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here the effective guidelines for the role of Company secratary.
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Author: Joanne Matisonn (FCIS and ICSA Director)
Edited by Phil Armstrong (FCIS, ICSA Past President and Director)
Introduction
Following the recommendations contained in the first King Report on
Corporate Governance in 1994, the Companies Act was amended in 1999
providing for the mandatory appointment of company secretaries in
public companies. It is good practice for large private companies to
also consider appointing a suitably qualified company secretary to
ensure that the board and directors fulfil their statutory
requirements and to meet the demanding standards of corporate
governance now required of companies.
The person appointed to this position must, in the opinion of the
directors, have the requisite knowledge and experience to carry out
the duties of a company secretary of a public company. The duties are
both extremely broad in scope and onerous. In particular, Section
268G(b) requires that the company secretary must make the directors
aware of all relevant laws and regulations and to report any failure
to comply. Compliance with this is extremely difficult due to the
scope of this requirement and the evolving nature of our legal system
and the many accompanying regulations. The company secretary should
endeavour to devise a system to meet this onerous obligation, such as
taking responsibility for certain areas of the law which relate to
his/her expertise and relying on the legal department and/or outside
lawyers for other specialised expertise and support.
Duties
The duties of a company secretary may vary from one company to another
but are broadly divided into responsibilities to the board, the
company and shareowners and relevant stakeholders.
The Board
The appointment of the company secretary should be a matter for the
board as a whole and his/her removal should be a decision of the
board. If the board decides to remove the company secretary, the
company secretary is entitled to include a replying statement in the
company's annual report.
The company secretary should be subject to a fit and proper test in
line with that required of directors. It is incumbent on the board to
empower the company secretary with the necessary authority and support
to enable him/her to carry out their duties effectively.
The company secretary must provide directors with guidance in their
duties, responsibilities and powers and make directors aware of all
laws and regulations relevant to the company. This should include
advice on business ethics and good governance. The company secretary
should remain abreast of developments in corporate governance and is
pivotal to ensuring that the directors adhere to the highest
governance standards as detailed in the second King Report ("King
II"). The company secretary should also monitor international
developments on corporate governance and bring these to the board's
attention where they would add value.
The company secretary is closely involved in preparing the schedule of
board and committee meetings for the year. The company secretary
prepares the agendas for these meetings in conjunction with the
chairperson and key executives. The company secretary should ensure
that information is dispatched timeously to all directors to enable
them to prepare adequately for these meetings. The company secretary
takes the minutes of these meetings and should ensure that they are
distributed as soon as possible thereafter to aid directors in
implementing the decisions.
The company secretary should ensure that the board's policies and
instructions are communicated to the relevant persons in the company
and that pertinent issues from management are referred back to the
board where appropriate. It is important for the company secretary to
develop a confident relationship with the chairperson, and to assist
the chairperson in formulating priorities in the board agenda for
consideration by the board.
The company secretary should play a key role in the induction process
of new directors, encompassing both directors' duties and
responsibilities in general and specific matters pertaining to the
company itself and the industry in which it operates. The company
secretary should provide new directors with an information pack
relating to these issues. Visits to major operations and meetings with
key executives can be useful for directors to familiarise themselves
with the business.
The company secretary should identify training requirements for
inexperienced directors and should also ensure that there is an
ongoing programme to keep directors well informed of developments in
the company and in respect of matters relevant to their
responsibilities generally.
The company secretary must ensure that the directors and management
operate within an authority framework approved by the board and
reviewed and updated from time to time.
The company secretary takes responsibility for preparing all or parts
of the annual report and ensuring that statutory deadlines are met and
that the statutory and regulatory disclosures are validated,
particularly in relation to statements given on corporate governance
standards and practices in the company.
The company secretary is privy to confidential information about the
company and needs to act with tact and discretion at all times. The
company secretary may not misuse confidential information or disclose
it to any third party in line with their fiduciary duties as an
officer of the company.
Equally, the company secretary must act in good faith and avoid any
conflicts of interest and to ensure that appropriate guidance is given
to the board in these matters.
A number of these activities and responsibilities can be scheduled in
an annual board work plan developed with the chairperson and chief
executive, and which can be a useful tool to monitor the performance
and effectiveness of the board in discharging its duties and
obligations.
The Company
The company secretary must comply with all the statutory provisions of
the Companies Act, including the lodgement of all documents with the
Companies and Intellectual Property Registration Office and the
maintenance and updating of the company's register of members. This
would extend to include any other legislation or regulations critical
to the nature of the company, such as a bank or financial institution
and/or company listed on a stock exchange.
The company secretary is usually responsible for ensuring that all
contracts and agreements are kept in safe custody and that an
executive summary of each document is maintained for ease of
reference, which is useful for orientating new operating executives on
critical contractual issues relevant to their areas of responsibility.
Accompanying this, should be a monthly diary of significant events
that would include issues requiring to be monitored in terms of such
contracts and agreements. It is good practice to ensure that duplicate
copies of critical documents are held offsite as part of a disaster
recovery programme.
The company secretary is responsible for ensuring compliance with the
company's memorandum and articles of association and effecting any
changes to meet the needs of the company.
The company secretary maintains a close relationship with the transfer
secretary to oversee movements in shareholdings and the payment of
dividends.
The company secretary is responsible for complying with the listings
requirements of any exchange on which the company's shares are quoted.
This should be extended to monitoring compliance with the requirements
of the Insider Trading Act and STRATE. Part of the fulfilment of these
obligations entails the preparation and submission of all relevant
communications to the stock exchange through the company's sponsor.
The company secretary may also assume the responsibilities of the
public officer of the company under the Income Tax Act and other
taxation legislation.
The company secretary must certify in the annual financial statements
of the company in accordance with the Companies Act that the company
has lodged all returns required of a public company and that all these
returns are true, correct and up to date.
The company secretary would ensure that all letterheads, notices and
other official stationery and publications of the company display the
correct name of the company, registration number, registered office
and names of the directors and company secretary.
Shareowners and Relevant Stakeholders
The company secretary prepares the agenda for shareowners' meetings in
conjunction with the chairperson and chief executive. This would also
require the company secretary to take the minutes of such meetings and
to ensure that any special resolutions passed at these meetings are
properly registered with the Registrar of Companies. In fact, the
company secretary would essentially take charge of the processes and
procedures associated with the holding of shareowner meetings,
including arrangements for the presence of scrutineers, if required,
and validating proxies and letters of representation received for
these meetings.
The company secretary would take responsibility or provide input for
any circulars and other documentation sent to shareowners by the
company. This would include obtaining approval from the stock exchange
and any other applicable regulatory authorities. It would also require
the company secretary to verify the statutory and regulatory
information contained in such material and to ensure that the
directors clearly understand the implications of any statements of
responsibility given on behalf of the board.
If the meeting is an annual general meeting, the company secretary
must arrange for all directors to attend and in particular the
chairpersons of the remuneration and audit committees.
The company secretary is responsible for all forms of communication
with shareowners and may often be responsible for the relationship
with analysts and the media. This may include responsibility for the
company's corporate reputation and investor relations activities.
The company secretary is required to ensure that a copy of the
company's annual financial statements is sent to shareowners within
the stipulated period and to all persons entitled to receive it.
Other Duties
The company secretary may be required to take responsibility for the
administration and management of the company's pension and/or
provident fund in the capacity as principal officer, trustee or
chairperson.
The company secretary may be required to administer and manage a group
life assurance scheme on behalf of the company's employees.
The company secretary may be required to take responsibility for the
administration of the medical aid scheme offered to employees and
other similar arrangements.
The company secretary may be required to administer and manage the
insurance portfolio and take some role in the company's risk related
activities in this context.
The company secretary may take responsibility for the corporate social
responsibility portfolio. This would entail ensuring that the company
adheres to its corporate social investment programme and monitoring
various aspects directly and indirectly related to this activity,
including the supervision of the company's adherence to any industry
or sector charter and its black economic empowerment credentials.
Consequences of Non-Compliance
In the event of the company not complying with its statutory
requirements under the Companies Act and other relevant legislation,
or its listings obligations, or the recommendations of King II, the
company secretary should raise the matter with the chairperson of the
board or the chairperson of the audit committee (as appropriate). As a
last resort, if the matter is not addressed, the company secretary may
be compelled to notify shareholders under section 268G(b) of the
Companies Act and/or approach the relevant regulator for assistance.
This requires considerable courage and resolution on the part of a
company secretary, which is the hallmark of this role.
--
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