I have worked with numerous boards over the last decade in my corporate governance consultancy and have come to deeply appreciate the role of the company secretary. The assumption of a “secretarial” role, which would infer simply taking minutes and ordering yet another confounded double cappuccino with soy milk and half a teaspoon of sugar for fussy directors is a far cry from what this indispensable office bearer is responsible for.
The company secretary is responsible for efficient administration of a company, particularly with regard to ensuring compliance with statutory and regulatory requirements as well as ensuring that decisions of the board of directors are implemented.
A few years ago, after undertaking a board evaluation where the role of the company secretary was being assessed by directors, a visibly disturbed chief executive pulled me aside after I had submitted the results: “You mean there are so many things that the company secretary is supposed to be doing and yet ours probably does only a third of them?”
Well, I thought to myself, this was not the time to throw the clearly underutilised resource under the bus: “It depends on what your terms of reference are. If you don’t define these clearly from the beginning then you will simply get what you ask and pay for,” I responded.
The company in question was using an outsourced company secretarial service and management were not exposed to the various value additions that they could demand from their provider.
But value additions aside, there are some basic requirements that a good company secretary should have. Firstly, the company secretary not only takes the minutes, but ensures that any matters arising out of the meeting are tabulated into an action tracking log.
The company secretary should work with management during the subsequent quarter to ensure that these items are followed through for execution so that by the time the next meeting rolls up, the action log is populated with the outcomes, making for a smooth and faster session when it comes to reviewing the action items.
I have attended board meetings where at the point where minutes are being confirmed, the chairman asks directors to read through them and see if there are any matters arising.
What follows is a chief executing bumbling through the ones he can remember doing and fobbing off the ones that he clean forgot to execute. Meanwhile, since there is no action log on record, the matters arising from past meetings quite often fall through the cracks, only to be remembered when a crisis unfolds.
Secondly, a good company secretary keeps the board informed of any regulatory changes that have occurred or expected to occur. An even better company secretary ensures that directors get the requisite training on the regulatory changes particularly where they are great significance and impact to the company and the directors in their personal capacities.
A few years ago, the Capital Markets Authority (CMA) was undertaking a review of the corporate governance code and had several stakeholder forums where it invited company secretaries as well as directors of listed companies. The changes that the CMA was proposing were far reaching and the cost of governance was going to significantly increase with the introduction of legal audits, governance audits and independently facilitated board evaluations.
As a director in some listed companies, the company secretaries in most of the boards I sat on immediately alerted directors that there was going to be a major change in the regulatory framework that not only had cost implications, but also required far more director engagement in the undertaking of their fiduciary obligations. However on one board, the company secretary, who I had seen present at the stakeholder forums, remained completely mum. I politely asked, at the any other business point of the meeting, if the company secretary was going to inform the board of the impending changes. A shrug of the shoulders and some mumbling about doing that later was the lackadaisical response. There was never any mention of it again by the time I left the board a few months later.
A good company secretary can make a board achieve its oversight objectives as long as they consider themselves the conscience of the board. They play a delicate role in ensuring that the board’s engagements with management are well informed, with the right amount of information flowing for appropriate decision making while not appearing to be a whistle blower when operational information is mischievously withheld. A less than stellar company secretary will only do what is required at a minimum: filing statutory returns, taking minutes and ensuring that directors get ocean facing rooms at the annual coastal board retreat. Which secretary do you have?