In the past, the role of the corporate secretary could be performed as a part-time function and was largely that of a court jester to the board and senior management. Nowadays, company secretary duties are varied and complex, and the position requires a high degree of professionalism and attention to detail.
This article examines the suggested areas of responsibility for the corporate secretary as well as best practices that can help guide corporate secretaries in the daily execution of their job. As a result, this article should prove to be a useful resource for those who are new to the profession as well as for corporate secretaries in need of a refresher.
The role of a corporate secretary is not always properly understood and can be an undervalued element in the organization’s governance architecture. This is understandable, given the scope and complexity of the role, and is further complicated by the fact that the duties of the corporate secretary are set by law and regulation, and can vary significantly by jurisdiction.
Overview of Corporate Secretaries
Therefore, considering the ongoing expectations of corporate secretaries, it is important to unravel the conceptual foundation to achieve fair outcomes of the existing informed governance regulatory framework development. This, in turn, will help assure both internal and external stakeholders. Evidence suggests that the potential contenders who could fulfill the corporate secretaries’ enhanced role are those who are equipped with a full range of board adviser roles and competencies. Active involvement of directors in decision-making is a discriminatory characteristic of effective corporate leadership and governance. This is particularly of interest since such characteristics are conducive to sustainable business operations. Among the various individual-level determinants that are likely to have potential roles in the success and contribution of the corporate secretarial function, this research sheds light on these issues by considering the relative significance and potential ethical alignment.
As company secretarial practice transforms to meet the challenges of the modern era, the role of the corporate secretary has been redefined in many respects. In essence, the corporate secretarial function has become comparable to a strategic policy management role that coordinates and manages the broad framework for the governance of the company. The insights of key findings consistently reveal that the corporate secretarial function has evolved to become more interactive with the board and senior management team members. In addition to giving valuable advice, corporate secretaries perform a much broader role in corporate governance within the recent trends of instigating a professional development program. They should not only be acquainted with corporate governance issues; they should also be given the opportunity to utilize their various skills to support the board and help create sustainable value for the company.
Importance of Corporate Secretarial Services
The corporate secretary is a means by which the directors can gain access to the information they require to discharge their oversight duties. The corporate secretary reports directly to the board and the CEO is not in the reporting line, implying that the board can acquire information about the current financial condition of the organization or other sensitive issues of the manager without his or her knowledge. By playing this role, corporate secretaries may have a beneficial impact on corporate governance. Therefore, both corporate secretaries and board members themselves note that the corporate secretary’s presence is an essential enabler of effective corporate governance. Based on these attributions, corporate secretaries are referred to as close bystanders of the organization, participating in or continuously observing significant discussions and decision-making processes. Participants of the interview study of Hossain and Lai state that the roles and duties of a corporate secretary can be comprehended under three categories: shareholder meetings, board activities, and regulatory and administrative compliance. We provide the definitions of these three types of roles in relation to the company’s formal governance structure. More concretely, from the viewpoint of a company’s shareholders as the owners of the business, the shareholder meeting is defined as a key event in the corporate governance structure and is the final stage in the shareholders’ governance cycle. The board has its fiduciary duty to act on behalf of its shareholders; thus, one of the primary objectives in AGM is the communication between the shareholders and the board.
Corporations are regarded as legal entities that are different from their shareholders, directors, managers, and employees and are governed by a set of laws, rules, and regulations, encompassing various sectors including corporate, tax, trade, and bankruptcy. One of the complexities of corporate regulations stems from the fundamental nature of the corporation, characterized as an artificial legal person created by a group of individuals pooling their resources to conduct business activities. It is often claimed in the agency-cost literature that conflicts of interest can arise among the parties involved in the corporate governance structure, and thus various monitoring devices are installed to mitigate these conflicts. For instance, the shareholders appoint the directors who, in turn, appoint the executive managers. Independent directors and audit committees are installed to oversee the manager and regular financial and nonfinancial reporting are required. Then, do we need one more piece in the corporate governance machine? Studies note that such internal monitoring devices (board members and shareholder committees) may not have enough incentives or expertise to effectively monitor the activities of the senior management, particularly in large and complex organizations. Hence, other employees of the organizations, such as nonexecutive directors or managers might not have full incentives or expertise to engage in monitoring of the CEO’s operations.
Key Responsibilities of Corporate Secretaries
In the corporate governance literature, corporate secretaries have traditionally been viewed through either a compliance-oriented lens or a more general governance one. Consequently, the corporate secretaries’ responsibilities have been classified into board and governance functions. More specifically, they are seen to either provide support services to the board or act as governance experts who manage the governance processes and meetings, in particular. Several studies have tried to establish the non-board related roles of corporate secretaries or focus on a particular activity that falls under the more general non-board related functions of corporate secretaries’ activities. Research shows that the non-board-related functions, as described in the corporate governance literature, uplift the corporate secretaries’ role to that of ‘a corporate governance leader or advisor, strategic leader or compliance officer. The execution of boundary-spanning roles, in particular, transforms their role to one of ‘senior advisor or corporate governance specialist.
Corporate secretaries typically handle various important responsibilities that are vital for long-term business success, but they are often overlooked by the management. They mainly focus on compliance-related roles, providing independent advice on the best governance practices, as well as on board-related roles, including helping the board to cohesively function and be effective. However, their role has evolved to include the management of governance functions and activities, as well as strategic management and value creation-related duties. While some of these responsibilities might be traditional, companies are turning to take them more seriously, especially as they pursue corporate sustainability goals as a means of long-term firm value creation. Consequently, there is a need to expand the overview of corporate secretaries’ duties and roles. This paper aims to disaggregate the role of corporate secretaries across three major dimensions, to develop an updated systematic overview of the key responsibilities and to provide best practices.
Ensuring Compliance with Corporate Governance
The corporate secretary should at all times be made aware of who he takes instructions from and who supervises him – the directors, the chairman or the CEO, or an authorized committee of directors, e.g., the board legal and secretarial, and/or audit and risk committees. This is to ensure that proper instructions and guidance are given and continuous supervision is maintainable within the corporate secretarial function, responsibilities which are of high importance. Regardless of where the corporate secretarial function is placed within the organization, whether within a larger corporate group or within a subsidiary, the corporate secretary should also be aware of who supervises and/or manages the function, whether it is within the “holding”, “service” company or a separate entity responsible for the corporate secretarial function of many subsidiary companies or one subsidiary company.
Corporate secretaries play a key role in the governance of small states in developing countries as well as in larger, more developed and diverse states. By manning the corporate secretariat, corporate secretaries will further contribute to the social and economic well-being of their societies. Functions of corporate secretaries are varied and diverse. It is no doubt that corporate secretaries can add value and be constructive in participating in the governance and management of any corporate entity in the foreseeable future. The ultimate objectives are to achieve sustainability in corporate entities and in the end bring about human, social and economic well-being to the societies they serve. In one sentence, the fundamental functions and duties of a corporate secretary revolve around ensuring compliance with corporate governance.
Maintaining Corporate Records and Documentation
The premature loss of any document held on behalf of a corporation can bring dire consequences for the corporation concerned. In specific instances, the loss of original documents may invalidate contracts or existing commercial arrangements; for example, a company’s contract may not be enforceable if the company was unable to produce a valid certificate of incorporation along with other related documents such as an up-to-date register of members. There are also statutory implications. If, due to the loss of original documents, the company was unable to ascertain the total number of shares for voting purposes, key votes may have to be annulled. If the documents were required to be filed with ROC, the company may be prosecuted for non-filing. Such dire consequences are exacerbated by the fact that the loss of original documents is invariably preventable. As the custodians of documents, all company secretaries must be fully aware of the potential problems and must exercise due care and diligence in respect of documents that come within their care, whether the documents are in paper-based format or are electronic.
Companies Act imposes a number of obligations regarding the form and keeping of statutory records. An officer is granted a general discretion in the manner in which the records are kept. However, the Act provides that, unless the Tribunal orders otherwise, the records must be kept either at the company’s registered office address or at an alternative location in Wales that is notified to the Registrar, or electronically in such a manner as to enable it to be accessed by the directors, shareholders entitled to inspect it, and the Company Secretary. There are also specific form and manner requirements with respect to records such as a company’s register of members. The record must be kept in writing or in a form that can be reproduced in writing and must contain the required particulars. If the register of members is not kept in written form, the company must take reasonable precautions to prevent tampering with the records. By virtue of the Companies Act, it is the duty of a company to maintain up-to-date registers of members and maintain records of any new allotments of shares and stock transfer of shares whenever these occur. Failure to maintain these records or to make them available to shareholders would represent a breach of statutory duty by the company, and the officer who has custody of the records failing to maintain these would be liable to a fine as well as criminal prosecution.
Facilitating Board Meetings and Shareholder Communications
Bearing in mind the challenging regulatory climate and the changing landscape that corporate governance is currently undergoing, corporate leaders today are pressured to understand and comply with the rules and to increase transparency in the work. This often results in directors doubting who to trust, feeling uninformed, and becoming paranoid about their ability to question delegates as an assurance in the performance of their assigned service. In fact, studies reveal that a strong thread of proportionality is related to high performance somewhere between board members and company secretaries. Nonetheless, a number of directors appear unsure as to the nature of the assistance that should be looked for or expected from a corporate secretary and lose potential profits from a well-grounded direct contact with one. Some of the apprehensions may originate from a lack of clear identification of the responsibilities that fall within the support of the role.
The administration of board and organizational meetings is a critical responsibility of company secretaries. The company secretary is expected to understand their duty in facilitating the logistical arrangements, preparation and dissemination of board and organizational meeting materials. As well, they need to ensure the meeting documents assist the board or stakeholders to make informed decisions as well as address the material challenges of the organization. A companion responsibility which might require the company secretary to take on more onerous duties is the quality of the board meeting. They monitor time on logistics and presentations and adopt strategies to address the board’s improvement. Finally, the company secretary is expected to be ready to react rapidly to the obligations of the board at a fast pace of exchange in NGOs and organizations.
Managing Regulatory Filings and Reporting
Given the data within these reports, management and other stakeholders both internal and external information to understand the company’s operations, strategy, and financial condition. Despite the volume and complexity of these tasks, corporate secretaries perform these duties because they not only have expertise but are uniquely positioned in the organization to coordinate and execute the required information. Although “EC” is responsible for this area, EC’s and their staff, if applicable, have related roles in these processes. The corporate secretary must now think as an advisor, able to identify and communicate important governance principles that shareholders may be reviewing in the course of their employment. Given these and other considerations, there are excellent governance principles that can better position the company to succeed in any indices.
Many corporate secretaries are responsible for managing, coordinating, and executing regulatory filings and reporting in addition to monitoring and compliance obligations, and maintaining other formal documents. Roles in managing regulatory filings and reporting can be substantial and involve working with other stakeholders such as management and external service providers. Regulatory filings and reporting requirements can be on a monthly basis, quarterly, or annually. Further, a public company is required to report earnings, usually on a quarterly basis.
Best Practices for Corporate Secretarial Services
This research helped improve the understanding of the roles and importance of the company secretary and provided an approach as a reference guide for how company secretarial functions can and should be fulfilled. Also, this study contributes to the understanding of the role of the Secretary for companies. This study applies comprehensive detail and depth concern of the knowledge base key secretarial field competencies connected to best practice secretarial services, and the market is combining current concerns and best practices focusing on the leadership competencies of the corporate secrets that apply. The implications of the study for companies and corporate secrets are as follows. This study on best practice in corporate secretarial services can help company secrets recognize and understand vital secretarial positions and their practices to enhance secretarial services. Consequences for the sense of capacity are limited to a few fields concerning business secretarial practices due to the fact that best practices are only about leadership expertise.
This study reviewed literature pertaining to corporate secretarial services. It then examines current practices in the company secretarial area and identifies the gap between best practices in the corporate secretarial area and current corporate secretarial functions, such as professional body education, professional body assessment structure, and assessment content. This study can provide corporate secretaries and their stakeholders with an excellent understanding of best and poor corporate secretarial services and some mismatch between poor services and their causes. It could be very useful evidence of the value of corporate secretarial services. Company secretaries may adapt this evidence to improve their services, resources, and position status. To give current industry-academic researchers and industry practitioners an insight into corporate secretariat services or further study and training topics, this study will be beneficial. It’s for the business organization, the findings of this research provide an understanding of the corporate secretariat function and the corporate secretariat scope.
Establishing Effective Communication Channels
Indeed, these secretarial professionals are professionals who continue to play an important role in corporate governance – not only in relation to their function as roles and regulatory compliance auditors, but also in adding value to the organization. This analytical research aims to discuss the role of corporate secretaries in increasing awareness of corporate governance and finding gaps in the current practices of corporate secretaries in this country as well as the best industry practices. Open discussion sessions will also be held in focus group form to gain insight into the greater importance of this group in relation to current industry practices.
With the increasing number of regulations and standards that a company has to comply with, having a business team such as a secretarial department that is well-versed in those regulations is an added advantage to the company. An effective business secretarial department not only ensures strict compliance with all legal and regulatory requirements, but can also add value to the company and reduce the risk of non-compliance, especially in an increasingly competitive and regulated corporate environment. Risk and change are inevitable in every business and government. This is the main challenge that over half of companies face and must be taken into account. This is when the business secretary becomes indispensable as an advisory element at all levels of management to ensure that their current operation or business decision-making model is consistent with corporate governance practices.
Staying Up-to-Date with Regulatory Changes
This continuous scoping activity, to which we must necessarily add the management of supervision activities, since the market is called upon to financial market regulations as well as insurance market regulations, can be pursued not only through the monitoring of the bodies that take care of standard setting. In a reality in which the ability to communicate and be stimulating is now public, it is also assumed that on the part of national and international supervisory authorities. The role of the corporate secretariat in these tasks cannot be considered important only in the phase of checking compliance with legal obligations, after the entry into force of the new rules. Any updates on regulations that affect the company cannot, in fact, be faced without the company. Information activities that are in place, to date, concern the responsibility of the company, which is now subject to the same shrewdness of the other social functions.
The first step for the effective corporate secretariat is to know the regulatory framework very well. In many cases, the fact that the implementation of a regulatory change has not been identified, or that its implications have not been assessed, leads well-intentioned and competent corporations to incur the costs and rework of the implementation of the new obligations, up to possible censures by the authorities themselves. It is therefore absolutely necessary to be aware of the fact that legislation regarding insurance companies is in full swing, also given the framework with defined timelines for implementation that the supervisory authorities assigned to such provisions. It is therefore essential to have a professional resource that is always up-to-date with the legislation on the subject. It is equally necessary to maintain the same level of accuracy in the identification of non-direct legislation, which still opens very explicit points and ambiguities in their application in the insurance sector.
Implementing Robust Document Management Systems
Secretaries should assist the communication team in establishing a proactive management system to ensure that key investors and sophisticates are contacted and kept informed, as most of them either will not sign up for proprietary feeds or already receive the company’s disclosure notices from dissimilar sources. If you have a contact management solution in place to keep all the prescribed contacts in one place, an appropriate system modification will help you to distribute relevant notifications to the selected recipients, completely eliminating the need for manual involvement, significantly impacting the investor relations team’s productivity while maintaining the highest standard of disclosure.
In today’s business environment, secretaries have become an indispensable component of every organization’s efforts to comply with various governance, disclosure, and regulatory requirements. For this reason, it has become crucial for an organization to have a strong document management infrastructure and to ensure that documents are kept appropriately. Strong document management tools will also ensure that documents are retained and disposed of in accordance with legal and business requirements. However, organizations who do not have the right infrastructure in place for document management might get their secretaries bogged down in administrative work necessary to comply with the communications bylaws for disclosures, becoming a more formal liaison than a partner in establishing a sustainable communications strategy and successful stakeholder engagement. A document infrastructure, however, strong management tools will increase company’s efficiency as the secretaries will sometimes focus on more value-added activities.
Collaborating with Internal and External Stakeholders
In sum, effective CS are not those who are “the voice of the board and sole keeper of corporate compliance.” They are the individuals who have successfully cultivated an environment where high-quality, bi-directional communication and vibrant participation are encouraged among all stakeholders throughout the modern corporation – from the boardroom to the executive suites, and in every division within the organization and into the public, the markets that affect, and key stakeholders.
External stakeholders that need regular contact with CS for both regulatory and business purposes include private investors, proxy service providers, and lawyers. Part of CS’s duties involves chairing negotiations, consulting, and requiring conciliation to solve difficulties that might emerge between interested groups.
With regard to internal stakeholders, it is important for CS to engage with their Board of Directors and develop a bond with them. For CS to efficiently support their organization in relation to board organization, secretarial, and corporate governance procedures, it is also beneficial for them to forge a close professional relationship with their internal and external legal counsel. It is likewise crucial for CS to work hand-in-glove with their Internal Audit department and their colleagues in corporate governance.
CS needs to liaise with internal and external stakeholders to convey important corporate information, such as meeting agendas, to them. They also need to work closely with these individuals when discharging their other duties. However, the level of interaction that CS experience in carrying out their job can deter them from accomplishing specific responsibilities that they acquired because these duties sometimes take an inordinate amount of time to complete.
Conducting Regular Compliance Audits
Corporate secretaries should adopt a risk-based approach to audit/compliance functions, which employs formal risk assessment to prioritize audit activities, determines how resources should be deployed, provides operations monitor risk control systems, and includes an evaluation of the internal control over financial reports of the company. Compliance monitoring should work with operational management to achieve company-wide risk management in an efficient manner and identify effective mechanisms to monitor and manage the various types of risks that the company faces. In conclusion, the corporate secretary should ensure that a regular review of the company’s compliance status is conducted. They should have working arrangements with management such as scheduled oral and/or written reports to document actions. For each key risk or important board meeting, the board and committees are provided with regular, timely, written and/or oral reports on compliance activities and operational results. For this reason, by undertaking effective compliance audits, the corporate secretary assures that the company and its management team have risk management strategies in place. A working risk awareness culture also ensures a clear understanding of the risk appetite of the company is confirmed by the board.
Good compliance efforts should ideally start from the top management, board members, and senior management. Once the process is initiated, corporate secretaries generally undertake these initiatives. For example, it is important to regularly assess the company’s compliance level across various legal and regulatory requirements and its adherence to internal compliance-related policies, guidelines, and procedures. It is recommended that the assessment be conducted at least once yearly to ensure continuous improvement in compliance levels. More frequent audits may be necessary for dynamic assessments, changing rules and policies, arising litigation, or for dealing with expansion or reorganization. Such assessments typically include reviewing internal and external reports and surveys, such as those prepared by an internal compliance officer, compliance consultants, internal auditors, industry reports, company balance sheets, company websites, press releases, news articles, and industry journals. The results of these assessments could be used to lower risks or liabilities, improve the reputation and investor relations of the company, as well as to increase trust in the company and promote greater confidence in the performance of the company. As a result, the company’s ability to attract investment will also be improved. Therefore, by keeping the board up-to-date with the company’s compliance levels and working toward continuous improvement, the corporate secretary is improving the company’s overall standing and performance. Finally, by doing so, the corporate secretary is also upholding ethical standards while supporting and implementing corporate governance efforts.