KCB revision - SLIDE DECK 2 - Role of the company secretary Flashcards
What types of companies must have a company secretary and what legislation or rules recommend this?
All public companies in the UK must have a company secretary.’
s271, CA2006
‘All directors should have access to the advice of the company secretary, who is responsible for advising the board on all governance matters. Both the appointment and removal of the company secretary should be a matter for the whole board.’
Provision 16, UKCG Code
The duties of a company secretary can be broken down into 4 main categories - what are they?
1.Governance
2.Advising the board and senior management
3.Statutory and regulatory compliance
4.Communication
GASC
ICSA’s guidance note ‘The Corporate Governance Role of the Company Secretary’ sets out specific duties and responsibilities of the company secretary for GOVERNANCE. List some of these duties.
BOARD COMPOSITION AND PROCEDURES
Establishing formal schedule of matters
Division of responsibilities between chair, CEO and mgt.
Insurance cover
Board committees are constituted in compliance
Supporting the board on succession planning
BOARD INFORMATION, DEVELOPMENT AND RELATIONSHIPS to include….
Directors’ induction program
Directors’ professional development
Arranging shareholders to meet directors
Developing a pro-active relationship, acting as primary POC for NEDS
Supporting process for formal evaluation
ACCOUNTABILITY to include…
Financial and Business Reporting – detailed knowledge and understanding rules have been met
Risk management and internal control – assisting board in annual review of effective of risk mgt systems and internal controls
Audit committee and auditors – ensuring compliance with code in this area inc. whistleblowing
RENUMERATION to include…
Ensuring remuneration of board meets requirements of code
Ensuring share options & LTI meet requirements with code
Ensuring NED renum. In line with code and AOA
Ensuring LTI approval with shareholders as per LR
Ensuring compliance with renum. In connection to directors’ remuneration reporting and disclosure requirements
RELATIONSHIP WITH SHAREHOLDERS
Continual contact with s/holders as required from board
Managing relations with institutional investors in accordance with UK Stewardship code
Managing AGM in line with stat requirements
DISCLOSURE AND REPORTING
Ensuring the necessary disclosure in relation to CG are inc. in annual report and if premium LR
Ensuring necessary governance info. made available as required on company website
ICSA’s guidance note ‘The Corporate Governance Role of the Company Secretary’ sets out specific duties and responsibilities of the company secretary for ADVISING THE BOARD AND SENIOR MANAGEMENT. List some of these duties.
ADVISING THE BOARD AND SENIOR MANAGEMENT to include…
Good board practice
Board and committee constitution and procedures
Board evaluation
Induction and ongoing training
Statutory duties and responsibilities
Commitment to Corporate Responsibility
Commitment to Corporate Governance
ICSA’s guidance note ‘The Corporate Governance Role of the Company Secretary’ sets out specific duties and responsibilities of the company secretary for STATUTORY AND REGULATORY COMPLIANCE. List some of these duties.
STATUTORY AND REGULATION COMPLIANCE to include…
Directors’ duties
Supporting adherence to CA2006
Share dealing
Inside information
ICSA’s guidance note ‘The Corporate Governance Role of the Company Secretary’ sets out specific duties and responsibilities of the company secretary for COMMUNICATION. List some of these duties.
COMMUNICATION
Communicating all board decisions to management, regulators and other stakeholders
Liaising with board members for all board events
Primary point of contact with NEDs
Ensuring board communication with shareholders
Supporting in preparation of the annual report
The company secretary is often called the conscience of the company. Summarise what this means and set out key knowledge required to fulfil this.
The company secretary is often referred to as the conscience of the company. This is because in fulfilling the role, the company secretary is often called to advise the board on the right thing to do in the long-term interests of the company
The key knowledge they would require to do this would be:
Independence
In depth knowledge of company
Strong governance and ethical understanding
Good relationship with the board
In 2014, ICSA published ‘The Company Secretary: Building trust through governance’. Summarise some of the key findings.
Key findings included:
‘Much more than just administrative..’
Ideally placed to align the interests of different parties around a boardroom table
The skills and attributes are closest to those of the chairman: humanity, humility, high intelligence, understanding of agendas, negotiation and resilience.
The role is changing: it is increasingly outward-focused (incorporating investor engagement and corporate communications), and not just about internal administration.
ICSA-qualified company secretaries deliver a more rounded governance and board member service than those who have come to the role via other professional routes.
Board members often have a lack of awareness of the ways in which the company secretary supports an organisation in its decision-making. Boards may miss out on making full use of the skills, knowledge and experience at their disposal.
What qualifications does a company secretary need to hold and what legislation states this?
S273 of the CA2006 requires directors of a public company enlist the services of a secretary who should have one or more of the following qualifications:
- have been a secretary of a public company for at least three years of the five years immediately preceding his or her appointment; (PRIOR TO CA2006)
- is a member of one of the following seven professional bodies:,
the Institute of Chartered Accountants in England and Wales;
the Institute of Chartered Accountants of Scotland;
the Association of Chartered Certified Accountants;
the Institute of Chartered Accountants in Ireland;
the Institute of Chartered Secretaries and Administrators;
the Chartered Institute of Management Accountants;
the Chartered Institute of Public Finance and Accountancy;
OR
- is a qualified barrister or solicitor.
OR
- Be a person who appears to them to have the requisite knowledge and experience to discharge the functions of the secretary.
According to ICSA’s paper ‘The Company Secretary: Building Trust through governance’ what are the 3 key skills required to perform the role effectively?
Interpersonal skills e.g. disagreeing constructively, integrity, empathy, good listening skills
Practical skills e.g. staying neutral, actively listening, staying calm, suggest step to resolve situations
Commercial and business acumen e.g. you understand the company and how it makes money and creates value, you keep up to date with your industry
What should the board expect of a company secretaries independence and how can this be achieved?
Boards have a right to expect the company secretary to give independent, impartial advice and support to all the directors, both individually and collectively as a board.’
CGI Guidance note, 2014
Best practice is that
- the company secretary should be appointed and dismissed by the board as a whole.
- If the company secretary role is combined with another role such as that of the in-house lawyer or accountant, care should be taken to see that the governance role is not compromised. A general counsel who is also given the role of the company secretary will often have to take sides in fulfilling their legal role to represent the particular interests of the company.
- Reporting lines - The company secretary is responsible to the board and should be accountable to the board through the chair on all matters relating to corporate governance and their duties as an officer of the company.
- Remuneration - decisions on the remuneration and benefits of the company secretary should be taken by the board or by the remuneration committee.
- Evaluation - carried out as part of the annual board evaluation
What can a company secretary be held liable for under legilsation?
As an OFFICER OF THE COMPANY, the company secretary may be liable, with the directors, to default fines and other penalties for officers under the COMPANIES ACT 2006.
Company secretaries may also be held liable, under the INSOLVENCY ACT 1986, for damages awarded by the court in the course of a winding-up of a company if there has been a misfeasance or breach of trust in relation to the company.
What are the arguments or benefits of outsourcing the role of the company secretary?
- To ensure that all of the statutory and regulatory requirements are met by a specialised firm.
- To reduce costs of employing a person with a specific qualification, especially in a company start-up.
What are the arguments or benefits of retaining in house the role of the company secretary?
- An in-house company secretary acquires an in-depth KNOWLEDGE and UNDERSTANDING of the company and its HISTORY and also develops relationships with the board and management that an external firm lacks.
- An in-house company secretary is AVAILABLE at all times
- A qualified in-house company secretary offers a WIDE RANGE OF SERVICES and is able to take on other responsibilities in a start-up or smaller company.
- An in-house company secretary may provide support that is difficult for an external firm to provide; for example, assisting the chairman to prepare for meetings.
- An in-house company secretary can truly act as the ‘conscience of the company’ and has NO CONLFICT, in that they do not do other work for the company such as providing legal or accountancy services.
