One board role, more than any other, has historically required more duties, and more varied responsibilities, than any other role within corporate governance. That is the role of the company secretary—a person whom every board member values. Board directors know that the “go-to” person to answer their questions is the company secretary. If they don’t get an answer, the company secretary, or corporate secretary, as they are sometimes called, will guide them to a place where they can get the answers they need.
State laws primarily mandate the particulars for corporate governance. Corporation laws in all states require that corporations have a company secretary, although the corporation’s bylaws and best practices for corporate governance describe the powers and duties of the corporate secretary.
The Role of Company Secretary in the Corporate World Is Changing
When you hear the words corporate secretary, most people envision the typical stereotype of a man or woman who assists a board chair or executive director. The stereotype often conjures up a picture of someone who is scurrying around and doing things like taking careful notes, following up on things for others and setting up meetings. Because of the recent changes in corporate governance, today’s corporate secretary holds the responsibility for all that and much more.
The role of company secretary is transitioning from being a support person to becoming one of the key governance positions within a corporation. State and federal laws and regulatory bodies are holding board directors accountable for following state and federal securities laws. Boards of directors need someone in a role who knows and understands the laws and will ensure that the corporation is in compliance at all times. The most logical place for that responsibility is the role of the company secretary.
Those who fill the shoes of the company secretary need to know that The Securities and Exchange Act of 1934 requires annual and quarterly financial reports and interim reports about events that impact investors. The Securities and Exchange Act also holds stipulations for meetings and voting protocols, and the company secretary needs to make sure that the board follows them precisely. The Sarbanes-Oxley Act of 2002 (SOX) amended the Securities and Exchange Act. SOX outlines which records corporations must keep and how long they must keep them toward the goal of improving reporting practices and preventing accounting fraud. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) requires corporations to meet certain disclosure and compliance regulations.
Company secretaries need to know and understand the history of such laws and stay current as those laws are amended or get superseded. A good example is the Financial Choice Act, which Congress is currently debating. Company secretaries will need to know if and when the law passes, and how its passage affects existing laws. They will also need to be prepared to communicate any new requirements to board members, managers and shareholders.
Corporations Need Qualified Company Secretaries
The role of the company secretary is now considered a senior position, equal to a managerial position or above. Beyond their normal course of duties, company secretaries often provide advice and counsel to the board chair, executive director and others, and serve as confidantes. The board secretary signs legal documents as a representative for the corporation, and bears custody of the corporate seal. Company secretaries share information with the board and managers on best practices for corporate governance and work with them to uphold them.
Because of the increased duties and very important responsibilities that boards require in a company secretary, the role of a corporate secretary is often filled by a senior board member.
Many of today’s corporations are finding that it’s helpful to appoint a lawyer to fill the role of the company secretary. A corporate secretary with a law degree may perform dual duty for the corporation as general counsel or by serving another legal role within the company.
At a minimum, the corporate secretary should belong to a body of professional accountants or a recognized body of corporate chartered secretaries. Boards also expect their corporate secretaries to have minimally achieved a master’s degree in business administration or commerce.
Company Secretaries Need Core Competencies
Industry experts recognize that the many demands and multiple facets that the role of corporate secretary requires make it a difficult position to fill. The Society of Corporate Secretaries came to the rescue when they developed a guide called the “Core Competencies of Successful Corporate Secretaries.” The list includes personal and professional attributes for successful corporate secretaries. The list of core competencies includes:
Having a thorough understanding of the company’s business
Having basic knowledge of corporate and securities laws, at a minimum
Having solid communication skills and an “executive presence”
Being intuitive and sensitive to the thoughts and feelings of board directors and the CEO
Staying current with changes in corporate governance and giving the board and managers a “heads up” about new developments
Being able to work and achieve a consensus within multidisciplinary settings
Being able to navigate bureaucratic thinking
Being flexible, creative and detailed
Remaining calm under pressure and not losing sight of perspective
Duties of the Corporate Secretary
In addition to some of the duties that are more familiar to the role of the corporate secretary, like preparing for meetings, planning agendas, taking minutes and storing records, secretaries in today’s corporate world have many legal duties.
The corporate secretary must make sure that the organization conducts business and manages its affairs according to the bylaws. As mentioned earlier, they need to know and be able to comprehend existing and new laws, and they need to be able to communicate that information to the board directors and managers. It’s not uncommon for corporate secretaries to be an integral part of discussions with the CEO, executive director, board chair and attorneys regarding legal matters. This is one reason that many corporations look toward filling the role of the corporate secretary with a lawyer.
Corporate secretaries also have many important responsibilities to the shareholders. They are responsible for making sure dividends get paid, carrying out matters concerning share allotment, issuing share certificates and managing share transfers. The corporate secretary is also the main communicator to the shareholders upon the advice and recommendation of the CEO or executive director and the board chair.
The heavy responsibilities of corporate secretaries demand that boards appoint someone who is extremely competent and who can meet the needs of the role effectively. The best people for the job have all or most of the core competencies listed for company secretaries and have a legal or accounting background. Good candidates stay current with the happenings in the corporate world. They are great communicators who pay attention to detail.
To simplify the role of the company secretary, a board portal should be used in order to easily manage board information and streamline processes.