Within a company, there’s always the need for a communication conduit between the board, stakeholders, and service providers. Communication also has to be effective across the various departments, and that’s where a company secretary, otherwise known as a corporate secretary, comes in. But what exactly is the role of company secretary in corporate governance?
A company secretary’s role in corporate governance includes board support, especially with meeting coordination, documentation, development, evaluation, and succession planning. A typical corporate secretary, however, does more. They also have statutory obligations, which include maintaining statutory registers, filing statutory returns, and regulatory reporting.
Company secretaries also play many other roles, which we shall explore in this guide, which include organized governance, compliance guardianship, shareholder relations, and administrative roles. We’ll also examine their administrative, fiduciary, legal, statutory, financial, and management duties.
But first, let’s define a company secretary, the difference between an in-house and outsourced company secretary, and the requirements for this coveted corporate position.
Key Takeaway:
- A company secretary is a senior-level official (or even a company) with administrative, legal, and statutory responsibilities. Moreover, a company secretary has fiduciary, financial, and management duties.
- An in-house company secretary suits smaller companies and those with budgetary constraints and fluctuating workloads. On the other hand, an outsourced corporate secretary suits more established companies with no budget constraints or fluctuating workloads.
- Corporate governance is a system of guidelines and practices dictating how a company is run and managed.
- The key roles of a company secretary are board support, statutory obligations, organized governance, compliance guardianship, and shareholder relations. Others are administrative, advisory, oversight, management, and review roles.
- Company secretaries support the board of directors by coordinating meetings, providing documentation support, assisting with board development, evaluating the board, and planning succession.
- Corporate secretaries’ statutory obligations include statutory register maintenance, filing for returns, and regulatory reporting.
- As compliance guardians, company secretaries ensure compliance with statutory requirements, risk management protocols, and legal frameworks.
Who is a Company Secretary?
A company secretary, sometimes known as a corporate secretary, is a senior-level executive responsible for administrative, legal, and statutory compliance. They ensure the company complies with existing policies, procedures, and regulations. These professionals are usually appointed by the board of directors.
A company secretary can be a person (in-house employee) or an outsourced company (third-party service provider). Let’s compare the two!
In-House Vs Outsourced Corporate Secretaries: What Should You Go for?
Choosing between an in-house and outsourced corporate secretary depends on company size, budgetary constraints, and workload. For example, a third-party secretarial service provider is ideal for smaller companies with budgetary constraints because it’s cost-effective. It’s also cost-effective for companies with fluctuating workloads as they can only ask for the expert’s support when there’s too much work.
In contrast, an in-house company secretary makes more financial sense for established companies. They can include the secretary as part of their staff and save money in the long run. An in-house corporate secretary also suits companies with fewer workload fluctuations and little budget constraints.
Below is a breakdown of the differences to help you decide what works for your company:
| – | In-House Company Secretary | Outsourced Company Secretary |
| Company size | Best for established companies | Best for smaller companies |
| Budgetary constraints | It is ideal when there are no budgetary constraints | It is perfect when there are budgetary constraints |
| Workload fluctuation | Perfect when there’s minimal workload fluctuation | Perfect when the workload keeps fluctuating |
| Industry restrictions | It is ideal when no industry restrictions exist on consulting specialized service providers. | It is ideal when industry regulations call for specialized service providers. |
| Company culture | Best for companies with a culture of hiring in-house | Best for companies with a culture of outsourcing |
What are the Duties of a Company Secretary?
A company secretary’s duties fall into any of these six categories:
Administrative Duties
A company secretary is involved in the company’s day-to-day operations under the direction of the board of directors. That includes handling the following administrative responsibilities:
- Prepare and issue notices for general meetings (including AGMs) and board meetings
- Prepare minutes during AGMs and board meetings
- Engage and communicate with shareholders
- Offer administrative and legal support to directors
- File confirmation statements
- Update statutory books and company registrars
- Maintain the company’s share certificate, certificate of incorporation, and other documents
- Signing legal documents on behalf of the directors
- Avail company registers and other documents for inspection by regulators
- Update the Companies Registration Officer (CRO)
- Provide notices to the media for publishing
Legal Duties
Company secretaries work with the board of directors to fulfil these legal obligations:
- Complete and sign annual returns and submit them to the CRO
- Certify the authenticity of financial statements that are associated with yearly returns
- Prepare accurate statements for the company’s assets and liabilities during a receivership or liquidation
Statutory Duties
The company secretary also handles statutory responsibilities on behalf of the company, which include the following:
- Maintain statutory registers (including the register of directors, register of charges, and register of members)
- Ensure prompt filing of statutory forms
- Provide notice of meetings to auditors
- Share copies of register agreements and resolutions
- Distribute copies of accounts to concerned members
- Avail statutory records for inspection
- Keep custody of the company seal
- Ensure compliance with the company’s act agreement
Fiduciary Duties
Company secretaries have the legal responsibility of acting in the best interest of their employer (the company). These fiduciary duties include the following:
- Duty of Loyalty: Dictates that the secretary puts the company’s interest before personal gain
- Duty of Care: The secretary is expected to work towards avoiding any conflict of interest
- Duty of Disclosure: The secretary is obliged to disclose specific information to regulatory authorities about their role
- Duty of Diligence: Dictates that the secretary identifies and verifies the identities of customers
Financial Duties
The company secretary handles a few accountancy and financial obligations in an oversight capacity. They mainly oversee the following processes:
- Internal audits
- Budgetary controls
- Business valuations
- Capital structure determination
- Financial statement compliance
- Audit committee assessment
- Loan syndication (where multiple lenders collaborate to fund one borrower)
Management Duties
A corporate secretary should possess exceptional managerial skills to oversee different departments and operations. Their management duties are as follows:
- Strategic management (where they help with developing the company structure, strategizing business policies, and acquiring ISO certification on behalf of the management)
- Human resource management (where they assist with workforce planning and oversee human resource auditing and performance appraisal management)
- Public relations management (where they engage stakeholders for the best interest of the company’s image)
- Information technology management (where the company secretary oversees cyber laws compliance, maintains digital copies of the statutory documents, and obtains licensing programs and software copyright)
What’s Corporate Governance?
Corporate governance encompasses processes, practices, and guidelines by which a company is run. These frameworks focus on balancing stakeholders’ interests, including those of shareholders, customers, employees, suppliers, lenders, and regulators.
The board of directors drives a company’s corporate governance. However, the board doesn’t work alone. It’s supported by the company secretary and top management to ensure compliance.
What’s the Role of Company Secretary in Corporate Governance?
The company secretary has a critical role in corporate governance, which includes the following contributions:
1. Board Support
A company secretary offers administrative support to the board, facilitates effective communication, and contributes to the board’s overall efficiency. Overall, here are ways the company secretary supports the board of directors:
a) Meetings coordination
A company secretary plays an essential role in coordinating meetings. This starts with creating and distributing meeting agendas. During board meetings and AGMs, the secretary produces the minutes and captures the action points. As part of their job, the company secretary handles all the logistics of meetings and monitors results.
b) Documentation support
The company secretary produces the necessary documentation for carrying out effective meetings. During meetings, they accurately document the minutes and company resolutions to ensure accountability and transparency. They are responsible for capturing key company records and keeping them safe, especially those touching on board discussions, key decisions, and action plans.
c) Board communication
The corporate secretary acts as the conduit between the board and various stakeholders. They feed the board with vital information and updates that are key to making important decisions on behalf of the company. The board secretary helps implement key decisions by ensuring information gets to the right people on time and is acted on.
d) Board development
Board secretaries are tasked with orienting, briefing, and training new board members. They also coordinate routine board training and development programs to keep the board updated on the latest trends and practices. Sometimes, company secretaries create training programs for individual directors who should update particular skill sets.
e) Board evaluation
The company secretary facilitates internal and external evaluations of individual directors to ensure the board’s and its committees’ effectiveness. The board secretary plans and coordinates the evaluation process and follows up to ensure that the findings are well communicated across applicable departments or personnel and effectively acted upon.
f) Succession planning
The company secretary helps identify prospective candidates for board positions. They assess the candidates’ expertise, skills, and professional competence and develop a strategic plan to facilitate their training and induction. Board secretaries are instrumental in ensuring seamless transition within the board and its leadership.
2. Statutory Obligations
Statutory obligations are key to operating within specific legal frameworks, and the company secretary is vital in ensuring compliance with these statutory duties. Here are their key contributions:
a) Statutory register maintenance
Companies must keep different statutory registers (ownership records, company history, and management). These records are essential in validating and contesting company share ownership, officer misconduct, or liability. They also help secure investments and exercise legal rights.
Companies should update the statutory registers when information changes and keep the records safe, which is part of the corporate secretary’s job. These registers include the following:
- Register of directors
- Register of members
- Register of transfers
- Register of charges
- Register of secretaries
- Register of Directors’ interests
- Register of debenture holders
- Register of beneficial ownership
- Directors indemnities
- Service contracts of directors
- Accounting records
- Minutes of meetings and resolutions
- Individual and group acquisition register
b) Statutory returns filing
Company secretaries should file relevant information and reports with the Registrar of Companies, especially the following:
- Returns of allotment
- Annual returns
- Article of association
- Amended memorandum
- Change of registered office
- Company resolutions
- Notice of appointment, resignation, and removal of directors
- Notice of resignation or removal of auditors
c) Regulatory reporting
Corporate secretaries prepare regular reports on regulatory changes to update the board and other stakeholders accordingly. They ensure timely and accurate reporting of new developments to stakeholders and regulation requirements to regulators to manage their relationships effectively. The secretary upholds transparency and a strong company reputation on behalf of the company.
3. Organized Governance
A company secretary helps the board of directors establish and develop its governance framework. The framework comprises the board directors and the board committees, which include audit, finance, risk management, compensation, and disclosure committees.
The corporate secretary also helps develop corporate governance programs to ensure they align with the recommended practices. They oversee the meetings and document governance procedures and policies well.
4. Compliance Guardianship
It’s the job of company secretaries to ensure the company complies with applicable governance principles and standards. In particular, they ensure compliance with:
- Statutory requirements. Company secretaries ensure compliance with the statutory requirements by filing annual reports and maintaining accurate and updated company records, including the registers.
- Risk management protocols: Corporate secretaries help to identify and manage crises to facilitate business continuity.
- Legal statutes: Company secretaries ensure compliance with applicable laws, including employment and corporate laws.
5. Shareholder Relations
The company secretary helps maintain good relationships with shareholders. They do that by making these contributions:
- Shareholder engagement: Company secretaries engage with shareholders on various issues, including their concerns. Doing so promotes transparency and trust among shareholders, which leads to stronger relationships. Company secretaries also ensure clarity and timely communication with shareholders, which boosts shareholders’ confidence and upholds the company’s reputation.
- Shareholder meetings: Shareholder meetings are essential forums for engaging shareholders and making key deliberations. The secretary coordinates these meetings and ensures their success.
- Dividend declaration and distribution: Dividends demonstrate the financial health of a company. The company secretary is pivotal in ensuring compliance with declaring and distributing dividend payouts. They ensure dividends are equitably distributed among shareholders and openly stated.
6. Administrative Role
The company secretary serves as the chief administrative officer (CAO), whose roles include those of a financial advisor, office manager, accountant, public officer, and public relations officer. That consists of the following responsibilities:
- Oversee day-to-day departmental operations
- Manage various departments (including HR, IT, finance, and logistics)
- Develop and manage budgets
- Fosters a healthy work environment
- Ensure alignment with company goals
- Collaborate with senior management
- Shapes the company’s culture
Qualifications and Skills of a Company Secretary
Qualifications
Corporate secretaries must be professionally competent. Therefore, they should be associated with a professional body such as the Corporate Secretaries International Association (CSIA) or any other recognized professional body.
Attributes
Corporate secretaries should demonstrate these personal attributes:
- Ethical conduct (act in a way that shows concern and respect for the company and people)
- Confidentiality (ability to maintain the confidentiality of private and sensitive company information)
- Integrity (be honest and reliable)
- Objectivity (be able to maintain an objective perspective when mediating between the board and senior management)
Skills
In addition to these attributes, Company secretaries should also possess these skills:
- Record-keeping skills
- Risk management skills
- Compliance oversight
- Problem-solving ability
- Good organization skills
- Excellent communication skills
- Good interpersonal skills
- Management skills
- Attention to details
- Critical thinking
- Teamwork
- Commercial awareness
- Report writing skills
- Strategic advisory skills (be able to advise the board and senior management)
- Knowledge of governance and corporate law
Can a Company Secretary be a Director in the Same Company?
While the company secretary and director are two different positions, one person can do both jobs in the same company. A director may serve as a company secretary if they meet the requirements, which includes being accredited by a professional body such as CSIA.
Most of the duties of an active executive director and a company secretary overlap, making it possible for the director to double up as a company secretary. This, however, should be long-term. It should only be for a while, as the duties of both positions could overwhelm the director. It’s only a short-term cost-saving measure. Consequently, separating the two roles in the long term is advisable.
Learn More About the Role of a Corporate Secretary!
There’s no denying the role of company secretary in corporate governance. Their administrative, fiduciary, and statutory responsibilities make them integral to running the company. Even so, their role in supporting the board, statutory obligations, compliance guardianship, and organizational governance roles are key to promoting good governance, and the board of directors and the company need them.
We at the Center for Corporate Governance understand how vital company secretaries are. More importantly, we recognize how effective they can be with corporate governance training. So we created a five-day training course.
Company secretaries can learn more about their roles and expectations through this corporate governance program. We equip them with the right skills to do their jobs and improve. This program provides participants with a comprehensive toolkit for leadership excellence and good governance to navigate the complex corporate landscape.
