,
filling of annual returns entails completion and filing of relevant
forms from the CAC, preparation and filing of financial records and
the payment of prescribed annual returns fees with penalties (if
any) to the CAC.
Following the new Corporate and Allied Matters Act 2020 and the
guidelines from the CAC, annual returns for companies limited by
guaranty, private companies, Limited Liability Partnerships,
Limited Partnerships and Incorporated Trustees (Not-For-Profits) is
N5000.00 per year while annual return for business names is
N3000.00 and annual return for public companies is N10,000.
The new Finance Act of 2020 amended part of the Corporate and
Allied Matters Act 2020. However, the amendment is as to management
and payment of unclaimed dividends of shareholders of Public
companies quoted on the Nigerian Stock Exchange. Hence there is no
amendment of the Finance Act that affects the filling of annual
returns to the CAC. There is no exemption of any entity from
filling of annual returns by the Finance Act. Even foreign
companies that are enjoying an exemption from registering with the
CAC, are mandated to file annual returns to the CAC every year.
It is believed that many people mistake annual returns for
tax/levies. Annual Return is a yearly notice of existence and state
of affairs filed at the CAC by all entities registered with the CAC
and foreign companies enjoying exemptions from the CAC. Tax/levies
are government prescribed charges created by law and payable to
government tax offices/agents, like the Federal Inland Revenue
Services and other tax agencies across states in Nigeria.
The only amendment on the Companies and Allied Matters Act
(CAMA), by the new Finance Act 2020, is on the issue of “Right of a
shareholder to claim for dividend”. The new Finance Act reiterates
that unpaid dividends as special debts and allows shareholders to
recover their unpaid dividends from companies within 12 years (this
is also provided by the CAMA). However, the new Finance Act, went
further to create an Unclaimed Funds Trust Fund, mandating publicly
quoted companies to transfer their unclaimed dividends to the fund
after 6 years. It also allows the Federal Government of Nigeria to
have access to such fund as special debts payable to their
respective shareholders any time there is a claim for it.
Conclusion:
The new Finance Act made on the last day of 2020, that became
effective on the first day of 2021, is commendable. It introduced
several themes designed to free up Nigerian economy and support
easy of doing business. Although, the federal law created some tax
exemptions, it did not waive the duty of entities to file annual
returns to the CAC, every year. That duty remains in place as
contained in the Companies and Allied Matters Act 2020. Failure to
file annual returns fetches monetary penalties and where such
failure continues for about 10 years, the CAC can de-register such
entity.
My authorities, are:
1. Sections 1, 2, 3, 4, 5, 6 and 12 of the Constitution of the
Federal Republic of Nigeria, 1999.
2. Sections 1, 60, 81 and 81 of the Finance Act, 2020
3. Sections 1, 81, 237, 417, 418, 419, 420, 421, 422, 423, 424,
425, 432 of the Companies and Allied Matters Act, 2020. Click to
download a free copy of the Companies and Allied Matters Act, 2020
<https://learnnigerianlaws.com/new-cama-2020-companies-allied-matters-act/[1]>
4. Onyekachi Umah, “Why Lawyers Are No Longer Needed In The
Formation Of Companies” (LearnNigerianLaws.com, 9 November 2020)
<https://learnnigerianlaws.com/why-lawyers-are-no-longer-needed-in-the-formation-of-companies/[2]> accessed 17 March
2021.
5. Onyekachi Umah, “CAC Can Now Takeover Churches, Mosques,
Associations and NGOs” (LearnNigerianLaws.com, 18 August 2020)
<https://learnnigerianlaws.com/takeover-of-not-for-profits-by-cac/>
accessed 17 March 2021.
6. Onyekachi Umah, “Company Secretaries Are Not Needed In Small
Companies” (LearnNigerianLaws.com, 13 August 2020) <https://learnnigerianlaws.com/company-secretaries-are-not-needed-in-small-companies/[3]
> accessed 17 March 2021.
Sabi Law Projects:
#SabiLaw
#DailyLawTips
#SabiBusinessLaw
#SabiElectionLaws
#SabiHumanRights
#SabiLawOnBeatFm
#SabiLawLectureSeries
#CriminalJusticeMonday
#SabiLawVideoChallenge
Speak with the writer, ask questions or make inquiries on this
topic or any other via onyekachi.umah@gmail.com,
info@LearnNigerianLaws.com or +2348037665878 (whatsapp).
To receive free Daily Law Tips, join our free WhatsApp group via
https://chat.whatsapp.com/DgFYxiYw6Mm8MdvOl3N1yn or Telegram group,
via the below link: https://t.me/LearnNigerianLaws
To keep up to date on all our free legal awareness projects of Sabi
Law Foundation, follow us via
Facebook Page:@LearnNigerianLaws,
Instagram: @LearnNigerianLaws, Twitter: @LearnNigeriaLaw and
YouTube: Learn Nigerian Laws
Please share this publication for free till it gets to those
that need it most. Save a Nigerian today! NOTE: Sharing, modifying
or publishing this publication without giving credit to the author
or Sabi Law Foundation is a criminal breach of copyright and will
be prosecuted. This publication is the writer’s view not a legal
advice and does not create any form of relationship. You may reach
the writer for more information.
This publication is powered by www.LearnNigerianLaws.com {A Free
Law Awareness Program of Sabi Law Foundation, supported by the law
firm of Bezaleel Chambers International (BCI).} Sabi Law Foundation
is a Not-For-Profit and Non-Governmental Legal Awareness
Organization based in Nigeria.
Daily Law Tips (Tip 758) by Onyekachi Umah, Esq., LL.M,
ACIArb(UK)
Introduction:
One of the last federal laws made in December 2020, is the Finance
Act. It is was signed by President Buhari on 31 December 2020 but
came into force on 1st day of January 2021. The law has made
laudable improvements on the Nigerian tax system and ushered in 80
amendments that affected 13 existing federal laws. Popular changes
brought in by the new Finance Act includes; the increase of Value
Added Tax from 5% to 7.5%, creation of the Unclaimed Funds Trust
Fund and the Crisis Intervention Fund of N500 Billion, Exemption of
low-income earners (earners of minimum wage or less) from personal
income tax, reduction of import duty on Tractors from 35% to 5%,
and reduction of import levy on Cars from 30% to 5%. Among the laws
affected is the Companies and Allied Matters Act; which is the law
that establishes the Corporate Affairs Commission (CAC) and its
activities; including, registration of business entities and
not-for-profit entities as well as their post registration changes,
among other things.
Incorporate law practice, my team and I have received severally
inquiries from business entities concerning the filling of annual
returns to the Corporate Affairs Commission (CAC) and the changes
brought by the Finance Act. Many are wondering if the new Finance
Act has truly exempted some certain business entities (Business
Names and Companies) and Not-For-Profit entities from filing annual
returns to the CAC. This work answers the question; “Does the New
Finance Act Exempt Companies from CAC Annual Returns?”.
The CAC, Annual Returns and the New Finance
Act:
Ordinarily, every entity registered at the CAC must file annual
returns to the CAC every year to confirm the existence of the
entity and where annual retune is not filed, huge penalties follow;
including de-registration of the entity by the CAC. Presently,
filling of annual returns entails completion and filing of relevant
forms from the CAC, preparation and filing of financial records and
the payment of prescribed annual returns fees with penalties (if
any) to the CAC.
Following the new Corporate and Allied Matters Act 2020 and the
guidelines from the CAC, annual returns for companies limited by
guaranty, private companies, Limited Liability Partnerships,
Limited Partnerships and Incorporated Trustees (Not-For-Profits) is
N5000.00 per year while annual return for business names is
N3000.00 and annual return for public companies is N10,000.
The new Finance Act of 2020 amended part of the Corporate and
Allied Matters Act 2020. However, the amendment is as to management
and payment of unclaimed dividends of shareholders of Public
companies quoted on the Nigerian Stock Exchange. Hence there is no
amendment of the Finance Act that affects the filling of annual
returns to the CAC. There is no exemption of any entity from
filling of annual returns by the Finance Act. Even foreign
companies that are enjoying an exemption from registering with the
CAC, are mandated to file annual returns to the CAC every year.
It is believed that many people mistake annual returns for
tax/levies. Annual Return is a yearly notice of existence and state
of affairs filed at the CAC by all entities registered with the CAC
and foreign companies enjoying exemptions from the CAC. Tax/levies
are government prescribed charges created by law and payable to
government tax offices/agents, like the Federal Inland Revenue
Services and other tax agencies across states in Nigeria.
The only amendment on the Companies and Allied Matters Act
(CAMA), by the new Finance Act 2020, is on the issue of “Right of a
shareholder to claim for dividend”. The new Finance Act reiterates
that unpaid dividends as special debts and allows shareholders to
recover their unpaid dividends from companies within 12 years (this
is also provided by the CAMA). However, the new Finance Act, went
further to create an Unclaimed Funds Trust Fund, mandating publicly
quoted companies to transfer their unclaimed dividends to the fund
after 6 years. It also allows the Federal Government of Nigeria to
have access to such fund as special debts payable to their
respective shareholders any time there is a claim for it.
Conclusion:
The new Finance Act made on the last day of 2020, that became
effective on the first day of 2021, is commendable. It introduced
several themes designed to free up Nigerian economy and support
easy of doing business. Although, the federal law created some tax
exemptions, it did not waive the duty of entities to file annual
returns to the CAC, every year. That duty remains in place as
contained in the Companies and Allied Matters Act 2020. Failure to
file annual returns fetches monetary penalties and where such
failure continues for about 10 years, the CAC can de-register such
entity.
My authorities, are:
1. Sections 1, 2, 3, 4, 5, 6 and 12 of the Constitution of the
Federal Republic of Nigeria, 1999.
2. Sections 1, 60, 81 and 81 of the Finance Act, 2020
3. Sections 1, 81, 237, 417, 418, 419, 420, 421, 422, 423, 424,
425, 432 of the Companies and Allied Matters Act, 2020. Click to
download a free copy of the Companies and Allied Matters Act, 2020
<https://learnnigerianlaws.com/new-cama-2020-companies-allied-matters-act/[1]>
4. Onyekachi Umah, “Why Lawyers Are No Longer Needed In The
Formation Of Companies” (LearnNigerianLaws.com, 9 November 2020)
<https://learnnigerianlaws.com/why-lawyers-are-no-longer-needed-in-the-formation-of-companies/[2]> accessed 17 March
2021.
5. Onyekachi Umah, “CAC Can Now Takeover Churches, Mosques,
Associations and NGOs” (LearnNigerianLaws.com, 18 August 2020)
<https://learnnigerianlaws.com/takeover-of-not-for-profits-by-cac/>
accessed 17 March 2021.
6. Onyekachi Umah, “Company Secretaries Are Not Needed In Small
Companies” (LearnNigerianLaws.com, 13 August 2020) <https://learnnigerianlaws.com/company-secretaries-are-not-needed-in-small-companies/[3]
> accessed 17 March 2021.
Sabi Law Projects:
#SabiLaw
#DailyLawTips
#SabiBusinessLaw
#SabiElectionLaws
#SabiHumanRights
#SabiLawOnBeatFm
#SabiLawLectureSeries
#CriminalJusticeMonday
#SabiLawVideoChallenge
Speak with the writer, ask questions or make inquiries on this
topic or any other via onyekachi.umah@gmail.com,
info@LearnNigerianLaws.com or +2348037665878 (whatsapp).
To receive free Daily Law Tips, join our free WhatsApp group via
https://chat.whatsapp.com/DgFYxiYw6Mm8MdvOl3N1yn or Telegram group,
via the below link: https://t.me/LearnNigerianLaws
To keep up to date on all our free legal awareness projects of Sabi
Law Foundation, follow us via
Facebook Page:@LearnNigerianLaws,
Instagram: @LearnNigerianLaws, Twitter: @LearnNigeriaLaw and
YouTube: Learn Nigerian Laws
Please share this publication for free till it gets to those
that need it most. Save a Nigerian today! NOTE: Sharing, modifying
or publishing this publication without giving credit to the author
or Sabi Law Foundation is a criminal breach of copyright and will
be prosecuted. This publication is the writer’s view not a legal
advice and does not create any form of relationship. You may reach
the writer for more information.
This publication is powered by www.LearnNigerianLaws.com {A Free
Law Awareness Program of Sabi Law Foundation, supported by the law
firm of Bezaleel Chambers International (BCI).} Sabi Law Foundation
is a Not-For-Profit and Non-Governmental Legal Awareness
Organization based in Nigeria.