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The short answer
Usually yes. CAMA 2020 section 402 exempts a company from audit only if it has not traded since incorporation or is a small company under section 394, and section 394 requires, among other conditions, that none of its members is an alien and that the directors together hold at least 51% of the equity. A subsidiary wholly owned by a UK company normally fails those conditions, so plan for an audit.
UK founders are used to the small-company audit exemption: below the size limits, many UK private companies file unaudited accounts. It is natural to assume a small Nigerian company works the same way. The Nigerian test is different, and it turns on who owns the company as much as how big it is.
The exemption in CAMA 2020
Section 402 of the Companies and Allied Matters Act 2020 says a company is exempt from the Act's audit requirements for a financial year if it has not carried on any business since incorporation, or if it is a small company within the meaning of section 394. The exemption is not available if, at any time in that year, the company was an insurance company, a bank or another company the CAC has prescribed.
Section 394(3) sets the qualifying conditions for a small company. All must be met:
- It is a private company.
- Its turnover is not more than ₦120,000,000 (or another amount the CAC sets).
- Its net assets value is not more than ₦60,000,000 (or another amount the CAC sets).
- None of its members is an alien.
- None of its members is a government, government corporation or agency, or their nominee.
- For a company with share capital, the directors between them hold at least 51% of its equity share capital.
Why a UK-owned subsidiary usually fails
Condition 6 is the one that catches most groups. If the UK parent owns 100% of the shares and the directors hold none personally, the directors hold 0% of the equity, well short of 51%. The company is not a small company under section 394, whatever its turnover, so the section 402 exemption does not apply. Condition 4 adds a second hurdle where a member is foreign. How 'alien' applies to a foreign corporate member is a point for a Nigerian lawyer, but the shareholding condition alone settles most cases.
Example
Example only. UK Ltd owns all 1,000,000 shares in its Lagos subsidiary. Turnover last year was ₦45,000,000 and net assets ₦20,000,000, both well under the limits. The directors are the UK founder and a Lagos manager, neither holding shares. Directors' holding: 0%. Result: not a small company; audit required.
Do not confuse it with the tax 'small company'
Nigeria's 2025 tax reforms use a separate definition for tax. A Nigerian tax firm's January 2026 summary describes small companies (turnover under ₦100 million and fixed assets under ₦250 million) as exempt from company income tax and the development levy, and the Nigeria Tax Administration Act 2025 lets a small company submit a statement of accounts attested by the taxpayer instead of audited financial statements with its return. Those are tax rules. They do not switch off the CAMA audit requirement, so a company can be small for tax and still need audited accounts for CAC purposes.
What an audit means in practice
- Appoint a Nigerian auditor and agree the timetable early in the year.
- Annual returns to the CAC go with the audited accounts; PwC's CAMA guide says a company files within 42 days after its AGM.
- Keep books and records in English for at least six years after the year of assessment, as the Nigeria Tax Administration Act requires.
- Give the auditor bank statements, intercompany agreements and receipts from both countries; gaps here are what slow audits down.
Planning the first audit
A first Nigerian audit is mostly about evidence. Expect the auditor to ask for the certificate of incorporation and share register, board minutes approving major contracts, payroll and pension records, withholding tax receipts, and bank statements in every currency. Agree a fee and timetable before year end, and ask what the auditor wants from the UK parent, such as intercompany confirmations and UK bank statements for any payments made on the subsidiary's behalf.
If you want to avoid the audit, the only route the statute offers is restructuring so the company meets every section 394 condition, which for a genuine subsidiary is rarely practical or wise. Most groups simply budget for the audit and make it efficient.
The UK side
The UK parent's own audit position is separate. GOV.UK lists the UK conditions (for financial years from 6 April 2025, two of: turnover up to £15 million, assets up to £7.5 million, 50 or fewer employees) and notes that subsidiaries and parents of groups need to check extra rules; see the UK small company audit exemption.
Where Pryme fits
Audits run faster when every payment has a record. On a Pryme Business Account, the Compliance agent keeps the filing calendar and prepares documents for a person to approve, and any customer can generate a verifiable statement or receipt through Pryme's partnership with VerifyDoc.ai (receipts). For the Nigerian detail, see when audited accounts are required in Nigeria and UK bank statements for a Nigerian auditor.
Questions people ask
Is a small company exempt from audit in Nigeria?
Only if it meets every condition in CAMA section 394, including directors holding at least 51% of the equity and no alien member. Banks and insurers can never use the exemption.
Does a 100% foreign-owned company need audited accounts in Nigeria?
In most cases yes, because the directors do not hold 51% of the shares and the company fails the small-company test.
What is the turnover limit for a small company under CAMA 2020?
Section 394 sets turnover at not more than ₦120,000,000 and net assets at not more than ₦60,000,000, unless the CAC sets other amounts.
Is the CAMA small company the same as the tax small company?
No. The tax definition is separate and does not remove the CAMA audit requirement.
Sources
- Companies and Allied Matters Act 2020, section 402 (LawGlobalHub text) · accessed Oct 2026
- Companies and Allied Matters Act 2020, section 394 (LawGlobalHub text) · accessed Oct 2026
- Mondaq (WTS Blackwoodstone): The Nigerian tax reforms, what it means for MSMEs and individuals (22 Jan 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- PwC Nigeria: Key compliance requirements under CAMA 2020 and Companies Regulations 2021 (Apr 2021) · accessed Oct 2026
- GOV.UK: Audit exemptions for private limited companies (updated 14 Oct 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.