Key Points
- It’s important to know the PSC issues Nigerian companies must avoid
- The Persons of Significant Control (PSC) register isn’t just another CAC formality
- If you can’t prove who owns or controls your company when asked, it raises questions about the legitimacy of your business structure
- We review your entire business structure; directors, shareholders, PSC records, and annual filings, to make sure everything aligns
- If your PSC’s shareholding percentage is off by even a few points, it can suggest ownership discrepancies that auditors or regulators will want explained
If you run a registered company or Limited Liability Company in Nigeria, you’ve probably heard about the PSC requirement. Maybe you’ve even filed it once during incorporation and assumed that was the end of it. It’s important to know the PSC issues Nigerian companies must avoid.
But here’s the thing: PSC filing isn’t a one-time task. It’s an ongoing compliance responsibility, and getting it wrong (or ignoring it entirely) can quietly sabotage your business standing with the Corporate Affairs Commission (CAC).
At Qrafteq, we’ve worked with dozens of Nigerian businesses that thought their records were fine until they tried to file annual returns, apply for a contract, or open a corporate account. That’s when they discovered that a “small PSC detail” had been flagging their company as non-compliant for months, sometimes years.
The Persons of Significant Control (PSC) register isn’t just another CAC formality. It’s a legal requirement that speaks directly to who really owns or controls your company, and if it’s not accurate, the consequences can pile up fast.
Let’s walk through the 10 most common PSC-related issues we see, and what they mean for your business.
PSC issues Nigeria Businesses Face
1. Multiple or Conflicting PSC Records
This happens when a company has duplicate PSC entries or conflicting ownership information across CAC filings. It usually stems from updates made without removing the old record, or inconsistencies between manual and online filings.
Even though it looks minor, CAC systems flag such discrepancies. When you try to file annual returns or request a Letter of Good Standing, the system can reject your application outright because it sees two different people (or two versions of the same person) listed as controlling the company.
In one case, a client’s PSC was entered twice with slightly different spellings. The result? Their annual returns filing was rejected, causing delays and compliance complications that took weeks to resolve.
Read our detailed breakdown: Why You Must Fix PSC Issues Before Filing Annual Returns
2. Incorrect PSC Information
Simple data errors; misspelled names, outdated phone numbers, wrong addresses, or incorrect share percentages, can make your PSC record unreliable.
Once detected, CAC may reject your filing or request rectification before proceeding with any corporate action. And if you’re undergoing due diligence for a loan, investment, or partnership, inconsistent data raises red flags about your company’s credibility.
It’s not just about getting the name right. If your PSC’s shareholding percentage is off by even a few points, it can suggest ownership discrepancies that auditors or regulators will want explained.
3. Not Updating PSC After Share Transfers
When a shareholder transfers or sells shares, it changes the ownership structure, and sometimes the PSC status. If someone drops below the 5% threshold, they’re no longer a PSC. If someone else crosses that threshold, they become one.
If this isn’t updated promptly with the CAC, your company could be accused of concealing beneficial ownership. And under Nigeria’s anti-money laundering framework, that’s not taken lightly.
Even worse, if you apply for funding or enter a due diligence process, outdated PSC records make it look like you’re hiding something even if it’s just administrative neglect.
4. Using Nominees or “Fronts” Without Disclosure
Some business owners use representatives to hold shares on their behalf. That’s legal — but only if you disclose it properly.
The PSC requirement exists to identify the real beneficial owners, not just the names on paper. So if someone is holding shares for you (as a nominee or trustee), you must declare who actually controls those shares.
Failing to do this can lead to sanctions under the beneficial ownership regulations, and it puts your company at serious legal risk if ownership transparency is ever questioned.
5. Failing to Disclose Foreign Beneficial Owners
If any of your shareholders or controllers live abroad or are foreign entities, CAC requires that to be clearly stated in your PSC filings.
Non-disclosure might seem harmless until your company needs foreign investment, applies for international partnerships, or undergoes KYC (Know Your Customer) checks with banks or regulators.
When your records don’t match reality, it raises questions. And in today’s compliance environment, those questions can delay deals, freeze accounts, or trigger regulatory scrutiny.
6. Delayed Submission (or No Submission) of PSC Information
Many small businesses never complete their PSC filings after incorporation. They assume it’s optional, or they forget entirely.
The CAC portal may allow temporary progress, but the omission becomes a red flag during audits, annual returns filings, or banking KYC reviews.
And if the CAC decides to enforce daily penalties for late PSC submissions (like they do with other compliance breaches), what looks like a ₦5,000 filing can balloon into hundreds of thousands (or millions), in accumulated fines.
7. Inconsistent Information Across CAC, FIRS, and Bank Records
When your CAC record says one thing and your tax or bank KYC says another, your company’s compliance credibility drops.
For example, if your PSC details at CAC don’t match the beneficial owner information you provided to your bank, the bank might flag your account for review. If your FIRS tax records show different shareholders than your CAC filings, tax audits become more complicated.
This inconsistency can slow down verification processes, delay transactions, or even affect your ability to open or maintain corporate accounts.
8. Wrong Categorization of “Control”
Some companies confuse ownership with control. Under CAMA 2020, a Person with Significant Control isn’t just someone who owns 5% or more of the shares. It’s also anyone who exercises significant influence or control over the company’s decisions, even if they don’t own any shares.
For instance, a founding director who gave up shareholding but still makes all major decisions should still be listed as a PSC. A parent company that controls a subsidiary should be declared, even if the ownership structure is indirect.
Misunderstanding this rule can make your filings incomplete or misleading and if CAC or regulators catch it during an audit, you’ll be asked to correct it, often with penalties attached.
9. Lack of Documentation to Support Declared PSCs
The CAC expects evidence like share certificates, resolutions, or statutory declarations, to back up your PSC details.
Without proper documentation, your filings might be considered invalid or unverifiable, especially during an audit or compliance review.
If you can’t prove who owns or controls your company when asked, it raises questions about the legitimacy of your business structure. And in regulatory investigations or legal disputes, that lack of documentation can be costly.
10. Ignorance of the Law
Finally, many small business owners simply don’t know what PSC filing means or assume it doesn’t apply to them because their company is “small” or “just starting.”
Unfortunately, ignorance doesn’t excuse non-compliance. And it’s often the reason why many firms get flagged in CAC’s internal reviews or face unexpected penalties when they try to file their annual returns.
The PSC requirement applies to all registered companies in Nigeria from one-person businesses to large corporations. Size doesn’t exempt you. Age doesn’t exempt you. The only thing that matters is whether you’re registered with the CAC.
The Real Cost of Overlooking PSC Issues
Failure to fix PSC issues can lead to:
- CAC rejecting your annual returns or other filings, forcing you to restart the process
- Delays in processing post-incorporation updates like director changes, address changes, or share capital increases
- Reputational damage, especially during due diligence for contracts, loans, or investments
- Possible fines or blacklisting under Nigeria’s anti-money laundering and corporate transparency framework
- Company status marked as “INACTIVE” on CAC portals, blocking access to government contracts and banking services
- Personal liability for directors and officers, who can be held accountable for compliance breaches
In short: the longer PSC issues linger, the harder (and costlier) they become to correct.
How Qrafteq Helps Businesses Stay Compliant
At Qrafteq, we help businesses identify, verify, and correct PSC irregularities before they affect compliance standing.
Our goal is simple: to help you stay transparent, compliant, and ready for growth.
We don’t just file forms. We review your entire business structure; directors, shareholders, PSC records, and annual filings, to make sure everything aligns. That way, when CAC cross-checks your records, you’re already good to go.
If you’re unsure about your current PSC status, it’s worth getting it reviewed professionally. Sometimes, the problem is smaller than you think but the risk of ignoring it is far bigger than it looks.
Read Also:
- Why You Must Fix PSC Issues Before Filing Annual Returns
- 10 Common CAC Compliance Mistakes Nigerian Businesses Make (and How to Avoid Them)
- Understanding the PSC Requirement in Nigeria: Why It Matters for Every Business
External Reference:
Corporate Affairs Commission (CAC) – Persons of Significant Control Guidelines
Qrafteq helps Nigerian businesses stay compliant, confident, and ready for growth. If your PSC records or CAC filings need a professional review, talk to us, and get it right the first time.
