The position of the Company Secretary is created by the law in sections 293 -298 of Companies and Allied Matters Act (CAMA) 2004, which provides for the appointment and functions of the company secretary. While there is no requirement for directors who have responsibility for the corporate governance of companies to be experts at law, they are expected to ensure the company functions within the ambit of the law that enables the creation of companies. The necessity that companies conform to statutes, regulations and best practices highlights the importance of a company secretary as he is recognized as the officer of the company required to have a robust knowledge of all laws and regulations peculiar to the industry of the company. For example the Company Secretary of a Bank should have comprehensive knowledge of Prudential guidelines, Banks and other Financial Institutions Act, (BOFIA), while his counterpart in an Insurance company must of necessity be familiar with The Insurance Act, the NAICOM Code of Corporate Governance as well as relevant rules and regulations in the industry.
The Securities & Exchange Commission (SEC) Code of corporate governance provides that the company secretary has the primary duty to assist the Board and management to implement the provisions of the Code and develop good corporate governance practices and culture.
The status of the company secretary has evolved over the years. In the years past, he was regarded as a mere servant of the company, but this perspective has since changed and both statute and case law now recognizes the position of the company secretary as vital to the company. In the case of Panorama Development (Guildford) Ltd V Fidelis Furnishing Fabrics Ltd[i], the Company Secretary was described as ‘ an officer of the company with extensive duties and responsibilities‘ beyond that of a mere servant.
Both SEC Code and CAMA provide that directors have the responsibility to ensure that the company appoints a suitably qualified Company Secretary. Whereas no specific qualification is specified for the company secretary of a private company, Section 295 of CAMA provides that a public company must appoint a secretary from among the following professionals:
- A member of the Institute of Chartered Secretaries and Administrators; or
- A legal practitioner within the meaning of the Legal Practitioners Act, 1975; or
- A member of the Institute of Chartered Accountants of Nigeria or such other bodies of accountants as are established from time to time by an Act; or
- Any person who has held the office of the secretary of a public company for at least three of the 5 years immediately preceding his appointment in a public company; or
- A body corporate or firm consisting of members each of whom is qualified under (a) to (d) above.
The responsibilities of a company secretary may be delineated along three major areas: company, board and shareholders.
Responsibilities to the Company:
The responsibilities to the company will vary from simple to complex. As company secretary, he ensures that the company complies with all applicable laws and regulations. This also will vary from company to company, however the central objectives and nature of his duties to the company will essentially remain compliance. The nature of compliance will mostly include rendition of periodic statutory/regulatory returns to the appropriate agencies, e.g., Corporate Affairs Commission (CAC), the Nigerian Stock Exchange (NSE), the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), Financial Reporting Council (FRC) etc. He proactively monitors the environment to be abreast of new laws and regulations. For example, certain provisions of codes of corporate governance which previously had persuasive implications or effects on the company may have become codified or obligatory as regulations which relevant companies are bound to comply with. This is the current position of the SEC Code for corporate governance as by the 2014 amendments, compliance with the Code has become mandatory for public companies.
Ensuring general compliance will entail that the company secretary will:
- Ensure that the Articles of Association comply with CAMA and other relevant statues, advice the directors on required or desirable amendments to the Articles; draft amendments in accordance with correct procedures and ensure that the company complies with its own Articles.
- Monitor and ensure compliance with NSE Rules, provide information to the market in a timely and compliant manner, ensure the security of unpublished, price-sensitive information and manage the company’s internal rules restricting share dealing during closed periods.
- Maintain the statutory registers of the company and ensure access to the registers by persons entitled to view each one. This includes dealing with transfers and transmission of shares and other matters affecting shareholdings.
- Coordinate the publication of the company’s annual report in consultation with the company’s internal and external advisers, prepare the report of the directors and ensure circulation of same to all parties entitled to receive it as at when due.
Responsibilities to the Board:
The Company Secretary co-ordinates the activities of the Board through the Chairman and makes available to all the Directors, advice on statutory compliance matters. He coordinates the operation of a company’s formal decision-making mechanism; board and general meetings. He also ensures that adequate and timely information is provided to all board members. As a matter of standard and general practice the Company Secretary must in relation to his duties to the Board do the following:
formulate the meeting agenda with the chairman/chief executive
- Issue notices of board meetings
- Communicate Board decisions to the management.
- Obtain Board approval on matters that are reserved for the directors before implementation
- Advise the directors on matters of procedure and best practice.
- In conjunction with the Chairman ensure that board meetings follow a standard.
- Attend and take minutes of the meeting of the Board and its committees.
- Maintain minute books and safeguard their access to authorized persons only
- Ensure safe custody and proper use of the seal
- Handles others administrative functions that may be referred to him by the Board.
Responsibility to the Shareholders:
The Secretary is the reference point to the shareholders. He conducts all correspondence with the members in relation to the issuing of shares, calls on shares, replacement of share certificate, management of shareholding accounts, and other matters as well as statutory requisitions (such as requisition for meetings). He initiates and obtains internal and external agreement to all documents required to be circulated to shareholders
Importantly, he assesses the adequacy of the company’s shareholder communication strategies. Whether influenced by legislative requirement, public relations or commonsense, the focus is on finding new and better ways to communicate whilst helping to improve the quality of information disclosed to shareholders as part of reporting requirements. A company should be conscious of improvements in information and communication technologies, which help shareholders and other stakeholders access information (for instance on company websites) as they now rely on more immediate information sources to assess company performance and to make investment decisions.
The Company Secretary & Corporate Governance
The role of company secretaries has become heightened as developments in financial and economic markets globally have propelled the attention of all stakeholders in companies in the concept of corporate governance. It is now generally acknowledged that the way and manner a company is managed essentially determines the success or failure of that company. The Company Secretary usually will have responsibility to review and advise on developments in corporate governance, advise directors on the duties, liabilities and best practice that should be followed, implement procedures that comply with statutes, regulations and best practice. A recent development is the role of the Financial Reporting Council (FRC) in ensuring sound corporate governance practices.
From the foregoing, it is evident that the role of the Company Secretary to proper management of the Company cannot be overemphasized. The role rather than being passive has become more active with the developments in financial and economic markets. In order to continue to be effective, a company secretary must not only ensure that he keeps abreast of the ever changing legal and regulatory environment, but be up to date with corporate governance best practices and confident enough to properly guide the company, board and shareholders to ensure compliance.
By Emmanuel Osajie