What is the role of a Company Secretary?
Dear Mirror lawyer, I set up a limited liability company with my dad in 2018.
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We appointed my friend Kojo then as the secretary during the registration of the company. However, Kojo recently travelled to the United Kingdom to further his education. The problem now is that the company has no secretary.
I therefore suggested to my father that we employ my friend Ama who was recently called to the Ghana Bar as our Company Secretary in order to run the affairs of the company properly.
However, my father disagreed and intimated that a secretary is just a mere clerk whose actions do not bind the company and that it is not necessary to employ a lawyer for that position.
He further stated that any person who can read and write can occupy that position so that we wouldn’t have to pay a fortune for it. He therefore recommended Kwame, our neighbour who just graduated from the senior high school to occupy the position of secretary in the company.
I am however not in agreement with my father. Please help me educate my father on the importance as well the legal requirements of a secretary in a company.
Dear Peter Manu, I must commend you for your interest in knowing the importance and legal requirements for a Company Secretary. This is because most often than not, people usually overlook the role and importance of secretaries in a company.
It is worthy to note that there is a newly enacted Companies Act which clearly stipulates the qualifications of a Company Secretary, which was not provided for in the old law.
To show the importance of a secretary in a company, section 211(6) of the Companies Act 2019 (Act 992) stipulates that “where a company carries on business for more than six months without a Company Secretary, the company and every officer of the company that is in default is liable to pay to the Registrar an administrative penalty of 25 penalty units for each day that the company continues to carry on business without a Company Secretary after the expiration of the period of six months.”
From the provision it is safe to suggest that it is mandatory for every company to have a secretary. The new law, i.e. Act 992 per section 211(3) further states the qualifications of a person eligible to be appointed as Company Secretary as follows;
(a) Has obtained a professional qualification or a tertiary level qualification that enables that person to have the requisite knowledge and experience to perform the functions of a Company Secretary and the said institution shall be a discipline offering company law practice and administration.
(b) Has held office, before the appointment, as an apprentice or has been articled under the supervision of a qualified Company Secretary for a period of at least three years.
(c) Is a member in good standing of:
(i) The Institute of Chartered Secretaries and Administrators, or
(ii) The Institute of Chartered Accountants, Ghana, or
(d) Having been enrolled to practice, is in good standing as a barrister or solicitor in the Republic, or
e) By virtue of an academic qualification, or as a member of a professional body, appears to the directors as capable of performing the functions of secretary of the company.
The core duties of a Company Secretary are captured under the law as follows;
a. Assisting the Board to comply with the constitution of the Company and with any relevant enactment.
b. Keeping the books and records of the Company.
c. Ensuring that the minutes of the meetings of the shareholders and the directors are properly recorded in the form required by this Act.
d. Preparing and issuing out notices in the name of the company.
e. Ensuring that the annual financial statements of the Company are dispatched to every person entitled to the statements as required by this Act.
f. Ensuring that all statutory forms and returns are duly filed with the Registrar;
g. Maintaining the statutory registers of the company.
h.Providing the Board with guidance as to the duties, responsibilities and powers of the Board and on the changes and development in the laws affecting the operation of companies.
i. Informing the Board of legislation relevant to or affecting meetings of shareholders and directors and their failure to comply with the legislation and reporting accordingly at any meeting and
j. Advising the directors on their responsibilities as directors.
It appears that looking at the core duties of a Company Secretary, the current position of the law is that Secretaries are not mere clerks of the Company. Actions done within the limit of their authority bind the Company. Also from the provisions of the law, it is evident that Kwame cannot be appointed the Company’s Secretary as suggested by your father.
This is because Kwame, who is merely a Senior High School graduate, does not possess any of the qualifications and qualities the law requires a secretary to have. In addition, the duties of the secretary as listed under section 212 are so fundamental to the proper functioning of the Company.
Therefore, Kwame would be incapable of performing such statutory functions as a mere Senior High School graduate with no experience in company secretarial skills.
To sum up, appointing Kwame would be against the provisions of the law. Peter, my advice to you is to explain to your father the qualifications as stated under section 211 as well as the role played by secretaries as listed under section 212 of Act 992 for him to understand that the role cannot be occupied by just anybody who can read and write.
Furthermore, since the authorised actions of the Company Secretary are most likely to bind the Company, a qualified person must be appointed for that position.
