CAC Cracks Down on Dormant and Shell Companies

In a bold and unprecedented move, the Corporate Affairs Commission (CAC) has embarked on a massive deregistration exercise, targeting dormant and shell companies that have remained inactive for years. Since December 2023, the Commission has deregistered over 300,000 companies that failed to meet statutory requirements, such as filing annual returns. This initiative, spearheaded by Registrar-General Hussaini Ishaq Magaji (SAN), aims to sanitize Nigeria’s corporate landscape, enhance transparency, and combat illegal activities like money laundering and tax evasion.

According to Magaji, shell companies often serve as fronts for fraudulent transactions and illicit financial flows. By purging dormant entities from the system, CAC is tightening the noose on companies that evade regulations and misuse the corporate framework.

“Our decision to deregister non-compliant companies is driven by the need to protect the integrity of Nigeria’s business environment. Dormant companies that do not fulfill their obligations pose risks to the economy and national security,” Magaji explained.

The deregistration exercise is conducted in collaboration with the Federal Inland Revenue Service (FIRS), security agencies, and financial institutions. Once a company is deregistered, its ability to operate bank accounts, engage in transactions, or conduct official business is automatically suspended. This integration ensures that only active, legitimate businesses remain operational.

Magaji disclosed that companies inactive for over ten years are eligible for deregistration under Nigerian corporate laws. In some cases, entities that fail to file annual returns for just two years can also face deregistration.

The Registrar-General attributed the success of the exercise to the political will of the Federal Government, noting that President Bola Ahmed Tinubu and the Minister of Industry, Trade, and Investment have provided the necessary support to enforce corporate regulations rigorously.

As part of ongoing reforms, CAC is working to onboard historical business records dating back to 1912, further strengthening its ability to identify and deregister non-compliant entities.