Do you want to know if incorporated trustees pay annual returns or file annual returns? If yes, let’s find out.

Incorporated trustees, also known as non-profit organizations, play a significant role in addressing various social, educational, religious, and charitable needs within Nigeria.

These entities are legally recognized under Part C of the Companies and Allied Matters Act (CAMA) 2020.

One of the critical regulatory requirements for incorporated trustees is the filing of annual returns.

This article explores whether incorporated trustees are required to pay annual returns, the importance of this requirement, and the process involved.

Understanding Annual Returns

Annual returns are mandatory filings that provide updated information about an organization’s activities, financial status, and governance.

They are a critical aspect of compliance for incorporated trustees, ensuring transparency and accountability to regulatory bodies, donors, and the public.

Legal Requirement for Annual Returns

According to the Companies and Allied Matters Act (CAMA) 2020, incorporated trustees are required to file annual returns with the Corporate Affairs Commission (CAC).

This requirement ensures that the CAC has up-to-date information about the organization’s activities and financial status, allowing for proper regulation and oversight.

Relevant Sections of CAMA 2020

• Section 845: This section mandates that incorporated trustees must file annual returns within a specified period after the end of each financial year. It outlines the details required in the annual return, including financial statements and information about the trustees.
• Section 846: This section provides the format and content of the annual returns, ensuring consistency and comprehensive reporting.

What are the Components of Annual Returns

The annual returns for incorporated trustees typically include the following components:

1. Financial Statements

The financial statements provide a detailed account of the organization’s financial activities over the past year. This includes:

• Income and Expenditure Statement: A summary of all income received and expenses incurred during the financial year.
• Balance Sheet: A snapshot of the organization’s financial position at the end of the financial year, including assets, liabilities, and equity.
• Cash Flow Statement: A report on the cash inflows and outflows during the financial year.

2. Activity Report

An activity report outlines the programs and activities undertaken by the organization in the past year. This includes:

• Projects and Initiatives: Descriptions of key projects, initiatives, and events conducted during the year.
• Impact Assessment: An evaluation of the impact of these activities on the target beneficiaries and the community at large.

3. Trustee Information

Detailed information about the trustees, including:

• Names and Addresses: The names, addresses, and contact information of all current trustees.
• Changes in Trusteeship: Any changes in the composition of the board of trustees, including appointments, resignations, or removals.

4. Declaration of Compliance

A declaration of compliance signed by a trustee or an authorized officer of the organization, affirming that the information provided is accurate and complete.

What is the Filing Process for Annual Returns

The process for filing annual returns involves several steps, which are crucial for ensuring compliance with regulatory requirements:

Step 1: Prepare Financial Statements and Reports

The first step in filing annual returns is preparing the necessary financial statements and activity reports. This typically involves:

• Accounting and Auditing: Ensuring that the organization’s financial records are accurate and have been audited by a qualified accountant.
• Activity Reporting: Compiling detailed reports on the organization’s activities and impact over the past year.

Step 2: Complete Annual Return Form

The CAC provides a specific form for annual returns, which must be completed with the required information. This form includes sections for financial statements, trustee information, and activity reports.

Step 3: Pay the Prescribed Fees

Incorporated trustees are required to pay a filing fee when submitting their annual returns. The fee is relatively modest and is intended to cover the administrative costs of processing the returns.

Step 4: Submit Annual Returns to CAC

The completed annual return form, along with the financial statements, activity reports, and payment receipt, must be submitted to the CAC. This can be done online through the CAC’s portal or in person at a CAC office.

Step 5: Obtain Acknowledgment

Once the CAC has processed the annual returns, the organization will receive an acknowledgment receipt. This serves as proof of compliance and should be kept for record-keeping purposes.

Importance of Filing Annual Returns

Filing annual returns is not only a legal requirement but also crucial for several reasons:

1. Regulatory Compliance

Filing annual returns ensures that the organization complies with Nigerian laws and regulations. Failure to file annual returns can result in penalties, fines, and even the deregistration of the organization.

2. Transparency and Accountability

Annual returns provide transparency about the organization’s financial status and activities, fostering trust and accountability among donors, beneficiaries, and the public.

3. Continued Eligibility for Tax Exemptions

Compliance with annual return requirements is essential for maintaining eligibility for tax exemptions and other regulatory benefits afforded to incorporated trustees.

4. Enhanced Credibility

Regular filing of annual returns enhances the organization’s credibility and reputation, making it more attractive to potential donors, partners, and stakeholders.

What are the Consequences of Non-Compliance

Failure to file annual returns can have severe consequences for incorporated trustees:

• Penalties and Fines: The CAC may impose financial penalties and fines for late or non-filing of annual returns.
• Loss of Tax-Exempt Status: Non-compliance may result in the loss of tax-exempt status and other regulatory benefits.
• Deregistration: In extreme cases, the CAC may deregister the organization, effectively dissolving its legal status.

Conclusion

Incorporated trustees in Nigeria are required to file annual returns to ensure regulatory compliance, transparency, and accountability.

The process involves preparing detailed financial statements, activity reports, and trustee information, paying the prescribed fees, and submitting the completed form to the CAC.

Regular filing of annual returns is crucial for maintaining tax-exempt status, enhancing credibility, and avoiding penalties.

If you need assistance with preparing and filing annual returns, Skypro Professional Services is here to help.

Our team of experts can guide you through the process, ensuring that your organization remains compliant and enjoys the benefits of legal recognition and tax exemptions.

Contact Skypro Professional Services today via info@skyproservices.com.ng to ensure your incorporated trustee organization meets all regulatory requirements and continues to thrive.