Why You Must Fix PSC Issues Before Filing Your Annual Returns

For many Nigerian business owners, filing annual returns feels like just another yearly task, something you do to keep your company active with the Corporate Affairs Commission (CAC). You pay the fee, submit the forms, and assume everything is in order.

But here’s what most people don’t realize: a single unresolved compliance detail, like a duplicated Person with Significant Control (PSC) record, can quietly sabotage that process, and even attract penalties that run into millions of naira.

It may sound like a small issue, but one wrong entry under “Persons with Significant Control” can cost your business dearly. And we’re not exaggerating. This post is to help you know why you must fix PSC issues serious.

Fix PSC Issues: What Exactly Is a PSC, and Why It Matters

A Person with Significant Control (PSC) is anyone who owns or controls at least 5% of a company’s shares, voting rights, or exercises significant influence over the business. Every registered company in Nigeria is required to declare its PSCs as part of anti-money laundering and ownership transparency laws under the Companies and Allied Matters Act (CAMA 2020).

The CAC uses PSC information to know who truly owns or controls a company, not just who’s listed as a director.

That means if your PSC details are wrong, duplicated, or outdated, the CAC sees it as a breach of corporate transparency. And when that happens, even if you’re ready to file your annual returns, the system can flag your company as non-compliant, forcing you to fix the issue first.

The Hidden Risk of “Duplicated PSC Details”

Duplicated PSC entries usually happen when a company mistakenly lists the same person twice, uses slightly different spellings, or re-files a name without removing the old record. Sometimes it’s a simple data entry error during CAC’s digital migration. Other times, it’s because shareholding changed but the old PSC entry was never deleted.

It looks harmless, at least, until the CAC’s database sees it as two separate PSCs controlling the same company.

This can trigger:

• Conflicts in ownership data that stall your annual returns filing
• Compliance flags that stop you from accessing government or corporate contracts
• Penalty accumulation if the issue stays unresolved

In short: filing your annual returns without fixing a PSC duplication is like painting over a cracked wall. It looks fine now, but you’re only hiding a problem that will cost more later.

A Real Case That Shows How Costly “Small” Mistakes Can Be

A few months ago, a client sought our assistance, thinking their issue was minor; a simple PSC update they had forgotten to file. The change filing fee itself was just ₦5,000. Nothing serious.

But when we checked their CAC record, it turned out that the system had been flagging the oversight for almost three years (987 days, to be exact). By law, a daily penalty applied to the company, its directors, and its secretary.

By the time they came to us, the total fine had reached ₦19,750,000.

All because of one small, unresolved PSC issue.

That’s not an exaggeration. It’s a real case that shows why ignoring these “technical” compliance steps can have painful financial consequences. The screenshot of that penalty notice tells the full story: a ₦5,000 filing turned into nearly ₦20 million because it was delayed for too long.

Why You Must Sort PSC Issues Before Filing Annual Returns

When you’re about to file your annual returns, the CAC system cross-checks your company’s records for accuracy; including directors, secretaries, share capital, and PSC details.

If there’s a duplicated or conflicting PSC record, your filing can:

• Be rejected outright, delaying your compliance status
• Attract backdated penalties tied to the unresolved PSC
• Affect your company’s standing in government and financial databases

So even if you submit your annual returns, it doesn’t clear you from non-compliance until all underlying PSC issues are corrected.

In other words: sort it out first, then file after.

What Happens When You Ignore It

If left unchecked, duplicated PSC details can lead to:

• Continuous daily fines for each officer of the company
• Legal or reputational risks when ownership transparency is questioned
• Possible restrictions on account openings, tenders, or funding access

And as the ₦19.75 million case shows, those fines don’t stop growing until you fix the problem.

Beyond the financial penalties, PSC issues can stall your business growth. You might find yourself unable to secure government contracts, renew certain licenses, or access funding that requires a clean corporate record.

And perhaps the most frustrating part? These issues are entirely preventable.

The Bigger Compliance Picture

This issue isn’t just about fixing an error. It’s about keeping your company’s legal records consistent across all filings.

When your PSC data doesn’t match your shareholding structure or director list, it raises questions about ownership transparency. A simple duplication could make it seem like your business is hiding something even when it’s just an innocent data entry error.

For a growing company, that’s not the kind of record you want attached to your CAC profile.

The Smarter Way to Handle Compliance

At Qrafteq, we’ve seen too many businesses lose money and credibility to issues that could have been solved in days. That’s why we help clients maintain accurate CAC and PSC records before they ever reach the point of penalty.

Before you pay for your Annual Returns:

• Review your company profile on the CAC portal
• Check your PSC section carefully
• If any name or record appears twice, get it corrected before you proceed with payment

You don’t have to do this yourself especially if you’re unsure which record to keep or how to navigate the CAC portal.

Our job isn’t just to file your returns. It’s to make sure your entire business structure and compliance profile stay clean, consistent, and penalty-free. Because compliance isn’t about paperwork. It’s about protection.

What If You’ve Already Waited Too Long? A 4 – 5 Year Delay Scenario

Let’s look at another common situation: a company with duplicated PSC details that hasn’t filed annual returns for 4 to 5 years. What are they facing?

The Numbers Break Down Like This:

Annual Returns Penalties:

• For a Limited Liability Company, the penalty for late filing is ₦5,000 per year
• 4 years unfiled = ₦20,000 in penalties (₦5,000 × 4)
• 5 years unfiled = ₦25,000 in penalties (₦5,000 × 5)
• Plus the original filing fees of ₦5,000 per year

The PSC Duplication Problem: This is where it gets serious. Daily penalties can accumulate against the company, directors, and secretary for unresolved PSC issues. If the duplicated PSC has been flagged for 4-5 years (roughly 1,460 to 1,825 days), and the CAC decides to enforce full daily penalties like they did in the ₦19.75 million case, you could be looking at:

Conservative estimate (if daily PSC penalties aren’t currently enforced):

• Annual returns penalties: ₦20,000 – ₦25,000
• Annual returns filing fees: ₦20,000 – ₦25,000
• PSC correction filing: ₦5,000
• Total: ₦45,000 – ₦55,000

Worst-case scenario (if daily PSC penalties apply retroactively):

• With duplicated PSC flagged for 4-5 years
• Daily penalty against company + directors + secretary
• Could easily exceed ₦15 million to ₦25 million

But It’s Not Just About Money

Beyond the financial penalties, a company in this situation faces:

Operational Restrictions:

• Company status marked as “INACTIVE” on the PSC Register and CAC portals
• No access to post-incorporation services from the CAC (Certified True Copy requests, share capital increases, director changes, address updates, etc.)
• Refusal to issue “Letter of Good Standing”
• Inability to secure government contracts, bank loans, or grants
• Cannot process any post-registration applications

Strike-Off Risk: If a company fails to file annual returns for a consecutive period of 10 years, the CAC has the authority to delist such a company from its records. In the last 3 years alone, CAC has delisted over 300,000 companies for non-compliance.

At 4-5 years, you’re halfway to that threshold.

Personal Liability: The company, along with every director or officer, becomes personally liable to these penalties. This isn’t just a “company problem” – it follows the individuals responsible.

Why This Matters Right Now

PSC issues are still active in the CAC system, and once the platform flags a conflict, it sits there until you fix it. It doesn’t clear on its own. And it can block your annual returns or any other filing.

The ₦19.75 million case happened simply because the PSC error was ignored for years. Not because of a random audit, the system kept counting the non-compliance until someone finally checked.

That’s the real risk here. Whether penalties are strictly enforced today or not, unresolved PSC problems remain on your record and can be triggered the moment you try to file anything.

If your dashboard already shows a PSC conflict, the cost of delaying is always higher than fixing it now.

Final Thought

In a regulatory environment where transparency and accuracy matter more than ever, clean PSC records aren’t just a formality. They’re a sign that your business is serious, structured, and trustworthy.

Don’t let “small” errors pile up into million-naira problems. Before you file your annual returns this year, take a few minutes to confirm your PSC records are correct.

Because compliance delayed is penalty earned.

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Read Also:

• Understanding the PSC Requirement in Nigeria: Why It Matters for Every Business
• 10 Common CAC Compliance Mistakes Nigerian Businesses Make (and How to Avoid Them)
• 10 Common PSC Compliance Issues That Can Affect Your CAC Filings

External Reference:
Learn more about Persons with Significant Control (PSC) Regulations on CAC’s official website.

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Qrafteq helps Nigerian businesses stay compliant, confident, and ready for growth. If your CAC filings or PSC records need a professional review, talk to us, and file right the first time.