A Company Secretary holds office based on the concepts of independence and trust and is a key participant in the enthronement of best practice in corporate governance.
Although ultimate responsibility for compliance with corporate governance rests with the board of directors, the Company Secretary is obliged to assist both the board and management to implement an enduring corporate governance culture.
In addition to the Company Secretary’s statutory duties, he is expected to:
· Advise the board on governance matters;
· Ensure adequate flow of information between executive management and non-executive directors;
· Ensure that matters requiring board consideration and approval are brought before the board
· Assist the Chairman of the Board with director development including induction programmes for new directors and with board performance evaluations;
· Manage the company’s relationship with shareholders and institutional investors;
Whilst directors have a right to expect the Company Secretary to give impartial advice and to act in the best interest of the company, it is incumbent on them to ensure that the Company Secretary is in a position to do so by granting the holder of that office the required independence. Failure by the board to protect the integrity of the Company Secretary’s position erodes the effectiveness of a significant in-built control available to the company.
The clear definition of appropriate reporting lines for the Company Secretary will normally be a critical factor in ensuring independence. The Secretary should be accountable to the board as a whole as opposed to being accountable to any individual director. As provided by CAMA, the appointment and disengagement of the Company Secretary is within the purview of the Board.
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. These dual roles usually task the independence of the Company Secretary. Additionally, there is the need to avoid potential situations of conflict of interest – where the performance of one role may conflict with the responsibilities required of the other. Therefore, depending on the governance structures of an organization, the Company Secretary’s position on the organogram, his role in entrenching the culture of good governance may not be effectively discharged.
Companies seeking to adopt corporate governance best practice should ensure a clear separation between these two roles to ensure that the role of the Company Secretary as the “conscience of the company” is not jeopardized. To assure independence, it is not out of place to outsource the duties of the Company Secretary. Some companies recognizing the key role the Company Secretary plays in ensuring compliance, combine the roles of Company Secretary with that of the Chief Compliance Officer.
With increasing focus on corporate governance, the role of the Company Secretary has grown in importance. He is now regarded as the guardian of a company’s compliance with laws, regulations, corporate governance and ethics. Establishing a structure that assures his independence is crucial to the entrenchment of corporate governance in any organisation.
BISI ADEYEMI
Adeyemi is Managing Director of Deloitte Corporate Services Limited ([email protected])
