Towards an effective corporate governance the role of the company secretary
This article has been inspired by frustrations I have encountered on some few occasions with some CEOs of some companies who seem to have confined the role of the company secretary to the backburner and have scant regard for them.
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It is often the case that, beyond the initial engagement of a person whether a lawyer or chartered secretary as a company secretary for the purpose of helping to register a company, the secretary thereafter becomes a ‘‘persona non grata’’. However, there is no denying the fact that the position of a company secretary cannot be discounted under any circumstances or even be done away with.
Discounting or downgrading the position of the company secretary is like discounting the position of the office of the chief of staff at the presidency or the position of the Chief Director at a government ministry or department or the position of the cabinet secretary.
The justification for the appointment of a company secretary
The position of the company secretary is provided for under section 190 of the Companies Act, Act 179 of 1963 which states as follows:
I. A company shall have a secretary and if a company carries on business for more than six months without a secretary, the company and every officer of the company who is in default is liable to a fine not exceeding twenty five penalty units for each day that the company continues to carry on a business without a secretary after the expiration of the period of six months.
II. Anything required or authourised to be done or by the secretary may, if the office is vacant or there is not, for any other reason a secretary capable of acting be done by or to an assistant or a deputy secretary or any officer of the company appointed by the directors to be acting secretary.
From the foregoing, there is no denying the fact that the company secretary features prominently in the scheme of affairs of the company even to the extent that the Companies Act provides for the appointment of a deputy secretary to act in the absence of the substantive secretary.
It must be emphasised that the position of the secretary is at the very heart of the smooth running of the company since he is expected to set up and run the company secretariat. Moreover, the secretary is also the direct interface between the company and the various regulatory agencies that the company is supposed to deal with. As a result, the traditional role of the company secretary is now changing to incorporate the new responsibilities of a compliance officer as well.
The duties of a company secretary
It is important to note that companies, being legal and business entities for that matter are required to keep and maintain a number of registers. Thus, the Companies Act is replete with a number of registers that a company has to keep. Among them are registers of directors’ particulars, secretary’s particulars, minutes of directors meetings, directors’ share holdings etc.
A company secretary is also responsible for the drafting of the company’s regulations. He is also responsible for the arrangements regarding the holding of annual general meetings or extraordinary general meetings by publishing notices for the summoning of meetings and sending circulars and reports on the meeting to members.
In addition, he is also responsible for making the necessary arrangements to enable the members to vote by proxy if need be.
Secretaries are also responsible for maintaining such registers of the company regarding the creation of charges over the company’s properties, a register of debenture holders and a register of members.
Other duties of the company secretary include the duty to notify the registrar of companies about the compliance with all statutory requirements with respect to the maintenance of all statutory registers and even notifying the Registrar of Companies about such things as a change in the location address of a company.
The secretary is also to draft the resolutions adopted at all meetings of the company, be they board meetings, annual general meetings or extraordinary general meetings. He/she is also responsible for organising meetings of directors and providing secretarial support for the meetings of the board of directors.
In addition, the company secretary is also required to serve as the custodian of the company’s seal as well as take responsibility for making accessible the company’s various registers for inspection by its members.
Observations on the current state of company secretarial practice in Ghana
Even though the ultimate responsibility for running the company rests with the directors, it must be emphasised that the office of the company secretary always plays a complementary role towards the proper functioning of the company and also the board secretariat. It must be noted that the absence of a company secretary or the inefficient functioning of a company secretariat often projects the company as one with a weak corporate governance structure.
The absence of a company secretary or a weak company secretariat could be likened to a cabinet without a cabinet secretary or a weak cabinet secretariat. In that situation, how would the cabinet be able to function appropriately to serve the needs of the government?
In Ghana presently, one can notice vibrant company secretarial practice with respect to listed banks and companies and also most of the non listed banks and multinational companies. Often, a company secretary is only called upon to act when he is required to draft a ‘‘resolution’’ by the board of directors to access a loan from a financial institution or to endorse a form for the opening of accounts by a company.
However, it must be noted that a vibrant company secretariat offers a lot of opportunities to companies and businesses. It must be noted that the world is now in an age of globalisation with all its attendant benefits and opportunities including capital inflows and proposals for strategic alliances of all kinds.
The point must be emphasised that the opportunities for investment in companies by local investors and also the spin offs from globalisation will only be available to companies which place a premium on effective corporate governance including making relevant the company secretariat.
One can imagine a foreign investor who intends to invest in a local company and who is not presented with any documentation on the company’s affairs comprising the various registers required to be maintained by the company upon request. Obviously, the interest of such an investor in such a company will wane.
It is a good corporate governance practice to ensure the proper functioning of the company secretariat as it serves as a useful tool in the management of the company. Its absence or ineffectiveness could be likened to the office of a weak Chief Director or a weak cabinet secretary.
Furthermore, the proper functioning of the company secretariat could lead to an upswing in investments as it is one sure way of convincing investors about the viability of a business.
The writer is a lawyer with specialisation in international business law.
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