A Comprehensive Guide to Persons with Significant Control (PSC) and Annual Returns

by Finnovo

Recently, the Corporate Affairs Commission (CAC) issued a 30-day notice to Companies and Limited Liability Partnership (LLPs) to file Persons with Significant Control (PSC) information and Annual returns with the Commission. Statutorily, it is essential for registered companies operating in Nigeria to disclose their information on Persons with Significant Control (PSC) and the filing of annual returns. Therefore, this article aims to shed light on the concept of Persons with Significant Control, annual returns, the importance of filing annual returns, the disclosure of PSC details, and the consequence of non-compliance. 

Who are Persons with Significant Control (PSC) 

Persons with Significant Control, commonly abbreviated as PSC, are individuals or entities that exert significant influence or control over a company’s operations and decision-making processes. These are people who directly or indirectly hold at least 5% of the issued shares, interests, or voting rights in a Company or an LLP. Significant Control also includes the direct or indirect right to remove or appoint a majority of the directors of a Company or partners of an LLP as well as direct or indirect exercise of significant influence or control over a Company or LLP. 

Basically, this concept was introduced to promote transparency and prevent money laundering, corruption, and other illegal activities within corporate entities. Identifying PSCs is crucial for maintaining the integrity of a company’s operations and for the larger goal of corporate governance. 

CAC Requirements.

The CAC requires companies to identify and report their PSCs as a means to: 

  • Prevent Illicit Activities: By disclosing PSC information, the CAC can identify individuals or entities that may be using companies as vehicles for illegal activities, such as money laundering or tax evasion. 
  • Enhance Accountability: PSC disclosure helps ensure that individuals or entities exerting significant control over a company can be held accountable for their actions, which is crucial for shareholders, investors, and regulatory bodies. 
  • Promote Investment Confidence: Investors and stakeholders are more likely to engage with companies that are transparent about their ownership structure. PSC disclosure can boost investor confidence and attract potential partners. 

CAC Deadline for Uploading PSC Details.

The CAC has set specific deadlines for companies to upload their PSC information, and compliance with these deadlines is essential to avoid penalties and maintain good standing. Consequently, the timelines for updating PSC details are: 

  • Initial Disclosure: The PSC is required to submit particulars of the control (or any change in particulars of the control) to the Company or LLP in writing not later than seven days after becoming a PSC or after any change in particulars of the control. 
  • Change in PSC Information: The Company or LLP is required to notify the Commission of the information (or any change in the information) received from the PSC not later than one month after receipt of the information. 

Consequences of Non-compliance with Updating Persons with Significant Control Details

  • Penalty: Daily monetary penalty against the PSC after the seven-day timeline for submission of the information to the Company or LLP.
  • Restriction on the relevant interest of the PSC.
  • Suspension or Deregistration: Reflection of the status of the Company or LLP as “INACTIVE” on the PSC Register and other relevant online portals of the Commission or deregistration of the company from the Corporate Affairs Commission 
  • Refusal to process any post-registration application submitted by the Company or LLP.
  • Refusal to issue a “Letter of Good Standing” to the Company or LLP.
  • False Information: In the case of false statements to the Commission, two years imprisonment against any officer of the Company or LLP so convicted. 
  • Legal Consequences: Company officers and directors may also face legal consequences for non-compliance, including personal liability for any illegal activities associated with the company. 

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