The Role of the Company Secretary
The Company Secretary plays a crucial role in the governance of any organisation, the board’s discharge of its leadership in this vital area and in the discharge of individual director’s duties.
The contemporary Company Secretary is much more than a “note taker” at board meetings or a mere servant of the board but is “the chief administrative officer of the company”¹. The board and particularly the Chairman of the board relies, or ought to rely, on the Company Secretary to advise them in respect of current best practice corporate governance requirements and practices, directors’ duties under the law, board reporting and disclosure obligations, listing rule requirements and proper meetings’ procedure. The specialized role of the modern Company Secretary has emerged as the Chief Governance Professional within the organization.²
The Company Secretary as the Governance Professional
The need for corporations to have the qualifications and skills of a governance professional has been widely recognised:
Þ Benchmarking Governance Practice in Australia, the 3rd benchmarking study conducted by Chartered Secretaries Australia (now the Governance Institute of Australia) in 2005, indicated that the specialised role of Company Secretary had evolved into the Chief Governance Officer, according to the CSA (Now Governance Institute of Australia) press release issued on 28 March 2006:
“...directors are using them (Company Secretaries) as a resource to ensure all their boxes are ticked. In 97 per cent of organisations, Company Secretaries have primary responsibility for the increasingly complex and important area of corporate governance. No longer just an administrative role, the Company Secretary provides essential, high-level strategic advice; and companies are clearly willing to pay for it”, CSA Chief Executive Mr. Tim Sheehy said.
According to the CSA press release issued on 6 April, 2004 the 2nd benchmarking study conducted in 2003:
“The dynamics of the boardroom are changing…Directors are realizing that they need a diversity of specialist skills and are looking…to advisers to provide this expertise.”
Þ ASX Corporate Governance Principles and Recommendations 3rd ed (which become mandatory for listed companies in all periods commencing from 1 july 2014) required that the Company Secretary should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the Board. (ASX Recommendation 1.4)
Þ The landmark Disney Case in the United States (Delaware Chancellery Court) highlights the need for a professional governance advisor to the board and the evidentiary significance of professionally prepared minutes of board and committee meetings.
Þ Recent research demonstrates the multi-facet strengths, qualities and values a professional Company Secretary brings to board and the company.
Þ The professional Company Secretary needs to have the confidence of the Board as its governance advisor independent of management. In fact, the independence, and perceived independence, of the Company Secretary speaks strongly to all stakeholders of the Board’s commitment to best practice corporate governance.
Benefits to the Board of a Professional Company Secretary
Astute boards realise the benefits of support from a professional Company Secretary:
Þ Obtain the highest professional governance skills and experience (with international affiliations) to advise the Board and Chairman;
Þ Improved governance within the corporation, separates the governance professional from other executive management;
Þ Frees other executives to concentrate on operational issues and enhances the Company Secretary as the independent adviser to the Chairman and Directors;
Þ Governance commitment by the board and the company demonstrated to shareholders and the market. There are significant potential investor relations benefits. Presents the company in the best light by having “top drawer” Company Secretary’s qualifications and experience for reporting in annual report; and
Þ Substantially enhances the board’s potential to be the “real” driver of effective governance within the corporation
GovernanceCulture has the skills to effectively train and mentor the Company Secretary into a true Governance Professional
¹ Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711
² “Benchmarking Governace Practice in Australia” study by Chartered Secretaries Australia
