Corporate governance plays a pivotal role in shaping the way companies operate and interact with their stakeholders. It serves as the bedrock for transparency, accountability, and ethical practices within organisations. But what exactly is the role of a company secretary in upholding corporate governance? This article will identify the core responsibilities of Company Secretaries and their benefit to organisations. You do not need to internally appoint a company secretary; instead, you can utilise the service of a third-party provider such as MSP Company Secretarial.
We are an Authorised Corporate Service Provider with decades of experience supporting businesses with all of the responsibilities listed below. For more information on how we can help, contact us here.
The different forms a Company Secretary can take
The role of Company Secretary can exist in an organisation in different ways, depending on the size of the business and the resources available. Many large organisations will have a dedicated Senior FTE for the Company Secretary position, although increasingly, companies are now looking at an internal resource supported by external expertise, from service providers such as MSP Company Secretarial.
Smaller organisations often combine the role of Company Secretary alongside a current director position, for instance the Finance Director will also accept responsibility for maintaining compliance. Although this is low cost, it can be a higher risk strategy than predicted, because often combining the roles spreads resources too thin and developing risks and legislation aren’t identified early enough.
The happy medium for an increasing number of SMEs and start-up businesses is to outsource the Company Secretary role to a third-party expert service provider. Organisations such as MSP Company Secretarial have a wide expertise with multiple resources, providing a safe, low-risk and cost-effective way to implement governance and compliance throughout the business.
What is corporate governance?
Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. It’s a set of principles that govern the relationships between a company’s management, its board of directors, its shareholders, and other stakeholders. At its core, corporate governance ensures that a company operates in an ethical, responsible, and transparent manner, with the ultimate goal of safeguarding the interests of all stakeholders.
The role of a Company Secretary in corporate governance is a critical one, ensuring a company’s compliance with legal and regulatory requirements. Governance obligations apply whether the business is a small private company or a large publicly listed organisation.
The roles and responsibilities of a Company Secretary
A Company Secretary plays an important role in supporting the company’s approach to governance responsibilities through:
Board support
Importantly, the Company Secretary organises and facilitates board and board committee meetings, they ensure that board decisions are accurately recorded and the supporting actions of implementation are traced as well as providing guidance and advice to the Board on best practices. This not only enhances transparency but also keeps the company’s approach to governance on track.
Company relations
Company Secretaries act as a bridge between the Board, management and the shareholders of the Company. They facilitate communications between a company and its shareholders, ensuring that communications and engagement satisfy regulatory requirements; are conducted in a transparent and fair manner; and ensure that shareholders’ voices are heard during annual general meetings (AGMs) and other shareholder engagements.
Training and development
Company Secretaries play an important role in the development of board members and the Board as a whole. They ensure that directors are well-informed about their legal, regulatory, and ethical obligations.
Compliance
A Company Secretary oversees the compliance framework of a Company, ensuring it meets its legal and regulatory obligations, and ensuring that it maintains the appropriate records and documentation. A significant part of compliance includes handling the company’s filings and notifications with Companies House, and managing governance projects such as amendments to the Articles of Association of a company.
Maintaining corporate governance best practices
Corporate governance best practices are essential for ethical and responsible business conduct. A Company Secretary plays a pivotal role in fostering these best practices and nurturing a culture of transparency and ethical behaviour. They ensure that the company complies with evolving corporate governance standards and adapt to changes in corporate governance codes such as the UK Corporate Governance Code and the QCA Code of Corporate Governance.
In recent years, there has been a growing emphasis on board diversity. Company Secretaries often play a role in promoting diversity by assisting in the recruitment of board members with a variety of backgrounds and expertise. Diverse boards can lead to better well-rounded decision-making.
As the corporate governance landscape evolves, the role of a knowledgeable and experienced company secretary becomes increasingly important. They can help businesses navigate changes in corporate legislation smoothly and ensure compliance with emerging requirements. By providing expert guidance, Company Secretaries contribute to the long-term success and sustainability of the company.
The role of a Company Secretary in maintaining ethical standards
Company Secretaries also help to uphold and promote ethical standards within an organisation. This may include:
Monitoring and resolving unethical behaviour
The benefit of having a dedicated Company Secretarial expertise (such as MSP Company Secretarial) is being able to identify and address unethical conduct or breaches of corporate policy. Where Company Secretarial tasks aren’t defined or allocated correctly, the risk of a breach can be greatly increased.
Adherence to ethical guidelines
Ensuring that the company adheres to ethical guidelines and codes of conduct. This includes promoting a culture that aligns with the company’s values and principles.
Preventing conflicts of interests
Identifying and mitigating conflicts of interest within the company. There may be a need to develop methods to prevent situations where personal interests may compromise the company’s ethical standards.
The role of a Company Secretary in maintaining company compliance
Company Secretaries are instrumental in maintaining compliance including:
Filing of annual reports and accounts
They oversee the timely and accurate filing of annual reports and financial accounts with relevant regulatory authorities, ensuring transparency and accountability to shareholders and regulators.
Maintaining company records
Company Secretaries are responsible for maintaining accurate and up-to-date company records, including minutes of meetings, share registers, and other important documents required by law. They can also extend to the administration of share certificates, correctly recording any changes in the registers held at Companies House. Any changes to the organisation’s structure, officers or persons of significant control are also updated by the Company Secretary.
Risk management
They assist in identifying and managing risks that could affect the company’s operations or reputation. Effective risk management is crucial for maintaining compliance and ensuring business continuity.
Legal compliance
Company Secretaries support legal compliance in an organisation. For instance, through liaising with legal experts on corporate, employment, and environmental legislation. Regular compliance scanning will identify developing issues earlier and can significantly reduce organisational risk.
Secretarial outsourcing with MSP Company Secretarial
MSP Company Secretarial provides a wide range of company secretarial services and corporate governance support that respond to the commercial needs of publicly listed and private companies, and third sector organisations.
Our team has considerable practical experience in supporting companies from a wide range of sectors and our approach to our work is to deliver pragmatic, professional solutions with an emphasis on executive and board guidance, ensuring that good governance and compliance is paramount and commercially delivered.
To find out more about the services that we provide, to learn more about the role of a Company Secretary in corporate governance, or to find out how we could help you, please contact us.
The role of a Company Secretary: Frequently Asked Questions
Is a Company Secretary a legal requirement for UK Companies?
The Companies Act 2006 states that a public limited company (PLC) must appoint a company secretary. This isn’t the case for private limited companies however, the tasks and responsibilities held still need to be completed by someone in the business or outsourced (such as MSP Company Secretarial).
What is the difference between a Company Secretary and a Director?
The directors are responsible for strategy setting and the management of the company. The role has specific legal duties under the Companies Act 2006. The Company Secretary is a support resource for governance and the administration of compliance. Sometimes in smaller companies the Company Secretary role is undertaken by a director, but as organisations grow, governance becomes more complicated and provided dedicated resources.
What happens if a company fails to carry out governance or compliance duties correctly?
Missing filing deadlines, maintaining inaccurate records and failing to update regulators of significant changes can result in financial penalties and potentially personal liabilities for directors. A professional Company Secretary or a company such as MSP Company Secretarial will ensure full compliance and improve governance throughout the organisation.
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