23/11/2021
Corporate Secretaries, a lengthy but worthwhile read for all directors.
The Companies Act, No 71 of 2008 (the Act) prescribes that all public and state-owned companies are required to have a company secretary.
But what does it entail?
A company secretary is defined in the Act simply as “an officer of the company”. Company secretaries oversee the efficient administration and compliance of a company. Company secretaries are the primary source of advice on the conduct of the business.
A company secretary is the most senior administrative officer of a private or public company or organisation.
The risks of non-compliance with local regulations are considerable, with the potential for harsh consequences for organisations and individuals. It is essential to know that your entities, wherever they are located around the world, are in good standing, that business decisions are accurately implemented and that necessary changes can be effected in a straightforward and timely manner.
The role and responsibility of the company secretary is outlined in Section 88(1) - (2) of the Act includes but is not limited to:
Duties towards the Board
The company secretary should be subject to a fit and proper test in line with that required of directors. It is incumbent on the board to empower the company secretary with the necessary authority and support to enable him/her to carry out their duties effectively.
The company secretary must provide directors with guidance in their duties, responsibilities, and powers and make directors aware of all laws and regulations relevant to the company. This should include advice on business ethics and good governance.
The company secretary should remain abreast of developments in corporate governance and is pivotal to ensuring that the directors adhere to the highest governance standards. The company secretary should also monitor international developments on corporate governance and bring these to the board’s attention where they would add value.
The company secretary is closely involved in preparing the schedule of board and committee meetings for the year. The company secretary prepares the agendas for these meetings in conjunction with the chairperson and key executives. The company secretary should ensure that information is dispatched timeously to all directors to enable them to prepare adequately for these meetings. The company secretary takes the minutes of these meetings and should ensure that they are distributed as soon as possible thereafter to aid directors in implementing the decisions.
The company secretary should ensure that the board’s policies and instructions are communicated to the relevant persons in the company and that pertinent issues from management are referred back to the board where appropriate. It is important for the company secretary to develop a confident relationship with the chairperson, and to assist the chairperson in formulating priorities in the board agenda for consideration by the board.
The company secretary should play a key role in the induction process of new directors, encompassing both directors’ duties and responsibilities in general and specific matters pertaining to the company itself and the industry in which it operates. The company secretary should provide new directors with an information pack relating to these issues. Visits to major operations and meetings with key executives can be useful for directors to familiarise themselves with the business.
The company secretary should identify training requirements for inexperienced directors and should also ensure that there is an ongoing program to keep directors well informed of developments in the company and in respect of matters relevant to their responsibilities generally.
The company secretary must ensure that the directors and management operate within an authority framework approved by the board and reviewed and updated from time to time.
The company secretary takes responsibility for preparing all or parts of the annual report and ensuring that statutory deadlines are met and that the statutory and regulatory disclosures are validated, particularly in relation to statements given on corporate governance standards and practices in the company.
The company secretary is privy to confidential information about the company and needs to act with tact and discretion at all times. The company secretary may not misuse confidential information or disclose it to any third party in line with their fiduciary duties as an officer of the company.
Equally, the company secretary must act in good faith and avoid any conflicts of interest and ensure that appropriate guidance is given to the board in these matters.
The Company
The company secretary must comply with all the statutory provisions of the Companies Act, including the lodgement of all documents with the Companies and Intellectual Property Registration Office and the maintenance and updating of the company’s register of members. This would extend to include any other legislation or regulations critical to the nature of the company, such as a bank or financial institution and/or company listed on a stock exchange.
The company secretary is usually responsible for ensuring that all contracts and agreements are kept in safe custody and that an executive summary of each document is maintained for ease of reference, which is useful for orientating new operating executives on critical contractual issues relevant to their areas of responsibility.
The company secretary is responsible for ensuring compliance with the company’s memorandum and articles of association and effecting any changes to meet the needs of the company.
The company secretary maintains a close relationship with the transfer secretary to oversee movements in shareholdings and the payment of dividends.
The company secretary is responsible for complying with the listings requirements of any exchange on which the company’s shares are quoted.
The company secretary must certify in the annual financial statements of the company in accordance with the Companies Act that the company has lodged all returns required of a public company and that all these returns are true, correct, and up to date.
Shareowners and Relevant Stakeholders
The company secretary prepares the agenda for shareowners’ meetings in conjunction with the chairperson and chief executive. This would also require the company secretary to ensure that any special resolutions passed at these meetings are properly registered with the Registrar of Companies. In fact, the company secretary would essentially take charge of the processes and procedures associated with the holding of shareowner meetings, including arrangements for the presence of scrutineers, if required, and validating proxies and letters of representation received for these meetings.
The company secretary would take responsibility or provide input for any circulars and other documentation sent to shareowners by the company.
The company secretary is responsible for all forms of communication with shareowners and may often be responsible for the relationship with analysts and the media. This may include responsibility for the company’s corporate reputation and investor relations activities.
The company secretary is required to ensure that a copy of the company’s annual financial statements is sent to shareowners within the stipulated period and to all persons entitled to receive it.
Other Duties
The company secretary may take responsibility for the corporate social responsibility portfolio. This would entail ensuring that the company adheres to its corporate social investment program and monitoring various aspects, directly and indirectly, related to this activity, including the supervision of the company’s adherence to any industry or sector charter and its black economic empowerment credentials.
We also assist our clients with the dissolution and sale of entities that are dormant
or no longer required, whether it be the closure of a single entity or the closure of multiple branch and representative offices, and also assist in the sale of companies across a range of jurisdictions.
For more info contact Chantel Van Den Berg at [email protected] or at 083 7001753.
Text reference: Chartered Governance Institute of Southern Africa.
