In Nigeria, business owners have a legal obligation to register their ventures with the Corporate Affairs Commission (CAC), the government agency responsible for registering and regulating companies in the country.
Failure to comply with the CAC’s requirements can lead to penalties, and one of the consequences a company may face is delisting. Delisting means the company’s name will be removed from the CAC register, which means that it is no longer a recognized legal entity.
Delisting can happen for several reasons, with the most common being the failure to file annual returns. Each year, companies must submit their annual returns to the CAC. If a company fails to do so for two consecutive years, it risks being delisted.
The CAC recently published a list of over 100,000 companies to be struck off its register, and another batch would be released soon.
CCA Registrar General, Garba Abubakar, during a workshop in Kano said: the law is clear. Any company that has not been filing its returns or obligations, that is considered inactive or not in operation; that company is liable to be struck off, if it continues doing so for 10 years.
“Any company that is struck off will forfeit its properties to the government. But they are at liberty to apply and be relisted in the register. If they are not relisted in the next 10 years, whatever assets they have will be forfeited to the government.”
He continued saying: “We know that corruption and other illicit financial flows are carried out, using corporate bodies as vehicles. There is a limit to transactions an individual can carry out. So, most procurement and mining leases are issued or done using companies. The register provides information about the true owners and natural person that controls the companies, so it makes it easier for investigating agencies to search and know the true owners.
“If the company fails to provide the correct information about the ultimate individual that controls that company, at point of registration, that is criminal and attracts a two-year jail term. If they delay in providing the information, it attracts a daily default penalty, minimum of N10,000 per day.”
To avoid being delisted by the CAC, companies or businesses should take specific actions, such as:
1. Filing their annual returns on time.
2. Paying their annual fees promptly.
3. Keeping their company’s information up to date with the CAC.
CAC, in a statement signed by its management notified the public saying “The General Public is advised that it shall be unlawful for any company struck off the Register to carry on business unless it is first restored to the Register by an order of the Federal High Court.
By adhering to these guidelines, companies can ensure they remain listed on the CAC register and avoid the risk of being delisted, maintaining their status as recognized legal entities in Nigeria.