Understanding What Is a Company Secretary and Why You Need One: A Guide to Corporate Governance
The role of a company secretary is a crucial yet often underestimated component of corporate governance. As businesses evolve and navigate a complex legal and regulatory landscape, the need for a skilled and knowledgeable company secretary has never been more apparent. In this comprehensive guide, we will explore “what is a company secretary and why you need one”, shedding light on its importance in maintaining a well-functioning business and providing insights on how to excel in this demanding position.
Overview:
- Defining the Company Secretary Role
- The Importance of a Company Secretary
- Legal Requirements for Appointing a Company Secretary
- Distinctions Between Company Secretaries and Directors
- Eligibility Criteria for a Company Secretary
- The Appointment Process for a Company Secretary
- Removing a Company Secretary: Procedures and Implications
- Outsourcing vs. In-House Company Secretarial Services
- Professional Development Opportunities for Company Secretaries
- Managing Compliance and Regulatory Requirements
- Communication Strategies for Company Secretaries
- Utilizing Technology to Simplify the Company Secretary Role
Defining the Company Secretary Role
The company secretary role encompasses a wide range of responsibilities, including:
Administrative tasks
Advising directors on corporate governance
Facilitating the company’s compliance with legal and regulatory requirements, including informing Companies House of any changes
Authorizing the company’s confirmation statement
Signing cheques and other bank documents
In addition to legal compliance, a company secretary is also responsible for organising board meetings, drafting agendas, distributing relevant company documents, and taking minutes of the meeting. In maintaining the company’s statutory books, the company secretary plays an integral part by securely safeguarding essential documents like the certificate of incorporation, share certificates, and directors’ service contracts.
A company secretary must possess a wealth of knowledge in areas such as corporate governance, business law, finance, and taxation, as well as outstanding communication and organizational skills. These qualities enable the company secretary to provide valuable guidance to directors, ensuring that the company operates within the confines of the law and adheres to the highest standards of corporate governance.
Not sure what the corporation tax payment deadline is? If so, click that link to check out our article.
Get in touch with one of Sleek’s many experts today!
The Importance of a Company Secretary
A company secretary is instrumental in:
Upholding sound corporate governance
Ensuring adherence to legal and financial regulations
Facilitating communication between the company and its shareholders
Even in private companies, where appointing a company secretary is not a legal requirement, engaging a company secretary can reduce the administrative and corporate governance responsibilities of directors, allowing them to focus on developing the business.
The UK Corporate Governance Code advises that all directors should have access to the advice of the company secretary, and that the appointment and removal of the company secretary should be a decision of the whole board. The company secretary, through their compliance with corporate regulations and fulfillment of legal requirements, shapes the company’s governance operations and helps maintain a robust relationship with shareholders.
Legal Requirements for Appointing a Company Secretary
Private companies are not mandated by law to appoint a company secretary. On the other hand, public companies must have one. Checking the company’s articles of association for any specific requirements regarding the appointment of a company secretary is necessary. Many private limited companies still elect to appoint a secretary to alleviate the burden on directors and ensure proper compliance with relevant legislation.
A company secretary must inform companies house when appointed, removed or when their details change. This is mandatory for all companies. Failure to notify Companies House of such changes within the stipulated timeframe may result in penalties or legal consequences. Therefore, maintaining up-to-date records and making sure their company secretary understands their legal obligations is key for companies.
Distinctions Between Company Secretaries and Directors
Company secretaries and directors have distinct responsibilities, with secretaries focusing on compliance and governance, while directors are responsible for the overall management and strategic direction of the company. Company secretaries carry out duties that include providing directors with guidance on their obligations, adhering to corporate regulations, meeting legal requirements, and providing directors with administrative assistance.
On the other hand, directors are accountable for the overall strategic direction and decision-making of the company. They possess the authority to make decisions that have a significant impact on the company’s operations, finances, and direction. While company secretaries may have decision-making authority within their specific areas of responsibility, they do not have the same level of authority as directors.
Not sure how to claim tax back for working from home? Fret not, click that link to check out our article.
Get in touch with one of Sleek’s many experts today!
Eligibility Criteria for a Company Secretary
Eligible company secretaries include:
Individuals over 16
Accountants
Solicitors
Professional chartered secretaries
However, certain individuals are not permitted to be appointed as a company secretary, such as auditors, undischarged bankrupts, or disqualified directors. In a private limited company, no formal qualifications are required for the secretary; however, they must possess the necessary competence and knowledge to assume such a considerable level of responsibility.
Notably, a company director can also take on the role of the company secretary, as there are no statutory obstacles preventing a director from holding both positions at the same time. The board of directors of a company are the ultimate authority in deciding which duties and responsibilities should be given to a secretary they appoint. They make this decision with due consideration to their organisational needs.
The Appointment Process for a Company Secretary
The process of appointing a company secretary includes passing a resolution by the board or members, securing consent from the appointee, and informing Companies House within a prescribed timeframe. The necessary information to appoint a company secretary includes their name, address, and date of birth. Companies House must be notified no later than 14 days after the appointment date.
Maintaining a record of the company secretary’s appointments at all times, as per relevant legislation, is crucial for the company. The registered office address serves as a public register for all company information and is typically updated within 48 hours of receipt.
Removing a Company Secretary: Procedures and Implications
Removing a company secretary requires a majority vote or ordinary resolution of members, and the resignation must be submitted in writing. A simple majority vote of the directors or an ordinary resolution of the members can remove a secretary from a private limited company at any time. Any such decision must be in compliance with the existing service contract. There may be various reasons for a company to decide to discontinue a secretary’s employment, such as inadequate performance or involvement in fraudulent behavior.
Notifying Companies House of the removal of a company secretary is a legal requirement that must be adhered to within 14 days. Should this requirement not be met, there may be penalties or legal consequences. Therefore, companies need to follow the appropriate procedures when removing a company secretary and maintain up-to-date records.
Get in touch with one of Sleek’s many experts today!
Outsourcing vs. In-House Company Secretarial Services
Companies can choose between outsourcing secretarial tasks to a professional service provider or hiring an in-house company secretary, depending on their specific needs and budget. Outsourcing company secretarial services may offer benefits such as a broad range of services, a wealth of expertise, and cost-effectiveness. However, there are potential drawbacks, such as confidentiality concerns and accessibility to the service provider.
On the other hand, hiring an in-house company secretary can have a number of impacts on a company’s operations. Primarily, it ensures that there is a specialized professional responsible for managing all administrative tasks and meeting compliance requirements. This helps to optimize operations and guarantee that the company is adhering to its legal requirements.
In conclusion, hiring an in-house company secretary improves corporate governance and facilitates the efficient functioning of the company.
Not sure what business relief inheritance tax is? Click that link to read our article!
Professional Development Opportunities for Company Secretaries
Company secretaries can boost their professional development by acquiring qualifications like the Chartered Governance Qualifying Programme or a validated Masters degree, and by becoming part of professional networks. Professional qualifications are essential for public limited company secretaries. Obtaining the CGI examinations and becoming a Chartered Secretary is strongly recommended for private limited companies..
In addition to formal qualifications, the CGI website provides information regarding other available training and professional development opportunities. Company secretaries can remain informed with regards to legislative advancements by reading professional journals, such as CGI’s Governance & Compliance magazine, and newsletters. Additionally, they can network and exchange working practices with other company secretaries in both formal and informal settings.
Managing Compliance and Regulatory Requirements
Company secretaries are required to comply with various legal, financial, and statutory regulations, including the Companies Act 2006, and keep abreast of any legislative changes. This involves fulfilling various tasks, such as ensuring compliance with the company’s articles of association, the Companies Act 2006, and any other pertinent regulations.
The company directors are legally responsible for any shortcomings resulting from the failure of the company secretary to fulfill their statutory duties. This is due to the fact that ultimate responsibility lies with them. Notifications regarding alterations to the company’s share capital, officer appointments and resignations, changes to directors or company addresses, or amendments to the articles of association must be submitted to Companies House, as these changes may impact the company’s share capital.
Communication Strategies for Company Secretaries
For company secretaries, effective communication strategies encompass maintaining open communication channels with shareholders, circulating company announcements, and handling shareholder correspondence. Company secretaries are tasked with communicating with shareholders, including disseminating significant announcements, registering share ownership or the transfer of shares, and sending correspondence regarding dividends.
It is also essential for company secretaries to facilitate communication between the board of directors, management, and shareholders, maintain regular dialogue with shareholders, ensure access to vital information, and promote good internal communication. In times of crisis, the company secretary plays an instrumental role in coordinating meetings, guaranteeing adherence to regulations, ensuring efficient communication, and putting in place strategies to manage and communicate during such challenging times.
Get in touch with one of Sleek’s many experts today!
Utilizing Technology to Simplify the Company Secretary Role
Specialized software and other technologies can streamline the company secretary role by automating tasks, including:
Maintaining statutory registers
Submitting filings to Companies House
Facilitating workflows
Automating processes such as annual audit cycles, online surveys, staff data collection, and board meeting management
Corporate secretarial software, customized company secretarial software, and board management platforms are all viable options for a company secretary to utilize in order to automate tasks.
When choosing software for company secretarial tasks, critical characteristics to bear in mind include:
Comprehensive functionality
Bulk setup capability
Cloud-based solution
Deadline management
Integration with other systems
By leveraging technology, company secretaries can optimize their workflows, reduce the risk of errors, and ensure that their companies remain compliant with all relevant legislation.
Conclusion
In conclusion, the role of a company secretary is of paramount importance in ensuring sound corporate governance and compliance with legal, financial, and statutory regulations. From managing administrative tasks to advising directors on corporate governance, the company secretary plays a crucial role in the efficient functioning of a business. By understanding the nuances of this role, pursuing professional development opportunities, and leveraging technology, company secretaries can excel in their positions and contribute to the overall success of their organizations.
A consultation with Sleek‘s finance and accounting teams can help you fine-tune your financial accounting – past, present, and future revenue and expenses.
FAQs
A company secretary’s primary responsibilities include ensuring compliance with legal and regulatory requirements, organizing board meetings, advising directors on corporate governance and maintaining statutory records.
Private companies are not required to appoint a company secretary, unless their articles of association state otherwise.
Yes, it is possible for a director to also serve as the company secretary as there are no statutory impediments to this arrangement.
Company secretaries can enhance their professional development by pursuing qualifications such as the Chartered Governance Qualifying Programme, or a validated Masters degree, and participating in professional networks.
Technology can drastically simplify the company secretary role, such as by automating tasks like maintaining statutory registers and submitting filings to Companies House.
