While the position of Company Secretary has always been important within an organisation, especially from an administrative perspective, the Company Secretary’s role and scope of responsibility has grown over the years from an ‘efficient administrator’ to a ‘governance leader’.
A modern-day Company Secretary’s role essentially encompasses ensuring the smooth running of the board’s functions, as well as ensuring (from a good governance perspective) that directors are adequately informed and protected in the heightened regulatory environment in which modern organisations operate.
Duties of a Company Secretary
The de facto duties of a Company Secretary include attending board, board committee, shareholder and trustee meetings, and preparing the relevant documentation before and after these meetings.
In addition, Company Secretaries must have a full grasp of the legislative and regulatory environment in which the organisation operates. They are required to provide directors with guidance pertaining to their statutory and organisational-based duties, responsibilities and powers and to make them aware of any law that is relevant to, or that affects them as directors, not least also the organisation.
The Company Secretary is also responsible for the organisation’s compliance in respect of company legislation and governance codes. They must also proactively ensure that the organisation’s legal and regulatory governance structures and operations are in place.
To address these onerous requirements, it is imperative that the Company Secretary ensures a robust governance framework is implemented within the organisation. In this way, they demonstrate to the board the extent to which these duties are being effectively fulfilled and provide valuable information (in addition to any additional board pack materials) to the organisation’s leadership such that they can make properly informed decisions pertaining to the real state of governance the organisation finds itself in.
Company Secretaries are not simply minute-takers
Indeed, the absence of a digitised governance framework and its relevant information translates into increased risk and liability (for all). Given that the Company Act, 71 of 2008 sets strict requirements for the appointment and registration of the Company Secretary, the board cannot underestimate the knowledge, skill and experience necessary to do the job.
Company Secretaries are not simply minute-takers. In fact they are highly skilled professionals who are fundamental to the organisation’s governance team. They play a pivotal role in the organisation’s effective and timeous engagement with stakeholders which is of vital importance to modern, sustainable organisations.
In addition to the Company Secretary’s knowledge and experience of relevant legislation, regulation and other governance instruments, structures and mechanisms, it is generally accepted that, in terms of the Act, they are “prescribed officers”.
In conclusion
Regulation 38 of the Act states that a “prescribed officer” includes anyone who regularly participates to a material degree in the exercise of general executive control over and management of the whole, or a significant portion, of the business and activities of the organisation. As such, the Company Secretary is subject to the same fiduciary duties and liabilities as a director and must meet the same fit and proper tests, in line with that of a director.
Regrettably, many boards still regard their Company Secretary as a purely administrative position, not realising their strategic (and legal) importance to the sustainability of the board and the organisation itself. Improper appointments of this critical function will inevitably lead to dysfunction within the boardroom, not least other forms of risk and damages to the organisation.
Terrance Booysen | Chief Executive Officer | CGF Research Institute | mail me |
Related FAQs: Governance leadership of company secretaries
Q: What is the role of the company secretary in governance?
A: The role of the company secretary is integral to corporate governance as they act as a governance custodian, ensuring compliance with legal and regulatory requirements while also facilitating effective board processes and fostering accountability within the organisation.
Q: How can a company appoint a company secretary?
A: To appoint a company secretary, a company must follow the legal requirements outlined in the law to appoint a company secretary. This typically involves a board resolution and ensuring that the candidate meets the necessary qualifications and experience as per the governance standards.
Q: What are the key responsibilities of company secretaries and governance professionals?
A: Company secretaries and governance professionals are responsible for a variety of tasks including maintaining statutory records, ensuring compliance with the King IV Report on Corporate Governance and providing independent guidance on corporate governance matters to enhance board effectiveness.
Q: How does the King IV Report influence corporate governance in South Africa?
A: The King IV Report provides a comprehensive framework for corporate governance for South Africa, emphasising ethical leadership, accountability and the role of the company secretary as a custodian of governance to promote transparency and responsible decision-making within organisations.
Q: What are the consequences of governance failures?
A: Governance failures can lead to significant repercussions including legal penalties, loss of stakeholder trust and damage to the company’s reputation. Effective company secretaries play a critical role in preventing such failures by ensuring adherence to governance principles and compliance standards.
Q: Why is ethical leadership important in corporate governance?
A: Ethical leadership is vital in corporate governance as it sets the tone for the organisation’s culture and values. It reinforces the role of the company secretary in promoting ethical practices and ensuring that the board operates with integrity and accountability.
Q: What corporate governance services do company secretaries provide?
A: Company secretaries provide professional corporate governance services that include advising the board on governance best practices, facilitating board meetings, ensuring compliance with relevant laws and regulations and acting as a liaison between the board and shareholders.
Q: How can a company advance its governance programme?
A: A company can advance its governance programme by regularly reviewing and updating its governance policies, engaging with the governance institute for best practices, and ensuring that company secretaries receive ongoing training to stay informed about the latest developments in corporate governance.
Q: What does it mean for company secretaries to be custodians of corporate governance?
A: Being custodians of corporate governance means that company secretaries are responsible for safeguarding the governance framework of the organisation. They ensure that governance practices are adhered to, and that the board operates effectively, ethically, and in compliance with the King IV Report and other relevant standards.