ROLE AND DUTIES OF A COMPANY SECRETARY
ROLE AND DUTIES OF A COMPANY SECRETARY
Bhakti Ram Ghimire
Advocate
(LL.M TU, Constitutional Law and Commercial Law)
A Company Secretary is a senior position in a
private sector company or public sector organization, normally in the form of a
managerial position or above. The Company Secretary is responsible for the
efficient administration of a company, particularly with regard to ensuring
compliance with statutory and regulatory requirements and for ensuring that
decisions of the Board of Directors are implemented.[1]
Whereas most people would not easily differentiate
between an office secretary and a company secretary, their duties and
responsibilities are as different as their positions in a company.
A company secretary is a higher position post of
Company.[2]
A company secretary fulfills a very humble role; and
that he has no authority to make any contracts or representations on behalf of
the company.[3]
The word secretary has been define as company
secretary with in the meaning of section 2(1)(c) of the company secretaries
act, 1980 which means a person who is a member of the institute of company
secretaries of India
A company secretary is a much more important person
nowadays. Company secretary is an officer of the company with extensive duties
and responsibilities. This appears not
only in the modern companies act, but also by the role which he plays in the
day to day business of companies. He is not longer a mere clerk. He regularly
makes representations on behalf of the company and enters into contract on its
behalf which come within the day to day running of the company's business. So
much so that he may be regarded as held out as having authority to do many
things on behalf of the company. He is certainly entitled to sign contracts
connected with the administrative side of a company's affairs such as employing
staff and ordering cars and so forth. All such matters now come within the
ostensible authority of a company's secretary.[5]
According Ms Dorothy Lukwago, a company secretary for
Kampala Nissan Motors, a company secretary is a senior managerial position
which exists in private as well as public organizations. In other countries,
such a position is known as corporate secretary.
“The principal role of a company secretary is to
ensure that the administration of a company is efficiently run, in accordance
with the rules and regulations of the state or states where the company and its
offices are located,” she says.
The
company secretary ensures that an organization complies with relevant
legislation and regulation, and keeps board members informed of their legal
responsibilities. Company secretaries are the company has named representative
on legal documents, and it is their responsibility to ensure that the company
and its directors operate within the law. It is also their responsibility to
register and communicate with shareholders, to ensure that dividends are paid
and to maintain company records, such as lists of directors and shareholders,
and annual accounts.[6]
ROLE AND DUTIES OF A COMPANY SECRETARY:
The
secretary to appoint by a listed company shall be a member of a recognized body
of professional accountants, or a member of a recognized body of corporate/chartered
secretaries or a person holding a masters degree in Business Administration or
Commerce or is a Law graduate from a university recognized and having relevant
experience. However, the company secretary of a single member company shall be
a person holding a bachelor degree from a university recognized.[7]
The
duties of a company secretary are usually contained in an “employment
contract”. However, the company secretary generally performs the following
functions:-
Focus on governance
As the importance of
effective corporate governance continues to be critical in today’s environment,
not least due to the global financial crisis, there has been increased focus on
the role of the company secretary in the world.
Statutory
responsibilities[8]
The
Companies Bill 2012, which was published last December and is expected to be
enacted at the earliest in 2014, retains the requirement for a company
secretary unlike the UK
If one
were to examine the role and duties of the company secretary as currently
outlined in Irish legislation it would appear to be quite restrictive and
mainly administrative in nature. Principally, the company secretary
ensures the company complies with company law, maintains certain statutory
registers and makes the necessary filings with the Registrar of Companies such
as annual returns, financial statements and certain forms with respect to
changes to share capital etc.
Corporate
governance[9]
In practice, the role of the company secretary has
developed into much more than the basic statutory requirements outlined above.
Most notably, the responsibility for developing and implementing processes to
promote and sustain good corporate governance has fallen largely within the
remit of the company secretary. This is recognized in both the UK Code of
Corporate Governance (which has been adopted by the Irish Stock Exchange
through the Irish Annex) and the FRC Guidance on Board Effectiveness. Both have
served to focus companies on Board effectiveness and in turn how they can be
assisted by the company secretary. Although this guidance applies to listed companies,
it is seen as best practice and these standards of corporate governance should
be adopted by other companies in so far as they are considered appropriate to
the nature and scale of the organization.
The dynamics of the boardroom are changing and chairmen
and directors are realizing that they need specialist skills and technical
knowledge in this area and they are looking to company secretaries to provide
this expertise. There are a number of responsibilities, some of which have been
explicitly referenced to in the above guidance, where the company secretary can
assist and add value:
Organizational governance
It is important that robust governance arrangements
are in place, are clearly documented and communicated to the organization. The
position of the company secretary enables them to have a holistic view of the
governance framework and as a result they are generally tasked with the
responsibility of ensuring that this framework and any supporting policies and
procedures are clearly documented. This should include ensuring that the formal
documentation required under the UK Code of Corporate Governance, such as
schedule of matters reserved for the Board, is in place.
Supporting the chairman
The company secretary has a duty to advise the Board,
through the chairman, on all governance matters. Together they should
periodically review whether the Board and the company’s other governance
processes are fit for purpose, and consider any improvements or initiatives
that could strengthen the governance of the company. The relationship between
the company secretary and the chairman is central to creating an efficient
Board.
Board and committee processes
The company secretary plays a leading role in good
governance by helping the Board and its committees function effectively and in
accordance with their terms of reference and best practice. Providing support
goes beyond scheduling meetings to proactively managing the agenda and ensuring
the presentation of high quality up-to-date information in advance of meetings.
This should enable directors to contribute fully in board discussions and
debate and to enhance the capability of the Board for good decision making.
Following meetings the company secretary should pursue and manage follow up
actions and report on matters arising.
Board development
All directors should have access to the advice and
services of the company secretary. The company secretary should build effective
working relationships with all board members, offering impartial advice and
acting in the best interests of the company. In promoting board development the
company secretary should assist the chairman with all development processes
including board evaluation, induction and training. This should involve
implementing a rigorous annual Board, committee and individual director
assessment and ensuring actions arising from the reviews are completed.
Further, the company secretary should take the lead in developing tailored
induction plans for new directors and devising a training plan for individual directors
and the Board. Although these tasks are ultimately the responsibility of
the chairman, the company secretary can add value by fulfilling, or procuring
the fulfillment of, these best practice governance requirements on behalf of
the chairman.
Communication with stakeholders
The company secretary is a unique interface between
the Board and management and as such they act as an important link between the
Board and the business. Through effective communication they can coach
management to understanding the expectations of, and value brought by the
Board. The company secretary also has an important role in communicating with
external stakeholders, such as investors, and is often the first point of
contact for queries. The company secretary should work closely with the
chairman and the Board to ensure that effective shareholder relations are
maintained.
Disclosure and reporting
In recent years there has been increased emphasis in
the quality of corporate governance reporting and calls for increased transparency.
The company secretary usually has responsibility for drafting the governance
section of the company’s annual report and ensuring that all reports are made
available to shareholders according to the relevant regulatory or listing
requirements.
Increased
burden of regulation
In the light of economic developments in recent years
stakeholders of companies, particularly in the financial services sector, are
increasingly concerned with the conduct of the affairs of the company and
therefore it is essential that best practice is adhered to at all times and
evidence is available to demonstrate same. The requirement for higher
standards in this sector can be further evidenced by the introduction by the
Central Bank of a series of corporate governance codes including fitness and
probity standards for certain pre-approval controlled functions or persons who
perform controlled functions. Controlled functions include “ensuring,
controlling or monitoring compliance by a regulated financial service provider
with its relevant obligations”.
While the monitoring of compliance in the financial
services sector has traditionally been outsourced with the introduction of
these new standards there is more caution in the provision of such services
which are more likely in the future to be laid at the feet of the company
secretary. It is true to say that the role of the company secretary also
includes keeping the Board informed of new legislation and how it applies to
them. With this increased focus on corporate governance, the role of the
company secretary has been extended such that the secretary is now seen as the
guardian of the company’s compliance with legislative requirements and best
practice.
According to the company act, 2063 (2006) article 185 to manage Appointment
of company secretary. A public company with the paid –up capital of ten million
rupees or more shall appoint to the pot of company secretary. A Nepalese
citizen who has worked in the related field for at least two years after obtaining
the professional certificate of company secretary issued by a native or foreign
body authorized to issue the professional certificate of company secretary
pursuant to the prevailing law or who has worked in the related field or in the
field of company
management for at least three years after doing at least bachelor degree in law, management, commerce or economics may be appointed to the post of company secretary. Provided, however, that this provision shall not apply to the company
secretary who is incumbent at the time of commencement of this Act for three years after the date of commencement of company Act. No director of the concerned company shall be eligible to be
appointed as the company secretary of such company.
A person shall not be appointed to the post of company
secretary of more than one company at the same time. Provided, however, that this provision shall not bar the appointing of
the company secretary of any principal company to the post of
company secretary of the subsidiary company of such company. Where it is provided by this Act, the prevailing law or articles
of association that any act has to be done by or through the company secretary, and the post of company secretary remains vacant in the company or any reason the incumbent company secretary fails to do such act or shows has inability to do such act, then any such employee of the company, who has the qualification referred to in company Act, as designated by the board of directors to do such act may perform such act in the capacity of company secretary.
management for at least three years after doing at least bachelor degree in law, management, commerce or economics may be appointed to the post of company secretary. Provided, however, that this provision shall not apply to the company
secretary who is incumbent at the time of commencement of this Act for three years after the date of commencement of company Act. No director of the concerned company shall be eligible to be
appointed as the company secretary of such company.
A person shall not be appointed to the post of company
secretary of more than one company at the same time. Provided, however, that this provision shall not bar the appointing of
the company secretary of any principal company to the post of
company secretary of the subsidiary company of such company. Where it is provided by this Act, the prevailing law or articles
of association that any act has to be done by or through the company secretary, and the post of company secretary remains vacant in the company or any reason the incumbent company secretary fails to do such act or shows has inability to do such act, then any such employee of the company, who has the qualification referred to in company Act, as designated by the board of directors to do such act may perform such act in the capacity of company secretary.
Functions, duties and powers of company secretary:[11]
It shall
be the duty of the company secretary to implement, or cause to be implemented, the decisions made by the board of
directors and the general meeting ad the matters directed by the Office or the
concerned bodies and to submit such returns, documents, decisions etc. as required
to be submitted by the company to the Office or any other body pursuant to company
Act or the prevailing law within the specified period.
The company secretary shall perform the following functions:
(a) To call the meeting of the board of
directors or the general meeting;
(b) To prepare
the agenda to be discussed in the meeting
of the board of directors or the general meeting and
send it to the concerned directors or shareholders;
of the board of directors or the general meeting and
send it to the concerned directors or shareholders;
(c) To maintain the records of, authenticate and take
charge of, the decisions of the meeting of the board
of directors or the general meeting;
charge of, the decisions of the meeting of the board
of directors or the general meeting;
(d) To send a notice of the allotment of shares and a
call
on shares pursuant to the decision of the board of
directors;
on shares pursuant to the decision of the board of
directors;
(e) To
accurately an properly maintain, take
charge
of, and authenticate, the shareholder register and the
records of shareholders and debenture-holders;
of, and authenticate, the shareholder register and the
records of shareholders and debenture-holders;
(f) To refer the matter to the board of directors or
the
chief executive to record the pledge or mortgage of,
and execute the transferal or transmission of any
shares or debentures;
chief executive to record the pledge or mortgage of,
and execute the transferal or transmission of any
shares or debentures;
(g) In cases where a claim, petition, grievance,
suggestion, advice etc. has been made by any
shareholder or debenture-holder in writing ,to
transmit such matter to the board of directors or
chief executive or Office or other bodies; and to
inform in writing the concerned shareholder or
debenture-holder of the results of any act and action
done and taken in regard thereto;
suggestion, advice etc. has been made by any
shareholder or debenture-holder in writing ,to
transmit such matter to the board of directors or
chief executive or Office or other bodies; and to
inform in writing the concerned shareholder or
debenture-holder of the results of any act and action
done and taken in regard thereto;
(h) To perform such other functions as specified to be
performed by the company secretary under the
prevailing law or such other functions as prescribed.
performed by the company secretary under the
prevailing law or such other functions as prescribed.
Except as per the decision of the general
meeting, the
company secretary shall not do, or cause to be done, any such act from or through the company as is to yield benefits to him .The company secretary shall observe the code of conduct as
prescribed.
company secretary shall not do, or cause to be done, any such act from or through the company as is to yield benefits to him .The company secretary shall observe the code of conduct as
prescribed.
Indian Provision of company secretary:[12]
The functions of the company secretary shall include:
To report to the Board about compliance with the provisions of Company Act, the rules made there under and other laws applicable to the company. To ensure that the company complies with the applicable secretarial standards; to discharge such other duties as may be prescribed.
To report to the Board about compliance with the provisions of Company Act, the rules made there under and other laws applicable to the company. To ensure that the company complies with the applicable secretarial standards; to discharge such other duties as may be prescribed.
Explanation.—For the purpose of this section, the expression “secretarial standards” means secretarial standards issued by the Institute of Company Secretaries of India constituted
under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government.
The Company Secretary in the UK
English
law requires public companies to have a Company
Secretary. The Combined Code on Corporate Governance gives them a key governance role. They are appointed and dismissed by the board. They have certain legal duties and responsibilities. They adhere to a Code of Conduct.
Secretary. The Combined Code on Corporate Governance gives them a key governance role. They are appointed and dismissed by the board. They have certain legal duties and responsibilities. They adhere to a Code of Conduct.
Key
elements of the Company Secretary’s role:
Advising
the board on governance matters. Acting as a channel of communication and
information for independent directors.
Assisting the Chairman with providing induction and
training for directors. Producing papers and minutes of meetings of the board and committees. Ensuring compliance with all rules concerning the listing of the shares. Ensuring compliance with corporate law and regulations and the company’s constitution. Communicating with shareholders issuing circulars, paying dividends, answering questions. Organizing shareholder meetings. Dealing with the administration and legal aspects of employee share plans. Coordinating the drafting, preparation, printing and distribution of the company’s annual report. Playing a key role in any acquisition or merger of company. Maintaining the statutory registers
training for directors. Producing papers and minutes of meetings of the board and committees. Ensuring compliance with all rules concerning the listing of the shares. Ensuring compliance with corporate law and regulations and the company’s constitution. Communicating with shareholders issuing circulars, paying dividends, answering questions. Organizing shareholder meetings. Dealing with the administration and legal aspects of employee share plans. Coordinating the drafting, preparation, printing and distribution of the company’s annual report. Playing a key role in any acquisition or merger of company. Maintaining the statutory registers
Conclusion
The focus of the company secretary’s responsibilities will
differ depending on the type of company, whether it is public or private, and
depending on the industry. No matter what the organization however, the role
has expanded beyond simply ensuring statutory compliance to become a pivotal
one where the skills of the company secretary can have a direct impact on the
effectiveness of the Board and organization. Company secretaries can add
real value to their role and increase their impact by bringing commercial
acumen, strategic understanding and softer people skills in addition to their
already much sought after legal and governance knowledge.
[2] CHILIME JAL BIDHUT Co. Vs
Labour court Kathmandu (2064 , W.N. 0300, Date: 2064-10-17)
[3] White church Ltd vs Cavanagh
[4]
section 2(45) of the companies secretaries Act, 1980.
[5] Lord Denning 1971, 2QBD 711,
716.
[6] Barnett, Hores & Co v South London
Tramways Co,(1887).
[7]
THE COMPANIES ACT, 2063 (2006),(Nepal ), THE
COMPANIES ACT, 2013 (India ), Companies Act 2006 (UK
[10] company act 2006(2063),
article 185, 186
[11] company act 2006(2063), article186
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