Five steps companies can avoid delisting by CAC

Latest news shows that the Corporate Affairs Commission (CAC) will delist at least 90,000 companies from their portal. The reason was due to lack of regular filing of their annual returns. Therefore, their accounts with the commission become dormant. To avoid being a victim of this, we explained five steps to avoid delisting by CAC below.

1. Ensure proper books of accounts

Unless you didn't register your company with CAC (note that unregistered businesses are illegal), having a proper book of accounts is compulsory for all businesses. In fact, the company and allied matters act states clearly that one of the duties of directors is to ensure proper books of accounts are kept for the company they control.

This can be done by a simple MS Excel sheet or via an accounting software such as QuickBooks and Sage 50. A simple spreadsheet showing all the classes of assets, liabilities, capital, expenses, and income can help in keeping proper accounting records for your company.

2. Prepare annual financial statements

At the end of the entity's financial year, usually 12 months or annually, you should prepare the annual financial statement. This can be done with the help of an accountant. You can employ them in-house or through outsourcing. 

3. Request an Examination by external auditor

Next, request an external auditor to examine the financial statements. Without such examination, you cannot file your returns. An external auditor must verify the correctness of the financial statements prepared by the accountant. He or she will examine if the amounts presented are fair and complies with the International Financial Reporting Standards (IFRS).

4. File your annual returns with CAC

After the completion of the audit, you can then file your annual returns with the corporate affairs commission. Such filing is similar to when a student writes an exam and summarizes it to the teacher for making. What this implies is that filing annual returns is showing your workings to the government and potential investors. Therefore, they know if your business is performing well or not.

5. Continue the process

Every year, you will need to continue filing annual returns for your company. This is the only way to avoid being delisted from CAC and therefore avoiding running an illegal business name. More so, regular filing means you're a law abiding citizen. Also note that filing is done within six months of the end of the financial year of your company. For example, if the financial year ends on 31st December and the year is 2023. Then, you're expected to file before 30th June, 2024.