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We are frequently asked by those setting up a new company “What does a company secretary do?” and “Is their appointment really necessary?”. Contrary to what you may believe, there is no statutory requirement to appoint a company secretary for a private limited company (although a secretary is required for a public company). A company’s articles of association, however, may contain a specific provision to appoint a company secretary. Where company articles require a company secretary, such a provision can only be removed by the shareholders passing a special resolution. A company secretary can confer considerable benefits upon a private company, as we will outline. Indeed, they are often described as being the “bearer of the moral compass”. In this article we answer the question “What does a company secretary do?” and explain the qualities required, the role, its responsibilities and its fiduciary duties.

What does a company secretary do?

A company secretary has an executive role and ensures the effective governance and administration of a private limited company. The secretary is also a trusted adviser to the board, the company chair and any non-executive directors. A company secretary is legally liable if he or she fails to meet the statutory requirements, for which reason it is most important to understand the duties and obligations of the role. The statutory provisions for company secretaries are covered in sections 270 to 280 of the Companies Act 2006 (CA 2006), although there is no definition of the role and its duties. Rather, these are implied. Some company secretaries perform roles that are more administrative, whereas other such roles may instead be more strategic and advisory.

To whom is the company secretary responsible?

A company secretary is responsible to:

  • The chair: A company secretary tends to report directly to the company chair, although the chair will defer to the company secretary for guidance to ensure that he-or-she – i.e. the chair – is performing his-or-her legal duties and responsibilities at all times. This may include verifying that the governance processes are in place across the business and that these are suitable given the nature and type of company.
  • The board: A company secretary reports also to the board on an advisory basis and plays a key role in encouraging a healthy corporate culture. Board members often rely on the company secretary to advise them on fulfilling their:
    • directors’ duties
    • disclosure obligations
    • listing rule requirements
    • corporate governance obligations, and
    • board obligations
  • The company, shareholders and key stakeholders: A company secretary can be thought of as an important “bridge” between the senior board and those working in the business. In serving this role the company secretary is central to how the business strategy is formed and then disseminated within the business. The secretary performs also an external communication role, liaising with investors and other stakeholders on corporate matters.

The role of a company secretary as a “bridge”.

The importance of a company secretary as a internal bridge was emphasised in a report published by the Chartered Governance Institute (ISCA) in 2014 entitled: “The Company Secretary: Building trust through governance”. The report stated, “The role of the company secretary is much more than just administrative. At its best, it delivers strategic leadership, acting as a vital bridge between the executive management and the board and facilitating the delivery of organisational objectives”. The ISCA report also confirmed why company secretaries are so important when it comes to shaping strategy and facilitating effective decision making: “Company secretaries are ideally placed to align the interests of different parties around a boardroom table, facilitate dialogue, gather and assimilate relevant information, and enable effective decision-making. They are often the only people to know first-hand how the decisions made have been reached”.

In addition to providing much needed corporate governance oversight, an experienced company secretary will ensure the long-term continuity of the company, assist in making effective board-level decisions and highlight any skills gaps at board level. Despite the importance and breadth of their role, according to the ISCA, company boards are not taking full advantage of the many benefits of a company secretary.

What are the main duties and responsibilities of a company secretary?

The duties and responsibilities of a company secretary are not defined in law, although most individuals in this position will ensure the following on behalf of the company:

Correct filing of company returns

A company secretary ensures that annual filing obligations are met correctly and on time, including confirmation statements, annual accounts, directors’ reports and auditors’ reports.

Maintenance of statutory registers and minute books

A company secretary is typically responsible for maintaining statutory registers and minute books, including the Register of Members, Register of directors and secretaries, Register of interests in voting shares and Register of debenture holders.

Organising board and board committee meetings.

A company secretary arranges and prepares board meetings. This involves preparing the meeting agenda, circulating documents and notices, writing meeting minutes, drafting and preparing shareholder communications and organising the annual general meeting (AGM).

Updating Companies House of changes

Companies are required to keep Companies House updated with changes such as thos relating to share capital, directors and the registered office address. In addition, a company secretary will ensure that the company address (including the SAIL address) is correctly displayed and that changes are reflected on the company’s website and stationary.

Ensuring statutory and regulatory compliance

Perhaps the most important role of the company secretary is to ensure that the company remains at all times compliant with the CA 2006 and its articles of association. They will ensure also that the company is compliant with the latest regulations regarding health and safety, data protection, cyber security and human rights & modern slavery.

Shareholder communication

A company secretary may take responsibility for the circulation of correspondence to shareholders including announcements, dividend updates and any information on shares and shareholding.

Administration

In addition to all of the duties above, a company secretary often takes responsibility for important administrative tasks such as:

  • Authenticating company documentation.
  • Issuing share and loan stock certificates.
  • Looking after various documentation such as directors’ service contracts, property leases, agreements for commercial equipment.
  • Administering employee share option schemes.
  • Administering insurance and pensions.
  • Administering PAYE (Pay As You Earn) and payroll.
  • VAT registration.
  • Managing the company’s premises and facilities.
  • ustody and use of the company seal (if the company has one).

Fiduciary duties

It is important also to understand the fiduciary duties of a company secretary, these include:

  • Duty of loyalty.
  • Duty not to make secret profits.
  • Duty to act with care and skill.
  • A duty to avoid conflicts of interest.

These fiduciary duties remind us of the important role of the secretary as the company’s “bearer of the moral compass”.

What are the qualities of an effective company secretary?

A company secretary requires a wide range of skills and qualities in order to carry out faithfully the role’s duties and responsibilities. The most effective company secretaries have the following skills and qualities:

  • Can communicate and translate complex ideas
  • Can understand the needs and capabilities of the business and play a role in its strategic direction
  • Can facilitate dialogue within the company boardroom
  • Can mirror the qualities of the company chair – including high levels of humility, intelligence, understanding of agendas, negotiation skills and resilience.
  • Can access board members formally and informally
  • Can form strong working relationships with the company chair and CEO
  • Can communicate effectively to investors and other external stakeholders

What if a private company has no company secretary?

Section 270 of the CA 2006 explains that, where a private company does not have a secretary, anything that is “authorised or required to be given or sent to, or served on, the company by being sent to its secretary:

  • may be given or sent to, or served on, the company itself, and
  • if addressed to the secretary shall be treated as addressed to the company; and
  • anything else required or authorised to be done by or to the secretary of the
  • company may be done by or to—
    • a director, or
    • a person authorised generally or specifically by the directors”

Final words

While the appointment of a company secretary is not a statutory requirement for a private company, by appointing an experienced and skilled person to this position your members,shareholders and other vested stakeholders can be assured that your company has the necessary administrative and compliance oversight. Before you employ a company secretary, we recommend carefully reflecting on the qualities that you seek, making sure that your board truly understands the role of a company secretary and how you can integrate your new company secretary to provide the maximum contribution to your board. If you need help in understanding the answer to “What does a company secretary do?”, how to appoint a company secretary, or if you need any further information on this vital role, then speak to a company formation specialist – such as Uniwide Formations – who can advise you further.

Uniwide Formations specialises in registering limited companies and LLPs. We provide also a wide range of related professional business services, examples of just a few of these that are useful to a Company Secretary including:

 

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