Convexity of the current businesses and technological advancements bestow specific demands from modern business leaders. One such leader on whom the current law and the Companies Act 1956 bestowed the role of a coordinator with functional responsibilities is the Company Secretary (CS). The concept of Company Secretary may be said to be a unique Anglo-Saxon and Indian development. corporate secretarial services, as they were understood in the Regency period of the United Kingdom, encompass a wide and varied range of functions, only a fraction of which are relevant today in business organization. In 1909, he is a member of the Institute of Secretaries of joint-stock corporation and once a limited company had been incorporated under the Companies Act 1862. They were given the designation of the Company Secretary.
In the twenty-six years since the introduction of liberalization and globalization policies, India’s growth story has taken off and joined the milieu of globally emerging markets. The overall growth in GDP over this period has transformed India from being a poor country to a middle-income one and is projected to be a high-income country as early as the year 2040. The dynamics of its demographic structure and the concomitant success in human capital development invariably transform India into one of the largest consumer markets in the world by the year 2025. This level of dynamism in India’s economy paves the way for the growth of capital markets in the country.
Importance of Company Secretaries in Modern Business
There are only a few professions that work so closely on company or general meetings, manage the register of shareholders, board, and shareholder communication, as well as the continuous oversight and strategic flow of equity. There have been an increasing number of company secretaries appointed in the United States. The company secretaries appointed are those who are able to communicate information effectively and create a communicative environment while being responsible for more traditional company secretarial functions. In China, company secretaries are also being recognized for their increasing board communication and corporate governance activities. These attributes and reputation of company secretaries put the profession in an excellent position as companies increase strategies to accommodate the ESG investment objectives. As we see today, shareholders are increasingly attending to more than just the financial performance of a company. Every investment made in a particular company would take into account the organization’s sustainability, culture, etc. In the UK, stakeholders have seen the value company secretaries bring to the protection of the public and other business interests. Companies, as a result, have recognized the increasing workload of company secretaries and have proposed more resources to be made available to the company’s governance structure. The increased resources have included the appointment of skilled and competent employees. Based on recent research, just over 12% of company secretaries’ responsibilities relate to board governance or board oversight, so the profession has further space to increase its responsibilities and influence. According to this research, the low percentage of governance responsibilities may be because of some incompetence or lack of appropriate skills. In the Asia-Pacific, companies have seen the increasing role played by company secretaries and the importance of the effective operation of the company’s board, and are now increasing resources available to governance departments by appointing people to an adequately skilled, competent, and experienced team. This way, they would be able to take on the increasing responsibility placed on company secretaries according to local governance regulations. In Europe and other parts of the world, CEOs and directors are reliant on their company secretarial departments to navigate conflicts, change, and are essential in their companies achieving ambitions. Following the financial crisis, a redraft of the governance landscape commensurate with increased regulation and oversight, more responsibility would still continue to rest in the hands of company secretarial departments.
In the new economy, it is evident that there is an increasing need for an effective corporate governance structure and a key part of this would involve a competent company secretarial team. The position of the company secretary is a critical role. This person is often seen as the face of the board and needs to be someone who is of a high professional standard, able to build relationships with a variety of stakeholders ranging from short-term investors to the company’s workforce. A great company secretary is someone who is versatile and flexible, with the ability to deal with competing stakeholder interests and have excellent commercial acumen. At the heart of a cohesive governance system, the company secretary is in the privileged position of shaping and guiding board and management thinking and behavior. Yet the company secretary’s role is often seen as compliance-driven instead of being at the heart of governance. Depending on the nature of the business, companies could, and often do, alter how key governance and governance oversight are performed, meeting particular business and industry needs. The role is often performed by a legal specialist or lawyer, but more companies are recognizing that different skills and experience would, in many cases, be more appropriate. It is clear that more candidates are drawn to the profession and recognize the impact the role plays in industry and the benefit of the qualification.
Supporting Effective Corporate Governance
Evolving regulations and expectations are also influencing the recruitment processes of company secretaries. Although limited empirical evidence exists delineating the time spent in and contributing during meetings across the various management levels, it is strongly believed that the company secretary is a valued participant during board and divisional executive meetings. Their participation reflects the need for governance advice with the growing investor scrutiny of ASX listed entities and the introduction of a raft of national and international anti-corruption, bribery, and employee engagement regulations. The focus of the task of the company secretary, the traditional custodian of governance, has evolved concurrently to filling the skills vacuum of other support professionals by providing general administrative advice. While company secretaries have become more involved in providing services with expanded confidential managerial support, including general administrative services that often demand knowledge of the AoC, why and how is the company secretary able to expand into this outer space? As Pujo et al. found, whatever the expansion of the company secretary’s role, it is nested within the company secretariat function.
Company secretaries identified that they are still relatively unknown to the external governance community of regulators, the Australian Stock Exchange (ASX), institutional investors, and governance academics. For example, there are limited undertakings that they can sign which are recognized by a broader audience of stakeholders who might use the role of the company secretary as an indicator of the extent of corporate governance infrastructure a company has in place. However, the outlook by company secretaries was that this could change on the back of the growing corporate governance focus on the board as personnel as part of accountability structures.
Company secretaries play a critical role in supporting the board in delivering good corporate performance and governance. In confidence and on a no-names basis, company secretaries identified that one of their greatest tactical challenges is to maintain a respectful and supportive relationship with the directors and management while at the same time providing strong and firm governance advice. While diplomacy and commercial acumen do play a significant role in ensuring the appropriate balance is achieved, the challenge of achieving the desired degree of separation is constantly hampered as more company secretaries are incorporating a broader range of corporate compliance or secretarial services into their portfolio.
Managing Corporate Records and Documentation
The Companies Act (2008) does away with the traditional minute books, share registers, and securities register and requires all corporations to maintain an electronically-based record system in which they must record and keep copies of a variety of corporate documentation. In terms of the recently introduced amendments to the Companies Act 2008, companies are required to maintain a securities register and record in that register the owners of securities in a phased manner. Companies formed under the Companies Act 2008 are, from 1st October 2011, required to locate and identify their shareholders. From 14th April 2012, companies will be required to also ascertain whether their outstanding certificates (share or debenture certificates) are transferable by law and report the owners of undelivered certificates as untraceable or have contactable addresses, or the outcomes will be dire.
The requirement of managing documents and records arises from several commercial and legal considerations. It is a settled corporate governance principle that every company is free to carry on its business without interference from anyone. However, corporations are required to place their records and documents on public record so that they become available to the investing and lending public. There is also a need to ensure that there is complete safeguard in relation to the company records to be kept by an incorporated company. Section 635 of Act 6 of the Companies Act (1956) refers to the various statutory records (including, for example, the registers of shares) that have to be maintained, including other evidentiary records such as vouchers, and the returns to be filed with the company’s office.
Skills and Qualifications Required for Company Secretaries
India offers varied qualifications such as the Foundation Course offered by the Institute of Company Secretaries of India (ICSI) after 10+2 level, a degree for graduate students, the executive program offered to graduate students of all streams except fine arts, and those who have passed the foundation program. There is also a professional program for students who have passed the executive program. Any commerce, arts, science, and engineering students who have a keen interest in company law can take up programs from the above-mentioned, which are approved by the Institute of Company Secretaries of India and other recognized institutes while providing their regular courses. This gives an early start for career planning to the student, which is a departure from the old qualification levels, providing aspiring company secretaries a break immediately after graduation and while studying their post-graduation. It is essential that certain individuals also have a membership or Post Qualification Course along with at least one year of work experience, have been enlisted for the exam. However, company law knowledge requirements in conjunction with the network of unlisted companies, especially at an early career stage, require modern company secretaries for a course that spans shorter, and skill need after this basic course, which go beyond what a professional course has to offer.
Today, a certain level of knowledge is expected from company secretaries. This increased knowledge requirement calls for updated skills from company secretaries. Company secretaries are expected to be experts in everything: contract law, privacy laws, property law, trade practice law, administrative law, banking regulations, insurance law, general corporate compliances, various provisions under the Companies Act, Charitable Trusts Act, Academic Society Act, Companies Act, Goods and Services Tax (GST), and an expert at taxation and insurance laws. There are approximately 34 qualifications approved by the Institute of Company Secretaries of India and other recognized institutes all over India, which empower an individual to act as a company secretary in companies, public or private.
Knowledge of Corporate Law and Regulations
Company Secretaries hold key managerial positions and are authorized to authenticate the Registration and Annual Return Fillings under the LLP Act, 2008. It is important to note that multiple filing options, including incorporating new companies and filing documents during transactions, can be done online. The MCA21 project has facilitated online interaction between corporate stakeholders and regulators, providing features such as redistributions, document viewings, and payment status. While the filing cost is not fully ad valorem, with 80% of operations being conducted online, the government is committed to promoting e-governance and aims to provide an array of user facilities to the corporate world.
Company secretaries play a crucial role in the corporate world, being well-versed in company law and corporate regulations. They also need to have knowledge in niche areas of corporate law, such as banking regulations, corporate tax laws, and securities laws. Additionally, they should stay updated on changes in the political and legal landscape in India, as well as changes in the international scenario that may impact India Inc. Their expertise allows them to provide strategic inputs and ensure that the board receives necessary information regarding modern business operations and the impact of globalization.
Strong Communication and Interpersonal Skills
The right board will have the right mix. A bad board can spell disaster for a company. The old board members who have been part of the company since the first days, not necessarily the ones who will support you as you go on with your current ambition. As CSSs lead the board, communication is one of the critical responsibilities. CSS must work with the rest of the company and listen to the board’s feedback. Adaptability is a key attribute of CSS, given the rapidly changing nature of the business environment. CSSs need to quickly adapt to ever-changing market conditions and meet emergencies, sometimes requiring them to work longer hours. Understanding the pressures at all levels and some compassion should be considered naturally as a part of the CSS operations. They should also support management teams in assessing risk and aligning strategy. Furthermore, always being curious about the company’s mission and challenges will facilitate insight into the sector dynamics and support a larger understanding as well.
Strong communication skills are an absolute must for company secretaries. They are responsible for dealing with the board members and more. In business, every tiny detail is handled by a communications expert. Since secretaries are the main representatives of the company, they need to constantly equip themselves with a high level of communication skills. First impressions count, and thus CSS should be practiced at all times. The secretary delivers most aspects of the decision-making process. The ability to communicate proficiently on a range of issues with executives, both in oral and written form, is key. A high level of emotional intelligence (EI) is also essential. The topic and presentation should be more coordinated and efficient. Sensible persuasion skills are essential to build consensus on boards.
Attention to Detail and Organizational Abilities
A company secretary has multiple roles to play and they have to ensure smooth and effective completion of assigned tasks. The board has to make the most important decisions concerning business operations. With the wisdom and experience of the board members, the decisions have to be taken to guide and manage the overall company direction that is beneficial for the company and its stakeholders. It becomes necessary for energy and time to be given to arrive at the best decisions. Often, company secretaries are continuously involved in many other activities alongside board activities. Due to the dynamic environment of business and era of technological advancements, company secretaries have to multitask or perform numerous roles within short spans. Handling these various roles and tasks within dramatic imposition can indeed become a challenge. For them to be successful professionals, they would need to be alert, possess a focused mindset to be innovative, highly proactive and astute in building multi-dimensional skills. Indubitably, a winning streak depends entirely on the professional grit and determination possessed by individuals.
Attention to detail and organizational abilities are another set of traits that every company secretary must have. Their job largely involves handling and managing many things at once. They take notes during a meeting or a board session, craft and monitor agendas regularly, or are often at the forefront when compiling important reports or other correspondences on behalf of the board. The more board members there are, the more complex this organizational trait and ability can become. It also starts from being prepared and having a good plan. Organizational abilities can significantly reduce a company secretary’s workload and make things more productive for board members. Detailed attention to the tasks assigned helps reduce complications to the board member(s).
Ability to Adapt to Technological Advancements
By efficiently using technology, company secretaries can focus less on administrative duties and more on strategic governance areas, providing greater value to stakeholders. Future leaders in this field should be knowledgeable in various technological communities and drive technological ventures to contribute to the success of tech-savvy organizations.
To adapt to the modern world, company secretaries should utilize modern communication tools like social media and websites to inform stakeholders about future activities. Electronic-based filing systems are also becoming more common, so secretaries need to stay up-to-date with the latest tools to improve compliance and risk management. The secretarial role is evolving due to increasing pressure for governance, and company secretaries should take a leading role in improving automated governance compliance and adopting new technology.
Digital technology has had a significant impact on companies, increasing the demand for company secretaries to develop innovative solutions for data governance and compliance. This has led to the expectation that company secretaries should be more familiar with new developments and changes in the industry. Embracing new technologies, such as blockchain, big data, and gaming, can help company secretaries meet stakeholder demands and increase shareholder trust.
Future Trends and Challenges for Company Secretaries
By the turn of the century, companies became bare before the onslaught of the cyber age, where security, privacy, and the dissemination of price-sensitive information became a burning issue. The last decade also witnessed the company secretaries finding themselves caught up in an encompassing array of obligations, expectations, and the general issues management within companies. Thus, to be effective in such a demanding role, the company secretary must reinvent himself each time the ever-changing tough demands of the business environment set in. The three major stakeholders—the business, the profession, and the academia—must adopt a symbiotic relationship to help contribute to the value creation in the corporate ecosystem.
No sooner had the scope of the company secretary’s role broadened in the 1980s with the listing requirement to include primary market documentations or issuing house activities than it was further expanded in the formal professional market in the 1990s to include investor relations. Indeed, the listing of the company secretary’s qualifications, experience, and name in the annual report became a new and significant challenge.
The role of company secretaries has never been more critical. They play a pivotal position in practically every decision-making process within an organisation. It is essential the role evolves in line with business changes, technology developments, legislative reforms, and governance challenges. The only way to survive and be relevant in today’s business environment is not only to adapt to these developments but also to possess and develop a distinct range of attributes. This paper contains a comprehensive review of literature on the evolving role of company secretaries to aid innovative stewardship in boardrooms.
Embracing Digital Transformation in Corporate Secretarial Services
While at present, in many parts of the world, corporate secretaries and governance professionals commitment to an evolving role, it is equally incumbent on the part of the frame regulatory authorities, industry associations, employers and other stakeholders to also keep pace with this change and extend their support and assistance so as to enable corporate secretaries to successfully don these new roles. With technological developments potentially providing corporate secretaries with opportunities to play enhanced role within the organisation, the current section attempts to capture some likely opportunities for corporate secretaries going forward. The advance of technological developments has resulted in continual changes and rapid disruptions, and has also caused revisions to many facets of globalisation, social, economics, and environmental developments. This has worked to expedite a wave of digital transformation that has affected nearly all companies, functions, industry and operations with companies sensitive to the ongoing developments being forced to change in line with the speedy technological advances.
The advancing technological revolution has brought about several changes in business and is accordingly expected to impact also on the way companies are administering their legal and corporate secretarial requirements. As aptly mentioned in a report on a Conference on the Future of the Company Secretaries organised by the Corporate Secretaries International Association (CSIA) several decades ago, the profession of governance within corporations can be expected to run in accordance with the changes brought forth by technological progression. As the governance model and the roles played by governance professionals and company secretaries have undergone significant changes, it would only be both natural and reasonable to anticipate that this would also reflect a change in the delivery of company secretarial services. More particularly, such a change would also confer a significant impact on corporate secretaries.
Navigating Complex Global Regulatory Environment
The demands of the regulatory environment are not only set by legislation; the stakeholders themselves expect businesses, irrespective of their locations, to conform to the highest ethical standards. Environmental protection, physical security of workers and consumers, financial crime prevention including anti-money laundering and combating the financing of terrorism, privacy, and anti-corruption are only a few areas that regulators have identified as high risk, and businesses are expected to comply with the ultimate responsibility of the board. The role of the company secretary in ensuring compliance with the various legislation and industry codes has become even more critical in recent years. Each geographical location in which businesses operate requires compliance with main parent company obligations and local laws and regulations. The administrative consequences for non-compliance may be costly for businesses, and the courts have imposed significant fines for non-compliance in the area of corporate environmental waste and occupational health and safety legislation. Aside from these fines, failure to be in compliance with environmental protection regulation may seriously impact a corporation’s reputation, and for publicly-traded companies with heavy consumer interests, ruin them. Non-compliance may and does lead to civil and administrative prosecution-public shaming by media, non-governmental organizations, and stockholders of organizations, as courts scrutinize claims for individual liability against directors and management. It is a requirement in, among other places, the United States and the United Kingdom that the annual report of a publicly-held entity includes a statement from the board, signed by the officers, applying the business as a going concern, while the shareholders’ accounts signed by the directors include statements on the company’s financial economy and the effectiveness of internal control systems, and risk adjustments that shall meet certain standards.
In recent years, a complex global regulatory environment has been established which raises significant challenges for businesses that operate in multiple jurisdictions. Companies today are subject to an increasing number of regulations and ordinances that place the company at risk. In the US alone, no less than 100,000 new regulations and other legally binding measures were issued during 2006, each of which defines different standards, specifications, and requirements.
Balancing Traditional Responsibilities with Strategic Advisory Role
A Company Secretary is the principal adviser to the Board of Directors on a wide array of non-corporate matters which might include taxation, education, human resources planning, and even information technology. The professional himself or herself must take appropriate steps to upgrade himself or herself. The CS profession dares to implement subtle changes vis-à-vis other core functions by broadening their services without breaching the code of ethics or the value system. Expanding service areas by keeping a professional touch can remunerate and provide an edge to the CS profession. In spite of the rapid transformation and continued success, a company secretary does not confine himself or herself to the present role. This is a rationale step taken to overflow their existing position that generates scope for strategic mind setting to accelerate national growth.
The CS profession was initially established to perform corporate governance functions under the Companies Act, 1956. Since then, the profession has expanded its scope of work to include new functionalities and areas. In this fast-changing business arena, company secretaries need to play a key role not just in managing company performance through governance and compliance, but also act as a key advisor to the board, particularly on matters related to creating long-term sustainable value. Company secretaries need to be able to effectively manage relationships stretching from board members to the company’s senior leadership group, third parties such as suppliers, investors, and communities. However, in pursuing new business avenues, the CS can strengthen its status without alienating the existing traditional assignments.