02 Feb The role of the company secretary
A friend of one of my colleagues recently commented that they’d obviously been promoted as a utility company had started sending letters addressed in their name with the title of company secretary. To the best of their knowledge their organisation didn’t have a company secretary appointed; so was it simply an aberration on the part of the utility company, or is there still a general assumption/misunderstanding about the part which company secretaries play in business life?
Perhaps the first place to start is to consider whether a limited company actually requires the formal appointment of a company secretary. It’s a straightforward question to which the answer is ‘that depends.’ All public companies have to have a company secretary, but following the 2006 Companies Act private limited companies have the option to dispense with this role. However before they do so they would need to ensure that their Articles of Association do not require a company secretary to be in post and if necessary make a formal resolution to amend their Articles.
Dispensing with the company secretarial role doesn’t mean that private companies can ignore the duties which normally fall within a company secretary remit; merely that responsibility then falls to the company directors either to carry out the duties themselves or to appoint someone to act on their behalf. Those duties include maintaining the company’s statutory registers, filing annual returns at Companies House, and updating Companies House records in respect of any significant changes such as a change of registered office or of directors’ information.
With penalties for non-compliance it is not surprising that many, particularly smaller, companies prefer to outsource such duties to a third party can maintain records on their behalf. However it is also important to note that even when duties are outsourced the ultimate responsibility still rests with company directors.
Those businesses with a company secretary will find that the role can encompass far more than statutory record-keeping. Company secretaries act as guardians of corporate probity. Accordingly they need to not only advise directors in respect of their duties, but also take a lead role in ensuring that the company maintains a strong and healthy corporate governance structure. So they may well assume responsibility for shareholder interactions or maintain oversight on the company’s adherence to the requirements of their particular corporate governance code.
All in all the role of company secretary is one of guidance and oversight whilst ensuring that the company’s statutory obligations are met. It’s not a role to be undertaken lightly but it is one which can play a significant part in shaping the direction of an organisation.