Many founders register a company, then pause before trading. CAC does not pause its expectations along with them.
Why "dormant" does not mean invisible to CAC
A company that has never issued an invoice is still a company on the register. Legal-advisory commentary describes the annual return duty as reaching active and dormant companies alike, with no exception for one that has not started trading.
The logic is straightforward from CAC's side: the annual return confirms who the directors and shareholders are, not how much business the company did that year.
What the register still expects every year
A dormant small company still files its annual return on schedule, and still faces ₦1,000 for each late return if it does not. Nothing about having no revenue changes the mechanics of the filing or the penalty.
This surprises a lot of founders who registered a company "just in case" and never touched it again. The company still exists on CAC's file, quietly building up a filing history, or a gap in one.
What happens to the penalty clock while a company is inactive
The penalty clock does not know or care whether a company is trading. Each missed year adds to the bill in the same way it would for an active business, and the company and each of its directors and officers still applies to the directors on record.
A dormant company left alone for several years can build up a penalty bill that surprises its own founder more than an active company's would, simply because nobody was checking on it.
The difference between dormant and formally winding up
Dormant is not a status CAC formally recognises with different filing rules, as far as we could confirm. Winding up, by contrast, is a defined legal process that ends the company's obligations once it is complete.
Until a company goes through that formal process, or is struck off, it remains on the hook for annual returns. Simply not using a company is not the same as closing it.
When closing the company costs less than keeping it dormant
If a company has sat dormant for years with no plan to use it again, the accumulating penalty is worth comparing against the cost of a formal closure. Enough missed years can also put a company at risk of CAC striking it off after 10 consecutive years of default, which comes with its own consequences for the people who ran it.
A company secretary can lay out both paths side by side for your specific numbers, including what a strike-off would mean for the people who hold office in the company.
For the base filing cost, see our guide to CAC annual return costs. The CAC annual returns hub links the rest of this series, and you can start your CAC annual return for a dormant company just as you would for a trading one.