Jun 9, 2016

Vivian Nwobi - Making Boards Effective: The Role of the Company Secretary

Photo Credit - Fortune.com

 In the past, the definition given to the term “Company Secretary” tended to undermine the role of the Company Secretary in the scheme of the company's operations. Although the legal status of the Company Secretary is not provided for in most legislation that governs company affairs, it is generally accepted that the secretary is the chief administrative officer of the business of the company. The position of the Company Secretary as a mere clerk was overturned in the case of Panorama Developments v. Fidelis Furnishing, the Court of Appeal held that even where the authority is not expressly conferred nor conferred by implication, the secretary is nevertheless the company's chief administrative officer and has ostensible authority in day-to-day administrative matters.

The Company Secretary has a formal legal role to play within the company as the Companies and Allied Matters Act makes the appointment of a Company Secretary a necessity for companies doing business in Nigeria but there is however no legal inhibition or penalty on a company for failure to appoint a Company Secretary. The appointment of the Company Secretary is a function of the company's Board of Directors.

The role of the Company Secretary is of great practical importance within the corporate governance of a company and in relation to the effectiveness of the company's Board of Directors. The responsibility of the Company Secretary in this capacity is to the company's Board of Directors through the chairman of the Board. The Company Secretary is expected to maintain his integrity and independence in the performance of this role so that his impartiality is not compromised.

The Company Secretary is a resource for the whole Board as such all directors should have access to the advice and services of the Company Secretary. The Company Secretary should also demonstrate depth of knowledge Secretary in his ability to keep under review legislative, regulatory and governance developments which have the tendency of impacting either positively or negatively on the business of the company.

The Company Secretary should possess strength of personality as he acts as the “conscience of the company”. The Company Secretary ensures compliance of the company to its statutory obligations by a combination of his personal actions and by advising the Board of directors collectively and individually of their own duties and responsibilities. The Company Secretary also requires excellent communication skills, and a thorough knowledge of the company's business. Being a crucial link between the company and its service providers like accountants and solicitors, sound knowledge of the company's business will aid the Company Secretary in assessing their ability, competencies and performance. It will further aid proper coordination of the company's activities. The Company Secretary also needs to manage various relationships within the company in a way that facilitates the business of the company.

 In many companies, the Company Secretary also doubles as in-house-counsel (Chief Legal Officer, Legal Adviser, etc.) and reports to the Managing Director. He is also a member of the Management team in some companies. The duality of these functions and responsibilities performed by the Company Secretary usually casts doubts on his ability to maintain the level of independence required of his office. There are also issues of conflict of interest which may arise in carrying out the duties of both offices. It therefore becomes necessary for the company to adopt a structure which guarantees the independence of the Company Secretary and entrenches a valuable corporate governance culture within the company.

It is the aim of companies to achieve the highest standards of transparency, accountability and good corporate governance without unduly inhibiting enterprise and innovation. It is therefore imperative that the position of the Company Secretary is occupied by an individual with the requisite diversity of knowledge and experience necessary to assist the Board in steering the growth of the company in the right direction.

Ed’s Note: This article was originally posted here



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