Accounting records, annual accounts and the directors’ report under CAMA 2020

(1) Every company shall cause accounting records to be kept in accordance with this section.

(2) The accounting records are sufficient to show and explain the transactions of the company and as such, are to—

(a) disclose with reasonable accuracy, at any time, the financial position of the company ; and

(b) enable the directors to ensure that any financial statements prepared under this Part comply with the requirements of this Act as to the form and content of the company’s financial statements.

(3) The accounting records shall, in particular, contain—

(a) entries from day to day of all sums of money received and expended by the company, and the matters in respect of which the receipt and expenditure took place ; and

(b) a record of the assets and liabilities of the company.

(4) If the business of the company involves dealing in goods, the accounting records shall contain—

(a) statements of stocks held by the company at the end of each year of the company ;

(b) all statements of stocktakings from which any such statement of stock as is mentioned in paragraph (a) has been or is to be prepared ; and

(c) except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified.

(5) A parent company that has a subsidiary undertaking in relation to which subsection (4) does not apply shall take reasonable steps to secure that the undertaking keeps such accounting records as to enable the directors of the parent company to ensure that any accounts required to be prepared under this Part comply with the requirements of this Act.

(6) Each public company shall keep its audited accounts displayed on its website.

Open section 374 on its own page

(1) The accounting records of a company shall be kept at its registered office or such other place in Nigeria as the directors think fit, and shall at all times be open to inspection by the officers of the company.

(2) Subject to any direction with respect to the disposal of records given under winding-up rules made under section 732 of this Act, accounting records which a company is required by section 374 of this Act to keep are preserved by it for six years from the date on which they were made.

(3) A company may, in addition to original hard copies, keep electronic copies or registers of any document or record it is obliged to keep or maintain under this Act, and where a company chooses to maintain electronic copies or registers of its documents or records, the company shall give sufficient consideration to the quality of the hardware and software to be used, and technical specifications such as protocol, security, anti-virus protection or encryption.

Open section 375 on its own page

(1) If a company fails to comply with any provision of section 374 or 375 (1), every officer of the company who is in default commits an offence unless he shows that he acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable.

(2) An officer of a company commits an offence if he fails to take all reasonable steps for securing compliance by the company with section 375 of this Act, or has intentionally caused any default by the company under it.

(3) A person who commits an offence under this section, is liable to a penalty as the Commission shall specify in its regulations.

Open section 376 on its own page

(1) In the case of every company, the directors shall, in respect of each year of the company, prepare financial statement for the year.

(2) Subject to subsection (3), the financial statements required under subsection (1) shall include—

(a) statement of the accounting policies ;

(b) the balance sheet or balance sheet as at the last day of the year ;

(c) a profit and loss account or, in the case of a company not trading for profit, an income and expenditure account for the year ;

(d) notes on the accounts ;

(e) the auditors’ report ; (f ) the directors’ report ;

(g) a statement of the source and application of fund or statement of cash flow ;

(h) changes in equity ;

(i) a value-added statement for the year ;

(j) a five year financial summary ;

(k) in the case of a holding company, the group financial statements ; and

(l) such other matters as are required in accordance with the applicable accounting standards.

(3) The financial statements of a private company need not include the matters stated in subsection (2) (a), (g), (h) and (i).

(4) The directors shall, at their first meeting after the incorporation of the company, determine what date in each year financial statements is made up, and they shall give notice of the date to the Commission within 14 days of the determination.

(5) In the case of a holding company, the directors shall ensure that, except where in their opinion there are good reasons against it, the year of each of its subsidiaries shall coincide with the year of the company.

Open section 377 on its own page

(1) The financial statements of a company prepared under section 377 of this Act, shall comply with the requirements of the First Schedule to this Act (so far as applicable) with respect to their form and content, and with the accounting standards laid down in the statements of accounting standards issued by the Financial Reporting Council of Nigeria, provided such accounting standards do not conflict with the provisions of this Act or the First Schedule to this Act.

(2) The balance sheet shall give a true and fair view of the state of affairs of the company as at the end of the year, and the profit and loss account shall give a true and fair view of the profit or loss of the company for the year.

(3) The statement of the source and application of funds shall provide information on the generation and utilisation of funds by the company during the year.

(4) The value added statement shall report the wealth created by the company during the year and its distribution among various interest groups such as the employees, government, creditors, proprietors and the company.

(5) The five-year financial summary shall provide a report for a comparison over a period of five years or more of vital financial information.

(6) Subsection (2) overrides—

(a) the requirements of the First Schedule to this Act ; and

(b) all other requirements of this Act as to the matters to be included in the accounts of a company or in notes to those accounts, and accordingly, the provisions of subsections (7) and (8) shall have effect.

(7) If the balance sheet or profit and loss account drawn up in accordance with those requirements would not provide sufficient information to comply with subsection (2), any necessary additional information shall be provided in that balance sheet, profit and loss account or in a note to the accounts.

(8) If, owing to special circumstances in the case of any company, compliance with any such requirement in relation to the balance sheet or profit and loss account would prevent compliance with subsection (2), (even if additional information were provided in accordance with subsection (4)), the directors shall depart from that requirement in preparing the balance sheet or profit and loss account (so far as necessary) in order to comply with subsection (2).

(9) If the directors depart from any such requirement, particulars of the departure, the reasons for it and its effects shall be given in a note to the accounts.

(10) Subsections (1)-(9) do not apply to group accounts prepared under section 379 (1) and (2) apply to a company’s profit and loss account (or require the notes otherwise required in relation to that account) if—

(a) the company has subsidiaries ; and

(b) the profit and loss account is framed as a consolidated account dealing with all or any of the subsidiaries of the company as well as the company—

(i) complies with the requirements of this Act relating to consolidated profit and loss account, and

(ii) shows how much of the consolidated profit and loss for the year is dealt with in the individual financial statements of the company.

(11) If group financial statements are prepared and advantage is taken of subsection (7), that fact shall be disclosed in a note to the group financial statements.

Open section 378 on its own page

(1) If, at the end of a year a company has subsidiaries, the directors shall, as well as preparing individual accounts of each subsidiary for that year, also prepare group financial statements being accounts or statements which deal with the state of affairs and profit or loss of the entire company and the subsidiaries.

(2) The provisions of subsection (1) do not apply in instances exempted under accounting standards issued by the Financial Reporting Council of Nigeria.

(3) A group financial statement may not deal with a subsidiary, if the directors of the company are of the opinion that—

(a) it is impracticable, or would be of no real value to the members, in view of the insignificant amounts involved ;

(b) it would involve expense or delay out of proportion to its value to members of the company ;

(c) the result would be misleading, or harmful to the business of the company or any of its subsidiaries ; or

(d) the business of the holding company and that of the subsidiary are so different that they cannot reasonably be treated as a single undertaking.

(4) The group financial statements of a company shall consist of a consolidated—

(a) balance sheet dealing with the state of affairs of the company and all the subsidiaries of the company ; and

(b) profit and loss account of the company and its subsidiaries.

(5) If the directors are of the opinion that it is better for the purpose of presenting the same or equivalent information about the state of affairs and profit or loss of the company and its subsidiaries, and that to so present it may be readily appreciated by the members of the company, the group financial statements may be prepared in a form not consistent with subsection (1) and in particular the group financial statement may consist of—

(a) more than one set of consolidated financial statements dealing respectively with the company and one group of subsidiaries and with other groups of subsidiaries ;

(b) separate financial statements dealing with each of the subsidiaries ; or

(c) statements expanding the information about the subsidiaries in individual financial statements of the company, or in any other form.

(6) The group financial statements may be wholly or partly incorporated in the individual balance sheet and profit and loss account of the holding company.

Open section 379 on its own page

(1) The group financial statements of a holding company shall comply with the requirements of the First Schedule to this Act, so far as applicable to group financial statements in the form in which those accounts are prepared with respect to the form and content of those statements and any additional information to be provided by way of notes to those accounts.

(2) Group financial statements together with any notes thereon shall give a true and fair view of the state of affairs and profit or loss of the company and the subsidiaries dealt with by those statements as a whole.

(3) Subsection (2) overrides—

(a) the requirements of the First Schedule to this Act ; and

(b) all the requirements of this Act as to the matters to be included in group financial statements or in notes to those statements and accordingly subsections (4) and (5) shall have effect.

(4) If group financial statements are not in accordance with the requirements of this Act by not providing sufficient information in compliance with subsection (2), any necessary additional information shall be provided in, or in a note to, the group financial statements.

(5) If, owing to special circumstances in the case of any company, compliance with any such requirements in relation to its group financial statements would prevent the statements from complying with subsection (2), (even if additional information were provided in accordance with subsection (4)), the directors may depart from that requirement in preparing the group financial statements.

Open section 380 on its own page

(1) Subject to subsection (4), a company is for the purposes of this Act deemed to be a subsidiary of another company if the company—

(a) is a member of the company and controls the composition of its board of directors ;

(b) holds more than 50% in nominal value of its equity share capital ; or

(c) the first-mentioned company is a subsidiary of any company which is that other’s subsidiary.

(2) For the purposes of subsection (1), the composition of the board of directors of a company is deemed to be controlled by another company if that other company by the exercise of some power, without the consent or concurrence of any other person, can appoint or remove the holders of all or majority of the directors.

(3) For purposes of subsection (2), the other company is deemed to have power to appoint a director with respect to which any of the following conditions is satisfied that—

(a) a person cannot be appointed to it without the exercise in his favour by the other company of such power as is mentioned in this section ;

(b) the appointment of a person to the directorship follows necessarily from his appointment as director of the other company ; or

(c) the directorship is held by the other company itself or by a subsidiary of it.

(4) In determining whether one company is a subsidiary of another—

(a) any share held or power exercisable by the other in a fiduciary capacity is treated as not held or exercisable by it ;

(b) subject to paragraphs (c) and (d), any share held or power exercisable—

(i) by any person as nominee for the other (except where the other is concerned only in a fiduciary capacity), or

(ii) by, or by a nominee for, a subsidiary or the other (not being a subsidiary which is concerned only in a fiduciary capacity), is treated as held or exercisable by the other ;

(c) any share held or power exercisable by any person by virtue of the provisions of any debentures of the first mentioned company or of a trust deed for securing any issue of such debentures are disregarded ; and

(d) any share held or power exercisable by, or by a nominee for, the other or its subsidiary (not being held or exercisable as mentioned in paragraph (c)), shall be treated as not held or exercisable by the other, if the ordinary business of the other or its subsidiary (as the case may be) includes the lending of money and the shares are held or the power is exercisable by way of security only for the purposes of a transaction entered into in the ordinary course of that business.

(5) For the purposes of this Act—

(a) a company is deemed to be the holding company of another, if the other is its subsidiary ; and

(b) a body corporate is deemed to be the wholly-owned subsidiary of another, if it has no member except that other and that other’s wholly owned subsidiaries are its or their nominees.

(6) In this section, “company” includes any body corporate.

Open section 381 on its own page

(1) The additional matters contained in the Second Schedule shall be disclosed in the company’s financial statements for the year; and in that Schedule, where a thing is required to be stated or shown or information is required to be given, it is construed to mean that the thing shall be stated or shown, or the information is to be given in a note to those statements.

(2) In the Second Schedule to this Act —

(a) Parts I and II deal respectively with the disclosure of particulars of the subsidiaries of the company and its shareholders ;

(b) Part III deals with the disclosure of financial information relating to subsidiaries ;

(c) Part IV requires a subsidiary company to disclose its ultimate holding company ;

(d) Part V deals with the emoluments of directors, including emoluments waived, pensions of directors and compensation for loss of office to directors and past directors ; and

(e) Part VI deals with disclosure of the number of the employees of the company who are remunerated at higher rates.

(3) Whenever it is stated in the Second Schedule of this Act that this subsection applies to certain particulars or information, the particulars or information is annexed to the annual return first made by the company after copies of its financial statements have been laid before its shareholders in a general meeting and if a company fails to satisfy this obligation, the company and every officer of it are liable to a penalty as the Commission shall specify in its regulations.

(4) It is the duty of any director of a company to give notice to the company of such matters relating to himself as may be necessary for the purposes of Part V of the Second Schedule to this Act and this applies to persons who are or have at any time in the preceding three years been officers as it applies to directors.

(5) A person who makes default in complying with the provisions of subsection (4), is liable to a penalty as the Commission shall specify in its regulations.

Open section 382 on its own page

(1) The group financial statements of a holding company for a year shall comply with Part I of the Third Schedule (so far as applicable) as regards the disclosure of transactions, arrangements and agreements mentioned therein, including loans, quasi loans and other dealings in favour of directors.

(2) In the case of a company other than a holding company, its individual accounts shall comply with Part I of the Third Schedule (so far as applicable) as regards disclosure matters contained in the Schedule.

(3) Particulars which are required to be contained in Part I of the Third Schedule in any financial statements are required in respect of shadow directors as well as a director given by way of notes.

(4) Where by virtue of section 379 (2) or (3), a company does not prepare group financial statements for a year, it shall disclose such matters in its individual statements as would have been disclosed in group financial statements.

(5) The requirements of this section apply with such modifications as are necessary to bring them in line with Part I of the Third Schedule to this Act, (including with particulars of exceptions in respect of recognised banks it shall disclose).

Open section 383 on its own page

(1) The group financial statements of a holding company for a year shall comply with Part II of the Third Schedule to this Act, so far as applicable, as regards transactions, arrangements and agreements made by the company or its subsidiary for persons who at any time during that year were officers of the company but not directors.

(2) In the case of a company other than a holding company, its individual accounts shall comply with Part II of the Third Schedule to this Act so far as applicable, as regards matters contained therein.

(3) Subsections (1) and (2) do not apply in relation to any transaction or agreement made by a recognised bank for any of its officers or for any of the officers of its holding company.

(4) Particulars required by Part II of the Third Schedule to be in any account shall be given by way of notes to the accounts.

(5) Where by virtue of section 379 (2) or (3), a company does not prepare group financial statements for a year, it shall disclose this fact in its individual financial statements as required by subsection (1).

Open section 384 on its own page

(1) In the case of every company, there shall be prepared in respect of each year, a report by the directors—

(a) containing a fair view of the development of the business of the company and its subsidiaries during the year and of their position at the end of it ; and

(b) stating the amount, if any, which they recommend should be paid as dividend and the amount (if any) which they propose to carry to reserves.

(2) The directors’ report shall state the names of the persons who, at any time during the year, were directors of the company, and the financial activities of the company and its subsidiaries in the course of the year and any significant change in those activities in the year.

(3) The report shall also state the matters, and give the particulars, required by Part I of the Fourth Schedule to this Act.

(4) Part II of the Fourth Schedule to this Act applies as regards the matters to be stated in the report of the directors in the circumstances specified therein.

(5) Part III of the Fourth Schedule to this Act applies as regards the matters to be stated in the directors’ report relative to the employment, training and advancement of disabled persons, the health, safety and welfare at work of the employees of the company and the involvement of employees in the affairs, policy and performance of the company.

(6) In respect of any failure to comply with the requirements of this Act as to the matters to be stated and the particulars to be given in the directors’ report, every person who was a director of the company immediately before the end of the period prescribed for laying and delivering financial statements commits an offence and is liable on conviction to a penalty as the Commission shall specify in its regulations.

(7) In proceedings for ascertaining guilt under subsection (6), it is a defence for the person to prove that he took all reasonable steps for securing compliance with the requirements in question.

Open section 385 on its own page

(1) A company’s balance sheet and every copy of it which is laid before the company in general meeting or delivered to the Commission shall be signed on behalf of the board by two of the directors of the company.

(2) If a copy of the balance sheet—

(a) is laid before the company or delivered to the Commission without being signed as required by this section, or

(b) not being a copy so laid or delivered, is issued, circulated or published in a case where the balance sheet has not been signed as so required or where (the balance sheet having been so signed) the copy does not include a copy of the signature as the case may be, the company and each officer of it are liable to a penalty as the Commission shall specify in its regulations.

(3) A company’s profit and loss account and, so far as not incorporated in its individual balance sheet or profit and loss account, any group accounts of a holding company, shall be annexed to the balance sheet, and the auditors’ report and the directors’ report shall also be attached to the balance sheet.

(4) The balance sheet and the profit and loss account annexed to it shall be approved by the board of directors and signed on their behalf by two directors authorised to do so.

Open section 386 on its own page

(1) In the case of every company, a copy of the company’s financial statements for the year shall, at least 21 days before the date of the meeting at which they are to be laid in accordance with section 388 of this Act be sent to the following persons—

(a) every member of the company (whether or not entitled to receive notice of general meetings) ;

(b) every holder of the company’s debentures, (whether or not so entitled) ; and

(c) all persons other than members and debenture holders, being persons so entitled.

(2) In the case of a company not having a share capital, subsection (1) shall not require a copy of the financial statements to be sent to a member of the company who is not entitled to receive notices of general meetings of the company, or to a holder of the company’s debenture who is not so entitled.

(3) Subsection (1) shall not require copies of the financial statements to be sent to—

(a) a member of the company or a debenture holder, a person who is not entitled to receive notices of general meetings, and of whose address the company is unaware ;

(b) more than one of the joint holders of shares or debentures none of whom are entitled to receive such notices ; or

(c) those who are not entitled in the case of joint holders of shares or debentures, some of whom are not entitled to receive such notices.

(4) If copies of the financial statements are sent less than 21 days before the date of the meeting, it is, notwithstanding that fact, deemed to have been duly sent if it is so agreed by all the members entitled to attend and vote at the meeting.

(5) If default is made in complying with subsection (1), the company and each officer of it are liable to a penalty as the Commission shall specify in its regulations.

Open section 387 on its own page

(1) In respect of each year, the directors shall, at a date not later than 18 months after incorporation of the company and subsequently once at least in every year, lay before the company in general meeting copies of the financial statements of the company made up to a date not exceeding nine months previous to the date of the meeting.

(2) The auditors’ report shall be read before the company in general meeting, and be open to the inspection of any member of the company.

(3) In respect of each year, the directors shall deliver with the annual return to the Commission a copy of the balance sheet, the profit and loss account and the notes on the statements which were laid before the general meeting as required by this section.

(4) In the case of an unlimited company, the directors are not required by subsection (3) to deliver a copy of the accounts if—

(a) at no time during the accounting reference period has the company been, to its knowledge, the subsidiary of a company that was then limited and at no such time, to its knowledge, have there been held or been exercisable, by or on behalf of two or more companies that were then limited, shares or powers which, if they had been held or been exercisable by one of them, would have made the company its subsidiary ; and

(b) at no such time has the company been the holding company of a company which was then limited.

(5) References in this section to a company that was limited at a particular time are to a body corporate (under whatever law incorporated) the liability of whose members was at that time limited.

Open section 388 on its own page

(1) If in a year any of the requirements of section 388 (1) or (3) are not complied with by any company, every person who immediately before the end of that period was a director of the company, in respect of each of those subsections which is not so complied with, is liable to a penalty as the Commission shall specify in its regulations.

(2) If a person is charged with an offence in respect of any of the requirements of section 384 (1) or (3), it is a defence for him to prove that he took all reasonable steps for securing that those requirements be complied with before the end of the period allowed for laying and delivering accounts.

(3) In proceedings under this section with respect to a requirement to lay a copy of a document before a company in general meeting, or to deliver a copy of a document to the Commission, it is not a defence to prove that the document in question was not in fact prepared as required by this Part of this Act.

Open section 389 on its own page

(1) If—

(a) in respect of a year, any of the requirements of section 388 (1) and

(3) of this Act has not been complied with by a company before the end of the period allowed for laying and delivering financial statements, and

(b) the directors of the company fail to make good the default within 14 days after the service of a notice on them requiring compliance, the court may on application by any member or creditor of the company or by the Commission make an order directing the directors (or any of them) to make good the default within such time as may be specified in the order.

(2) The court order may provide that all costs of and incidental to the application be borne by the directors.

(3) Nothing in this section affects the provisions of section 389 of this Act.

Open section 390 on its own page

(1) If any financial statements of a company (other than its group financial statement) of which a copy is laid before the shareholders in general meeting or delivered to the Commission do not comply with the requirement of this Act as to the matters to be included in, or in a note to, those financial statements, every person who at the time when the copy is laid or delivered is a director of the company is, in respect of each contravention, liable to a penalty as the Commission shall specify in its regulations.

(2) If any group financial statements of which a copy is laid before a company in a general meeting or delivered to the Commission do not comply with section 388 (4) and (5) or section 389 and with the other requirements of this Act as to the matters to be included in or in a note to those financial statements, each person who at the time when the copy was so laid or delivered was a director of the company is liable to a penalty as the Commission shall specify in its regulations.

(3) In proceedings against a person for an offence under this section, it is a defence for him to prove that he took all reasonable steps for securing compliance with the requirements in question.

Open section 391 on its own page

(1) Any member of a company, whether or not entitled to have copies of the company’s financial statements sent to him, and any holder of the company’s debentures (whether or not so entitled) is entitled to be furnished on demand and without charge with a copy of the company’s last financial statements.

(2) If, when a person makes a demand for a document with which he is entitled by this section to be furnished, default is made in complying with the demand within seven days after its making, the company and each officer are liable to a penalty as the Commission shall specify in its regulations, unless it is proved that the person has already made a demand for, and been furnished with, a copy of the documents.

Open section 392 on its own page