Confidante, guide, organiser and supporter – The ever-important role of the company secretary

0
Professor Douglas BOATENG

Insights into Directorships and the Boardroom

A company secretary forms an important part of an organisations’ management and supervisory functions and plays an essential role in facilitating good governance.

Today, it is a requirement by law for all organisations operating under the Companies Act (e.g. ACT 992-2019-Ghana) to have a qualified and experienced company secretary. The company secretary may be a body corporate except that one of its promoters, directors or operating officers must be a qualified and experienced in matters pertaining to company secretariaships.

Company secretaries according to the Institute of Chartered Secretaries and Administrators-UK (ICSA), the Chartered Governance Institute-SA (CGISA) Companies Act 992-(CA-Ghana-2019) Cadbury and King 1V must have a broad skills set to successfully execute their duties. They include: corporate law, finance, governance, strategy and corporate secretarial practice. Another key requirement for the practitioner is to have had access to a wide variety of different job roles across many sectors and a diversity of responsibilities.

It is important to note that being a company secretary is not a legal function but rather a governance function which includes legal.  They are not just board meeting “minute takers” and are expected to give detailed guidance to company directors to enable them to fulfil their fiduciary responsibilities to the organisation, shareholders and stakeholders within a carefully constructed legal, ethical and regulatory framework.

It now accepted in many jurisdictions and by ICSA UK and its affiliates around the globe (including Ghana) that company secretaries for public, private and state owned organisations are responsible for:

  1. Inducting board members including new, experienced and even existing directors
  2. Assisting with professional director development as required.
  3. Guiding the chairman and board on their responsibilities under the rules and regulations to which they are subject and on how those responsibilities should be discharged
  4. Supporting the chairman in ensuring the board functions efficiently and effectively.
  5. Ensuring good information flows within the board and its committees and between senior management and non-executive directors,
  6. Maintaining good shareholder relations and keeping the board informed on shareholders’ views.
  7. Developing and overseeing the systems that ensure that the company complies with all applicable codes, in addition to its legal and statutory requirements.
  8. Monitoring changes in relevant legislation and the regulatory environment and taking action accordingly.
  9. Overseeing the day-to-day administration of the company, e.g. maintaining statutory books, including registers of members, directors and secretaries, organising board meetings and AGMs, preparing agendas and taking minutes.
  10. Assisting the chairperson and chief executive in determining the board plan
  11. Providing support with other strategic matters of administration and governance matters
  12. Act as the main sounding board governance, ethical related matters. (Source: ICSA, Companies ACT 992-GHANA, KING IV)

To enable best practice, company secretaries are also subjected to independent evaluation tests to ensure that they are objectively held to account for their actions.

In Ghana, the Companies Act 992 (2019 p171) clearly stipulates that a company shall have a company secretary.  It is also generally a requirement and good practice for all public and state-owned organisations to have a company secretary. In state owned entities they are sometimes referred to as board secretaries. Unfortunately, this role in state owned entities is generally misunderstood and ill-defined consequently leading to professional practitioners becoming purely board minutes recorders and sometimes providing inputs from merely a legal and not from the broader governance perspective.

According to the Institute of Directors, “The company secretary has a key role to play in ensuring that board procedures are both followed and regularly reviewed. The chairman and the board will look to the company secretary for guidance on what their responsibilities are under the rules and regulations to which they are subject to and on how these responsibilities should be discharged.”

While the duties and responsibilities of company secretaries are dependent on the organisation they represent, these duties are usually related to the activities and responsibilities of the board, the company, shareholders and stakeholders.

When it comes to the responsibility or duty to the board, the company secretary is generally expected to provide the board of directors with guidance and insight into their responsibilities and powers and should provide them with all information related to the laws impacting on the company. The secretary should remain up-to-date on any developments related to corporate governance and should keep the board of directors informed of any changes or developments.

According to Deloitte, “the Board, particularly the chairman, relies on the company secretary to advise them not only on directors’ statutory duties under the law, disclosure obligations and listing rule requirements but also in respect of corporate governance requirements and practices and effective board processes.”

The company secretary is often responsible for assisting with the organisation of board and committee meetings and ensuring that meeting minutes are correctly recorded. The secretary is also responsible for preparing shareholder meeting agendas and other processes and procedures related to these meetings.

In this regard, Deloitte notes that the company secretary’s administrative support should go “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.”

According to the Chartered Governance Institute of Southern Africa, “the company secretary is responsible for all forms of communication with shareholders and may often be responsible for the relationship with analysts and the media. This may include responsibility for the company’s corporate reputation and investor relations activities.”

Deloitte adds further input to the importance of communication in the secretary’s duties when they say: “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 secretary is also required to undertake several administrative roles related to the management of the preparation of the annual report, certification and distribution of financial statements, yearly work plans, updating of board and committee charters, and compiling board papers, among other things.

In addition to this, the company secretary is often expected to assist with the nomination and appointment process of new directors, including ensuring the proper induction, orientation, education and training on new and current directors.

In terms of board development, Deloitte notes that 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.”

They further insist that 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 fulfilment of, these best practice governance requirements on behalf of the chairman.”

Based on the wide range of possible responsibilities, it is clear that the role of the company secretary is an important one. The company secretary needs to be able to manage a number of different duties simultaneously, while keeping the company up to date and compliant when it comes to sound governance practices.

It is for this reason that boards of directors need to take careful consideration when it comes to the appointment of a company secretary. The Chartered Institute of Directors note that “the person appointed to this position must in the opinion of the directors, have the requisite knowledge and experience to carry out the duties of a company secretary of a public company. The duties are both extremely broad in scope and onerous.”

Due to the varied nature of the corporate secretaries responsibilities, narrowing down the specific qualities to look for is not always that simple. Today, with the dynamics of the boardroom changing, companies have realised that secretaries need to be able to provide specialised skills and technical knowledge.

In summary, the increasingly specialised role of the company secretary has led to them emerging as key governance experts within organisations be they public or private or state owned.

At the core of the qualities, skills or traits required of a company secretary would be a sound and in-depth knowledge of corporate governance practices influencing a company as well as any legal requirements that the company is bound by. Other essential traits to look for would include being a good communicator, having exceptional multitasking skills, problem solving skills, the ability to work well under pressure, the ability to adopt a mediator, mentor and liaison role, and having sound judgment.

To conclude, the company secretary is responsible for overseeing the efficient administration and compliance of a company and act as a core source of advice on business conduct. Other duties often required of a company secretary includes the administration of a company’s pension, provident and medical aid fund schemes as well as taking responsibility for the organisational social responsibility programme.

>>>the writer is an international chartered director and Africa’s first-ever appointed Professor Extraordinaire for Industrialisation and Supply Chain Governance. Independently recognised as one of the vertical specific global strategic thinkers on industrialization, supply and value chain governance and development, he continues to play leading academic and industrial roles in sectorial reforms both in Africa, and around the world. He is the CEO of PanAvest International and the founding non-executive chairman of MY-future YOUR-Future and OUR-Future (MYO) and the highly popular daily Nyansa Kasa series. For more information on COVID-19 updates and Nyansakasa visit www.myoglobal.org.

 

 

Leave a Reply