Key responsibilities of the company secretary and why it is crucial now more than ever
Customers, regulators, investors, and even employees are putting pressure on companies to be transparent and accountable. As a result, reducing risk and fostering growth depend on good corporate governance. The company secretary plays an important but frequently misunderstood role in any corporate governance framework.
What you need to know about company secretarial services is covered in this article, along with current changes to the position and usual responsibilities.
Functions of a company secretary described
In this context, the term “secretary” is occasionally misunderstood to refer to a position that performs routine or low-risk administrative tasks. In actuality, a company secretary has several responsibilities that are essential to safeguarding a business and assisting it in achieving its strategic objectives.
A large worldwide firm may find the corporate secretary, or “cosec,” role to be time-consuming and fraught with risk. Depending on the size of the organisation, the term “function” may refer to a specific person, typically a senior team member and frequently someone with legal training, like a general counsel. A distinct corporate secretariat team or a legal team lead by the general counsel may also perform the role of company secretary. For certain smaller organisations, the CFO may assume the role title and assign or outsource the necessary statutory duties.
Obviously, anyone accepts the position of company secretary needs to be aware of all of the duties that come with it. The following are some typical tasks a company secretary might complete:
- keeping the organization’s statutory books and records up to date
- Certain statutory returns to be filed
- Ensuring that governance of subsidiary entities is kept in good standing across all jurisdictions
- Monitoring board and shareholder actions as required by the local bylaws and charter of each business
- Submitting the necessary documents as soon as possible to implement changes to the board and shareholder structures
- Putting up and drafting pertinent statutory reports
- The organisation of annual general meetings
- Taking care of a few other responsibilities, like
- insurance-related ones
- pension schemes
- options on stock
- (GST/VAT) Indirect tax
- safety and health
- cybersecurity and data protection
Criteria for a company secretary
The appointment of a company secretary is not obligatory of every organisation in every jurisdiction. Countries have varied rules, and even within one jurisdiction, there may be variations according on the sort of corporation. For instance, a company secretary is required in Hong Kong, while public corporations are required to hire a company secretary in the UK and Australia, but private companies are not required to do so. It’s vital to remember that the company secretary is typically regarded as an official of the company. Notably, this is true for businesses that are listed on international stock exchanges.
Gonzalo Garcia, a senior director stationed in the US, notes that the obligations must be carried out even without the appointment of a company secretary. “There is a misconception that countries that don’t recognise or demand the appointment of a company secretary don’t have the same requirements. However, corporations still need to perform cosec duties, such as filing legal and financial documents.”
Outsourcing secretarial services for businesses
Corporation secretarial responsibilities can frequently become administratively onerous for a company, if not overwhelming, especially during times of cross-border expansion and rapid growth. A business may choose to choose an outside professional to serve as the company secretary in one or more jurisdictions.
For instance, a US business moving into Hong Kong might employ the services of a third-party company secretarial firm. The customer will be given a calendar with due dates and schedules for the entire year at the start of the partnership. Head of corporate services in Hong Kong Edmund Chiu explains. By coordinating with local agents to make sure the proper documents are presented on time and the company is always in good standing, we keep our clients on schedule.
Keeping up with legal and regulatory requirements has become incredibly difficult for firms with subsidiary entities across numerous nations. Sound governance practises and risk controls are introduced within the worldwide firm by a good company secretarial services supplier. The provider should also maintain a regular reporting convention and be current with regulatory changes in each jurisdiction. By lowering risk and safeguarding reputation, these services give a corporation immediate value.
Working with a global company secretarial service provider, according to Farman, “provides companies, their general counsel, or their company secretariate access to specialised compliance expertise from professionals who have gathered and refined best practises over many years and are constantly monitoring legislative and regulatory change.”
Garcia elaborates on the significance of comprehending regional laws and associated difficulties. “When businesses expand their activities outside of their home nation, they rarely do so with a thorough understanding of the local laws, cultures, languages, and customs. They must seek out a local specialist who can explain the requirements for continuing to be compliant.
According to Keri Wong, associate director for corporate services in Hong Kong, clients are frequently perplexed by the many kinds of documentation they require to conduct business in several nations. We need to think ahead of them and prepare for any unexpected geographical variances.
An experienced provider would know to watch for frequent errors, such as consumers accidentally misunderstanding first and last names, since Chinese names, for instance, might be perplexing to Westerners. They might also be confused about when documents need to be notarized and apostilled or whether nations demand a moist signature on specific forms.
Chiu emphasises how choosing a single source is preferable to dealing with numerous vendors. According to him, connecting, establishing, and vetting relationships with numerous local corporate secretaries can be extremely time-consuming and painful. “Clients are increasingly looking for a single point of contact who can speak with them in their own language and time zone in order to expedite operations.”
Trends in company secretaries nowadays
In order to help their organisation proactively manage strategy, corporate secretaries must stay on top of regulatory trends as well as customer and investor needs. ESG is a strategic and governing concern for multinational corporations that is becoming more and more important.
“An organisation should have ESG on their agenda if they haven’t already,” says Farman. She points out that while industry-specific ESG priorities and developing reporting requirements differ, all businesses will be evaluated based on their efforts and performance in this area.
Increased requests for ultimate beneficial owner (UBO) information disclosure, which distinctly identify who ultimately profits from a company’s financial operations, is one significant regulatory development. According to Garcia, “adequate documentation guarantees a UBO is not disguised by company architecture.” “We are noticing an increasing emphasis on the need to explain, along with other information local authorities should know about a client’s business in their nation, if and how a company’s ownership has changed.”
Garcia continues by saying that this is a part of a general trend toward more regulation. “You can see that jurisdictions continue to place a high priority on gathering more information when you look at the European Union, Asia, and other regions of the world. They pay close attention to how businesses handle cybersecurity and data protection in particular. A company’s worth can be considerably impacted by its ability to demonstrate and report on effective safeguards in these areas.
Some tendencies are less obvious. For instance, Farman has seen that many businesses are thinking more proactively about the data they include in their annual reports’ strategic report part. According to her, finding the right balance in this area can be challenging. A corporation must give enough information to the public and shareholders to reassure them without giving away too much to rivals.
According to Farman, “This is a great illustration of how the company secretary function is changing and becoming more crucial to almost all organisations.” Even though it’s still crucial to complete daily tasks like board meeting minutes, today’s company secretary is also aware of regional and worldwide economic and regulatory trends and knows how to take those trends into account when creating and implementing business strategy.
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