Company Secretary FAQs

Since 6 April 2008, private companies have not had to appoint a company secretary. The Companies Act 2006 (sections 270 and 271) states that a PLC must have one while private companies are not required to do so.

The objective of the introduction of the reform and new Companies Act was to simplify and modernise company law, guaranteeing higher flexibility and in general streamline any bureaucratic and administrative burden on companies, with a special look at smaller size entities.

Appointing a secretary for a limited company has become a matter of choice. Where the choice is not to appoint, the directors must be aware that someone will need to take on the responsibilities and duties traditionally taken on from the secretary.

The answer is, it depends on whether you are a limited company, a plc. Let’s look at PLCs first because there are stricter rules here.

Public limited companies have qualifications of their company secretaries dictated by s273 Companies Act 2006. Here’s a summary of

• the relevant knowledge and experience to fulfil the role of the company secretary.

And,

• has one or more of the following qualifications:
  • previously been a secretary of a public company for at least three of the last five years.
  • is a member of any of the main accounting bodies or chartered secretary (Institutes of Chartered Accountants in England and Wales, of Scotland and in Ireland. ACA, ICSA, CIMA and CIPFA)
  • a barrister, advocate or solicitor called or admitted in any part of the UK
  • a person who, by virtue of holding or having held any other position or being a member of any other body, appears to the directors to be capable of discharging the functions of secretary of the company.

Since 6 April 2008, private companies have not had to appoint a company secretary.  However, where one isn’t appointed it is a legal responsibility of the directors to ensure the duties are fulfilled. Failure to do so is a personal liability.

Unlike for PLCs. There are no rules governing this. Anyone can be a company secretary of a UK limited company except the company auditor, any employee of the auditor, or any person who is an undischarged bankrupt or disqualified director. However, just because anyone can be the company secretary, there are factors worth considering, which we look at next.

A person or a company can be appointed to a limited company. Limited companies are not obliged to have a company secretary however you will need someone to carry out the key functions of a company secretary. Certain functions are sometimes bolted on to a finance director or general council role, with a separate minute taker function allocated elsewhere. There are risks with this approach:

• if the company secretary element is bolted onto an already full-time role it may not be given the attention it deserves or requires
• the person may not be qualified as a chartered company secretary and as such may not be keeping up to date on the changing regulations and governance requirements of the role; and
• Boards rely on the independence of the company secretary as its trusted advisor. There may be inherent conflicts if the company secretary is also the Finance Director who as an executive director would be expected to have a view of the issues and topics addressed by the Board.

A company along with its board of directors may be better served by use of a company secretarial service provider who will stay ahead of changing legislation and best practice governance such as Elemental.

Qualified and quality company secretaries have a broad skill set – corporate law, finance, governance, strategy and corporate secretarial practice – and they advise a company’s board in these key areas, providing support to the Chair, CEO and non-executive directors.

For a company, public or private, it would be the directors who would have the authority to approve the appointment of a company secretary. When deciding they should consider we can be a company secretary and who should be a company secretary.

In case of an LLP, it would be the LLP members who would have the authority to appoint a company secretary.

In case of a limited partnership, it would be the partners who would be authorised to appoint a company secretary.

Once they have decided on the successful candidate, there are two ways directors can approve the appointment of a company secretary:

1. A Board meeting is held with the proper quorum of the directors where they can approve and pass a resolution to appoint a company secretary.  So, if a company has 4 directors and a quorum for a meeting is any 2 eligible directors, then the 2 directors can hold the board meeting and appoint the company secretary. The procedure for calling the Board meeting, meeting attendees quorum etc. varies for different companies and it is prescribed in the company’s articles.
2. If it is difficult to hold a board meeting, then a written resolution approving the company secretary appointment can be circulated to all the directors who need to sign up to it.  Again, this can only be done if a company’s articles of association allow for a Board decision to be taken by the directors’ written resolution method.