Under the Companies Act, 2011, directors are entrusted with key responsibilities to ensure the sound governance and legal standing of their companies. Among the most important of these is the obligation to keep the company in good standing through timely and accurate statutory filings, most notably, the annual report.
What is an Annual Report and Why Does It Matter?
An annual report is a formal statutory submission that outlines key developments in the company’s affairs during the course of its financial year. Filed with the Companies Registry, the report functions as a snapshot of the company’s structure, operations, and compliance posture.
The report typically includes:
- A summary of any changes in the company’s business activities or investments;
- The company’s (or group’s) financial statements for the reporting year;
- A record of new appointments or resignations of directors since the previous filing;
- The current list of directors and their addresses;
- Disclosure of shares issued, whether for cash or other forms of consideration.
This filing is not merely procedural, it reflects a company’s transparency, operational integrity, and regulatory compliance.
Timelines: When Must These Filings Be Prepared and Submitted?
The Companies Act imposes strict deadlines for both preparation and submission of reports and financials:
- Preparation of Annual Report:
The board must finalise the report within 3 months of the end of the financial year. - Preparation and Audit of Financial Statements:
Financial statements must also be completed within the same 3-month window, and audited within 6 months after the financial year-end. - Filing Deadline:
The annual report and audited financials must be lodged with the Registrar within 3 months from the company’s incorporation anniversary date.
Non-Compliance: What Are the Consequences?
Failure to file an annual report carries financial and legal risks:
- A daily penalty of M5.00 will be charged from the date the report becomes overdue.
- More significantly, persistent non-compliance may result in deregistration, as the Registrar is empowered to strike companies off the register for failure to submit reports.
This could interrupt your company’s ability to operate legally, open bank accounts, bid for tenders, or maintain investor and shareholder confidence.
Protect Your Company: Stay Compliant
Ongoing compliance is not just about avoiding penalties, it’s about preserving the legal personality and credibility of your company. If you require assistance with preparing annual reports, meeting filing deadlines, or ensuring your company stays in good standing with the Registrar, our Corporate Services Department is here to support you.
Let us help you fulfil your duties as a director with confidence and peace of mind.