Conor Sweeney outlines the important changes affecting the role of Company Secretary following the implementation of the Companies Act 2014.
All the Company Secretaries in Ireland breathed a huge sigh of relief when the CLRG recommended to retain the requirement to have a Company Secretary and instead removed the need for a second director for LTD companies. By giving this recommendation the CLRG recognised the important role of the Company Secretary for all companies from a small SME to PLC’s and not for profit companies.
Professor Kakabadse from Henley Business School commented on the role of the Company Secretary in his research report for the ICSA on the Company Secretary:
“The role of the company secretary is much more than administrative. At its best, it delivers strategic leadership, adding significant value as a vital bridge between the executive management and the board and facilitating the delivery of the organisational objectives.”
Key features of a Company Secretary
- Every company must have a Company Secretary;
- The Secretary may be one of the directors, unless the company has only one director;
- References to a Secretary include references to joint secretaries
- The Company Secretary must be at least 18 years old;
- The Company Secretary is no longer responsible for the company’s compliance with the Act;
- It is the duty of the directors to ensure that a suitably qualified Secretary is appointed;
- The appointment of another company as Company Secretary continues to be permitted.
A new duty is imposed on the directors of every company to ensure that the person appointed as Secretary has the skills or resources necessary to discharge his or her statutory and other duties. The “skills and resources” is not defined so it is important that the directors, when appointing the Secretary document whether the Secretary has the necessary skills to act as Company Secretary for the company. These skills will depend on the size and activities of the company and its governance requirements.
The Secretary may also rely on the accountant, solicitor or a company secretarial firm to provide them with the resources to perform this role and it is vital the terms of this service is agreed in an engagement letter.
The Secretary must consent in writing to be appointed as Company Secretary stating: “I/We acknowledge that, as a secretary, I/we have legal duties and obligations imposed by the Companies Act, other statutes and at common law.“
The Secretary shall be appointed by the directors of the company for such term, at such remuneration and upon such conditions as they may think fit; and any Secretary so appointed may be removed by them. This is similar to what was in the old Acts and the Secretary should ensure that when they are appointed they agree the role and terms of employment with the board of directors.
Disclosure of interests
The Secretary is required to disclose any interests in shares or debentures in the company or any group company held by them or persons connected to them unless it is less than the 1% exemption threshold.
Register of Secretaries
Every company is required to keep a register of its directors and secretaries and, if any, it’s assistant and deputy secretaries. The register should contain the details of the secretary including the date of birth which is a new disclosure requirement. Duties of the Secretary The Act provides that the duties of the Secretary of a company shall, without derogating from the secretary’s statutory and other legal duties, be such duties as are delegated to the Secretary, from time to time, by the board of directors of the company. As mentioned above, the directors of a company shall, in their appointment of a Secretary, have a duty to ensure that the person appointed has the skills necessary so as to enable him or her maintain (or procure the maintenance of) the records (other than accounting records) that are required to be kept under this Act in relation to the company. On appointment as Secretary, the duties and responsibilities should be clarified by the board of directors so the Secretary is aware of what is expected of them.
Statutory duties of the Secretary
The Companies Acts set out the statutory duties that the Secretary must comply with including:
- Countersign with a director or registered person any instrument to which the company seal is affixed
- Countersign with a director the annual return
- Countersign with a director the certificate annexed to the financial statements stating they are a true copy of the original
- Sign the certificate annexed to the abridged financial statements
- Countersign with a director a satisfaction or release form with respect to any charge
- Submitting and verifying the statement of affairs required where a receiver has been appointed
- Summon a meeting of the directors on the requisition of a director
- Sign CRO Forms
Administrative duties of the Secretary
The administrative duties of the Secretary can be vast depending on the organisation and some of the key duties include:
- Maintain the statutory register, minute books, headed paper
- Maintain a list of sealings
- Prepare and file the annual return
- Organise meetings of directors and shareholders and record the minutes
- Attend meetings and record minutes and resolutions
- Ensure necessary forms are filed in CRO
- Ensure company complies with disclosure requirements such as letterheads and electronic communications
- Provide legal and administrative support to the Board
- Act as the Governance advisor to the Board
- Support & guidance to the Chairman
The role of the Company Secretary has been expanded in recent years from the minute taker and meeting organiser to acting as the key governance advisor to the Board. All company types have governance requirements and particular sectors such as the financial services and the charitable sector have enhanced governance requirements that directors must comply with and the Secretary is often the key advisor to the board in advising them of what is good practice and what should be complied with.
Company Secretary of a PLC
The directors of a PLC shall have a duty to ensure that the person appointed as Secretary has the skills or resources necessary to discharge his or her statutory and other duties and that the person complies with one, or more than one, of the following conditions:
(a) the person, for at least 3 years of the 5 years immediately preceding his or her appointment as Secretary, held the office of secretary of a company;
(b) the person is a member of a body for the time being recognised for the purposes of this section by the Minister (being the Institute of Chartered Secretaries and Administrators (ICSA));
(c) the person is a person who, by virtue of his or her:
(i) holding or having held any other position; or
(ii) his or her being a member of any other body appears to the directors of the PLC to be capable of discharging the duties referred of Company Secretary.
Duties of directors
Another key innovation in the Act clarifies the fiduciary duties of directors. The Act provides that it is the duty of each director of a company to ensure that this Act is complied with by the company. The duty on the Company Secretary to secure compliance has been removed. This is to reflect what happens in a company as the Secretary does not have the power to ensure the company is compliant as they cannot vote at directors meetings.
The Secretary as the governance advisor should be aware of the duties imposed on directors and be in a position to advise the board on their responsibilities in accordance with the Companies Act, the constitution of the company and any shareholders agreements.
Opportunities to act as Company Secretary
The Company Secretary will have an important role in advising the company on the implications of the Companies Act 2014 and how to implement these changes which include:
- Advising on the Company Conversion Options and choosing the appropriate company type
- Reviewing the Memorandum and Articles of Association and drafting the new constitution
- Updating headed paper, company seal, registers & minute book where appropriate
- Advising directors on their duties and responsibilities
Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.