The Corporate Affairs Commission (the Commission/CAC) vide its publication dated April 16, 2021, granted an extension period for existing companies to issue all of their unissued share capital in compliance with Section 124 of the Companies and Allied Matters Act 2020 (CAMA) latest by 31st December 2022.
By Section 868 (Interpretation section) of CAMA 2020, “share capital” is defined as “the issued share capital of a company at any given time” By this provision, only the issued share capital of a company is recognized as the share capital of that company under CAMA 2020. Thus, unissued shares are no longer recognized under the framework of CAMA 2020. However, it is important to note that companies may eliminate their unissued shares through share capital reduction.
Further, as it relates to costs, a company is only required, upon incorporation, to make payment on the stamp duty and CAC filing fees as applicable to the share capital issued to its subscribers. Significantly, where the company seeks to issue more shares, a resolution in this regard is passed and payment is made in respect of the applicable stamp duty and CAC filing fees for the newly issued shares.
Non-complying companies and its officers conversely are liable for every day of default to a daily penalty of N1,000 (One Thousand Naira) for public companies, N500 (Five Hundred Naira) for private companies and N250 (Two Hundred and Fifty Naira) for small companies.
Thus, pursuant to this directive, it is expedient that all existing companies with unissued shares proceed to issue their unallotted shares on or before December 31st, 2022, to avoid default penalties.
Similarly, registered entities in Nigeria are expected to file their annual returns with the Corporate Affairs Commission not later than 30th June every year. Although, where the calendar year in which the business name is registered does not end by 31st December, it needs not file same before 30th June. For newly incorporated companies, annual returns may be filed after the first 18 months of incorporation whereas existing companies ought to file their returns not later than 42 days after its Annual General Meeting and on or before June 30th each year. Annual Returns for incorporated trustees should be filed between 30th June and 31st December for the preceding financial year according to Section 862 CAMA.
Failure to file the annual returns will attract the applicable default penalties and may lead to striking out the name of the company from the Register of companies according to section 425(3) CAMA. Companies, Business names and Incorporated Trustees returns are also expected to accompany their returns with audited statement of accounts.
Thus, it is expedient that all existing companies and other registered entities proceed to duly file their annual returns in compliance with the provisions of CAMA before June 30th to avoid attracting the default fees or risk being delisted by the CAC after ten years of non-compliance.
SIGNED PUNUKA Attorneys & Solicitors
