Being the most senior legal role in an organisation without a voice at the Board level, or even the executive table can be frustrating. Some General Counsels have taken on the role of Company Secretary to “gain a seat at the table”. But is taking on the Company Secretary role really the panacea to the challenges they face?
The role of the Company Secretary has evolved significantly in recent years. Traditionally, the Company Secretary was responsible for the administrative and procedural aspects of corporate governance but the role has now expanded, becoming a more strategic and advisory function. Being a Company Secretary is a profession in its own right, taking years of study and examination to achieve, albeit less if you are already a qualified lawyer.
It is not uncommon for the GC and Company Secretary role to be combined, although it is probably more often the case in private, less complex organisations.
There is significant alignment between the roles in terms of knowledge around company law and potentially around Corporate Governance codes (depending on the legal background of the GC and whether a company is subject to such codes). However, there are some important areas of difference that a GC should be mindful of when taking on the role.
Three of the most critical distinctions, which are relevant whether or not a company is listed:
1. Being an officer of the company
The role of the Company Secretary is the only role outside of a directorship that is a formal legal officer of the company and that brings personal accountability. The Company Secretary is not only responsible for company law compliance, but also for advice and guidance to the Board on corporate governance matters. This includes advising on the Board’s composition, its duties and responsibilities, and decision-making processes. The Company Secretary also provides the Board, and individual Directors including the Chairman, with confidential advice on sensitive matters, and that will not be limited to legal advice.
The role of the Company Secretary is unique, sitting between the executive team and the Board. This can be a difficult line to navigate, but also brings great opportunities to be a trusted conduit between the two groups with a helicopter view of the whole organisation. When wearing both GC and Company Secretary hats – it is vital to be able to distinguish when each hat should be worn.
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Responsibilities of the Company Secretary in this context include:
- Ensuring the Board is run efficiently and effectively, working with the Chairman to create a balanced board agenda covering all necessary topics;
- Working with the Chairman to ensure that the Board composition is appropriate, with the right skills, experience and diversity;
- Conducting board effectiveness reviews, with or without external parties;
- Alongside the Chairman, ensuring there is an effective board succession plan;
- Working with both the Chairman and CEO, ensuring the quality and timeliness of board information;
- Ensuring that the Board’s decision-making is compliant with companies’ law and the company’s own governing documents such as Articles of Association or any Shareholder’s Agreements;
- Managing conflicts of interest at the Board level;
- Ensuring that the Company’s records and filings are accurate and up to date.
2. Being the Chief Governance Officer
The Company Secretary may not hold that title (although some companies are shifting to this to reflect the broader role), but the Company Secretary remains ultimately accountable for providing advice and guidance around the effective governance of the organisation and not just the TopCo Board.
The Company Secretary will be responsible for designing and deploying the Corporate Governance Framework across the organisation, which should cover effective decision making as well as compliance.
If there are subsidiaries, a Subsidiary Governance Framework will also be required that should work alongside the Corporate Governance Framework, taking into consideration local legal and regulatory requirements.
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3. Being responsible for shareholder/stakeholder engagement
The Company Secretary’s role overlaps with the Investor Relations team in a listed company, but may well be solely responsible for investor and broader stakeholder engagement (including ESG frameworks and reporting) in a private company.
Typically, in a listed company, the Company Secretary remains responsible for retail shareholder communications and works alongside the Investor Relations team for institutional investors. However in any company, it falls to the Company Secretary to run an effective and compliant AGM and any other Shareholder meetings and resolutions that are required. Running a large AGM requires significant event management skills!
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The Company Secretary is also responsible for delivering the Annual Report and Accounts. The non-financial reporting will be led by the Company Secretary, and they also work closely with the Finance Team on the Audited accounts.
The Reporting and AGM season can be a frantic time for Company Secretaries, whether in listed or private companies!
The seat at the table comes with a heavy price, and no guarantee of the anticipated reward.
In summary, the role of the Company Secretary is complex and demanding across both private and listed companies, and GC’s should carefully consider the amount of time they will need to dedicate to carry out the role effectively, and whether they have sufficient support. It is also worth considering the secondary professional qualification as a Company Secretary to gain the necessary skills to carry out the role effectively.
Here are some additional tips for GCs who are taking on the role of Company Secretary:
- Build strong relationships with the Board of Directors and senior management.
- Stay up-to-date – not just on the latest legal and regulatory developments but also on investor sentiment, voting practices, and best practice in corporate reporting.
- Develop a sound governance operations program, including utilising technology to streamline administrative tasks.
- Delegate tasks to qualified staff.
- Get help from external experts when needed.
To effectively discharge the duties of the Company Secretary, the GC must be able to identify when to act as which – when they are in the Boardroom as the Company Secretary they are not there as GC and so the dual role is not the key to obtaining a seat at the table in that capacity. Conversely the role brings a significant additional set of duties and responsibilities.
This is the case in both private and listed companies, as while there may be more focus on the role in respect of Code Compliance in listed companies, most responsibilities of a company secretary are shared across listed and private companies, including advising on corporate governance best practices.
However, it is true that, as Company Secretary, the role holder has the privilege of access to the Board – collectively and individually. This access, and the understanding and knowledge it brings, cannot fail to help the GC navigate the dynamics of an organisation more effectively and to help ensure legal advice is delivered to the right stakeholders at the right time.