The Secretary, The Board And Shareholders

Question 1

Why is the Company Secretary position considered a powerful position of influence?

Answer 1

He is the gatekeeper of governance in the company who advises decision makers in the company

Question 2

What are some of the expectations on him:

Answer 2

To act with integrity and independence on the best interests of the company taking into account the legitimate interests and expectations of the company’s stakeholders

Question 3

What dual role does the Company Secretary play?

Answer 3

Need for balance between the entrepreneurial or profit role of the business on one hand, and the governance role of the board and compliance with the law and regulations on the other.

Question 4

State the origin of the word Secretary

Answer 4

Originated from the Latin word “secretarius” - meaning confidential officer. Secretum means secret.

Question 5

Summaries the history of the Company Secretary in South Africa

Answer 5

The establishment of the Stock Exchange in the early 1900s saw the emergence of the Co- Secretary. Major players at a mine were the Mine Manager, Mining Engineer, and the Company Secretary

Question 6

State something of major significance to happen in the Secretaryship field in the 1900s.

Answer 6

The Institute of Chartered Secretaries and Administrators (ICSA UK) got its Royal Charter.

Question 7

What changes did King 1 recommend made to the Companies Act 61 of 1973

Answer 7

That public companies are required to appoint a Company Secretary s268 A

Question 8

True of false: A company secretary can enter into contracts on behalf of the company?

Answer 8

True

Question 9

Following the 2008 global financial crises, what changes did South Africa make to the Companies Act?

Answer 9

Brought increased civil liability of directors, also placed numerous duties and responsibilities on directors (individually and collectively)

Question 10

What organizations have a statutory responsibility to appoint a Company Secretary

Answer 10

Public Companies or State Owned Corporations (SOC), Section 86 of the Companies Act 71 of 2008

Question 11

Can a partnership or juristic person be appointed as a Company Secretary?

Answer 11

Yes provided that they satisfy the requirements set out in Section 84(5)

Question 12

Can a Company Secretary be a director?

Answer 12

Although the Act does not explicitly prohibit it, King IV recommends that the CS should not be a Director in the company and that the CS should maintain an arms length relationship with the governing body. (Principle 10, recommended practices 90-99)

Question 13

State the JSE LR position on the CS becoming a Director

Answer 13

The JSE LR discourage the CS from being a director and require that the listed companies do the following:

i. Be like King IV’s recommendation and maintain an arm’s length relationship with the board

ii. The board must consider and satisfy itself on the competence, qualification and experience of the CS and must confirm this in its annual report to the shareholders that the (board) has executed this responsibility.

Question 14

What of non-listed companies that still has a CS as a Director

Answer 14

The board must justify how such a CS can still be the gatekeeper of good governance in the company.

Question 15

What are some of the consequences for a CS who acts as a director?

Answer 15

A CS could incur liability as a director although not formally appointed as a Director.

Question 16

Is a CS a prescribed officer?

Answer 16

Depends on the individual circumstances of the company. S1 of the Act defines him as “a person who within any company, performs any function that has been designated by the minister in terms of s66(10).”

Question 17

Regulation 38 (Companies Regulations, 2011) has a specific definition for a prescribed officer. Give your understanding.

Answer 17

A prescribed officer is anyone who exercises general executive control over a significant or portion of the business.

Question 18

What is the Act’s position on Prescribed Officers?

Answer 18

Several sections treat Prescribed Officers as Directors especially s75(7) which deal with conflicts of interest, directors duties and liabilities.
S162 provides for Directors and Prescribed Officers to be declared delinquent or under probation under certain circumstances.

Question 19

What are the facts in the Australian Securities and Investments Commission (ASIC) vs Healey and Others

Answer 19

“The responsibilities of Company Secretaries can vary from company to company, within companies over time. They have tended to gradually wax over many decades.”
The CS is also seen as the legal counsel in an organization.
(In James Hardie case, the High Court concurred with the Australian Federal Court of Appeal, that where a CS had legal skills, he is expected to use them and could be expected to use them to report issues such as potential misleading statements or disclosure obligations with the board.

Question 20

Specifically which areas should the CS provide guidance on?

Answer 20

1. The Companies Act 71 of 2008 (as amended)
2. King IV’s Recommendations
3. The JSE LR
4. One of the newly listed Stock Exchanges such as (Crypto Exchange Trading Platform)
5. If the company is listed on dual stock exchanges such as NSE and London Stock Exchange

Question 21

What are the 3 main areas of responsibility for the CS?

Answer 21

The board
The organization
The shareholders

Question 22

What 2 platforms contain requirements pertaining to board and board committee meetings and procedures?

Answer 22

The board charter and,
Board committee terms of reference

Question 23

What section of the Act deals with the statutory duties of the Company Secretary?

Answer 23

S88

Question 24

State the statutory requirements of a CS: (7)

Answer 24

• Guide the directors individually and severally on their duties & responsibilities
• Make the directors aware of any law affecting the company
• Any failure of the company or director to comply with the MOI
• Record all minutes of all stakeholder meetings and those of sub committees
• Certify the company’s annual financial statements & annual reports
• Ensure that all the company’s financial statements are accurate and sent to all the persons entitled to them as required by the Act.
• Carry out the functions of a person designated in terms of s33(3) of the Act.