No, it’s not the kind of secretary you’re thinking of – someone who is responsible for managing administrative work in a company and looks after visitors. The type of company secretary that we are referring to is responsible for something else entirely.
Company secretaries are, simply put, individuals in senior positions in a private company, usually in a senior managerial position or above. They are responsible for ensuring that an organization complies with standard financial and legal regulations around running a company, and on the whole responsible for maintaining high standards of corporate governance within a company.
If you’re thinking about expanding your business, it is important for you to think about how you can best help your company function as an organization. This is where the role of the company secretary comes in, as an individual who will help ensure that your organization remains functional, and that the various stakeholders in your company are able to get the most out of their investment in your company.
Broadly speaking, in most jurisdictions, the company secretary owes duties to three groups of stakeholders – the company, the company directors, and the company shareholders.
These are, in brief:
Duties to the company
The company secretary ensures that the organization complies with the regulations set out in the respective pieces of legislation governing companies, in the respective jurisdiction in which the company is founded. In general, he is tasked with maintaining the high standards of corporate governance in a company, that is ideal for its functioning.
Duties to the shareholders
The company secretary is also responsible for communicating with shareholders and ensuring their interests are protected. He also is responsible for ensuring that shareholders are able to take part in the decision making process at a company’s Annual General Meeting, and does so by disseminating financial statements and any other relevant information needed for shareholders to come to an informed decision.
Duties to company directors
It is also their responsibility to register and communicate with shareholders, to ensure that dividends are paid. They also assist in the managing of company records, which include information like a list of directors and shareholders, and the annual accounts of a company. A company secretary often takes minutes at directors’ meeting as well.
Do note that these are the general requirements and expectations for such individuals. There may be additional specific scopes of duties depending on which jurisdiction you are in.
Relevant Legislation in the Asia Pacific
Singapore: Companies Act (Chapter 50)
Hong Kong: Companies Ordinance (Cap 622)
Australia: Corporations Act 2001
New Zealand: Companies Act 1993
United Kingdom: Companies Act 2006
These acts will generally set out issues such as who may be qualified to serve as a company secretary, whether a company must have a company secretary, the specific duties owed by the company secretary, and the potential penalties for contravening any of the regulations related to serving in this capacity.
The importance of this role in a company should not be overlooked. While the internal governance of a company may sound like one of the least exciting aspects of your business that you have to keep an eye on, it is undeniable that your company will not be able to function without it.