Business owners in Nigeria face increasing pressure as the Corporate Affairs Commission intensifies its effort to delist inactive companies from the official register. The exercise, known as “striking off,” wipes away a company’s legal identity, rendering it non-existent in the eyes of the law.
For many entrepreneurs, this discovery comes at the worst possible time—when they are applying for a loan, seeking investment opportunities, or trying to bid for contracts. Without an active status at the CAC, such opportunities collapse, leaving owners scrambling to correct mistakes that could have been avoided.
The development highlights a critical truth: registering a business is only the first step. Sustaining compliance is what keeps it alive. Under the Companies and Allied Matters Act (CAMA) 2020, businesses must take deliberate actions from incorporation to post-registration if they want to avoid being struck off.
The journey begins with choosing the right business name. Entrepreneurs must submit at least two name options to the CAC for clearance on its portal. These names must not be identical to existing companies, misleading, or prohibited. Once approved, the chosen name can be reserved for 60 days after paying the reservation fee. This step ensures that the business has a legally distinct identity.
Beyond the name, companies must prepare governing documents. The Memorandum of Association sets out the objectives of the business and the structure of its share capital, while the Articles of Association explain internal governance rules. Templates are available on the CAC portal, but entrepreneurs must ensure that these documents meet the requirements of CAMA 2020. They must also be signed by the promoters to be valid.
The next stage is declaring share capital. For private companies, the law sets a minimum of ₦100,000. While a higher share capital may create stronger investor confidence, it also attracts higher filing fees and stamp duty. Getting this balance right is important for entrepreneurs who want to project seriousness without overspending.
CAMA further requires the appointment of directors and shareholders. Small companies can have one director, while others must have at least two, in addition to at least one shareholder. Directors must be at least 18 years old, mentally sound, and free of legal disqualification. Full details, including names, addresses, occupations, and identification, must be provided during registration.
Once these are in place, the registration process continues with the submission of documents such as CAC Form CAC1.1, the Memorandum and Articles of Association, and details of directors and shareholders through the CAC online portal. Statutory filing fees and stamp duty must also be paid.
After incorporation, many business owners mistakenly believe their work is done. In reality, incorporation only confirms legal existence. To remain active, companies must fulfill post-registration requirements. This includes registering for a Tax Identification Number with the Federal Inland Revenue Service, securing the necessary operating permits, and, most importantly, filing annual returns.
Annual returns must be filed within 42 days of a company’s anniversary every year. These filings include details of the company’s operations, Persons with Significant Control, and all required fees. Failure to comply exposes a business to penalties and increases the risk of being delisted.
For Nigerian entrepreneurs, the CAC’s renewed focus on striking off inactive companies is a warning. Inactive businesses lose credibility, forfeit opportunities, and face unnecessary costs when they eventually attempt to restore their legal standing.
Staying compliant is therefore not just a legal obligation but also a strategic necessity. Entrepreneurs who take these steps early and consistently are more likely to build businesses that attract funding, win contracts, and scale across borders.
