Looking to close or dissolve your Nigerian business legally? This guide explains voluntary and compulsory winding up, CAC processes, and tax clearance requirements.
Thinking of Closing Your Business in Nigeria?
Whether due to market failure, retirement, or restructuring, business closure is sometimes the smartest move. But many Nigerian entrepreneurs make the mistake of simply “abandoning” the company—leading to penalties, blacklisting, and legal complications.
If you want to legally dissolve a business in Nigeria, this guide will walk you through the process.
Two Main Ways to Close a Business
- Voluntary Winding Up
- Initiated by company shareholders or directors.
- Must pass a resolution and notify the CAC.
- Compulsory Winding Up
- Ordered by the court, often due to insolvency or fraud.
- Creditors or regulators can initiate this.
Legal Steps for Voluntary Closure
- Board Resolution
- Pass a special resolution for winding up.
- Appointment of Liquidator
- Handles asset sale and debt payments.
- Notify CAC
- File the resolution and liquidator appointment.
- Tax Clearance
- Obtain final tax clearance from FIRS.
- Final Accounts
- Liquidator files statement of accounts with CAC.
- Dissolution
- CAC strikes company off the register.
Costs and Timeline
- Can take 3–6 months depending on company size and debt level.
- Involves legal, tax, and regulatory fees.
Why You Shouldn’t Ignore Legal Closure
- Unfiled annual returns lead to growing penalties
- Directors can be blacklisted from future companies
- Banks and partners may view you as non-compliant
Final Advice
If you’re shutting down, do it the right way. Work with a law firm like Penlit & Greyson to ensure legal business dissolution in Nigeria is clean, final, and documented.
