“The company secretary is a strategic position of considerable influence at the heart of governance operations within an organisation.”
Governance describes the way that an organisation is directed and controlled, which includes a company’s strategy and decision making, how it achieves its aims, and ensuring that all activities undertaken comply with legal, ethical and regulatory requirements. Company secretaries have a broad skill set – corporate law, finance, governance, strategy and corporate secretarial practice – and they advise a company’s board in these key areas, providing support to the Chair, CEO and non-executive directors” ICSA – The Governance Institute.
The office of a Company Secretary has evolved over the years to a high-ranking officer of the company with extensive responsibilities. Now regarded as the ‘guardian’ of the Company’s compliance with laws, regulations, corporate governance and ethics, the Company Secretary is now a highly revered professional. This significant shift has resulted from the need to ensure the enthronement of effective corporate governance framework as required by regulators, investors and other stakeholders.
Principle 8 of the Nigerian Code of Corporate Governance 2018 which deals with the office of the Company Secretary provides that “The Company Secretary plays an important role in supporting the effectiveness of the Board by assisting the Board and management to develop good corporate governance practices and culture within the Company.”
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In Nigeria, all companies are statutorily required to appoint a Company Secretary. Section 295 of Companies and Allied Matters Act (CAMA) provides for the qualification of a Company Secretary as follows:
“It shall be the duty of a director of a company to take all reasonable steps to ensure that the secretary of the company is a person who appears to have requisite knowledge and experience to discharge the functions of a secretary of a company.”
While the above provision is the only prerequisite for appointing a Company Secretary in the case of a private company, the Act in the same section provides for additional requirements in the case of a public company as follows:
“And in the case of a public company, he shall be-
a) a member of the Institute of Chartered Secretaries and Administrators; or
b) a legal practitioner within the meaning of the Legal Practitioners Act; or
c) 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
d) any person who has held the office of the secretary of a public company for at least three years of the five years immediately preceding his appointment in a public company; or
e) a body corporate or firm consisting of members each of whom is qualified under paragraphs (a), (b), (c), or (d) of this section.”
The proposed amendment to CAMA seeks to exempt “small companies” from the requirement to appoint a company secretary.
The NCCG Code recommends that the Company Secretary shall be appointed through a rigorous selection process similar to that of new Directors and where the Company Secretary is an employee of the Company, he/she should be a member of senior management. In the same vein, the removal of the Company Secretary is a matter for the Board of Directors as a whole. This collective responsibility will reduce the possibility of an individual Director (usually the CEO) exerting undue influence over the Company Secretary.
Placing the responsibility for the appointment and removal of the Company Secretary on the Board underscores the strategic role of the Company Secretary. The Board should ensure that the person appointed has the gravitas, competence and objectivity required to provide independent guidance and support at the highest level of decision-making in the Company. The Board is also expected to properly empower the Company Secretary to effectively discharge his/her duties and responsibilities.
The Company Secretary has both functional and administrative responsibilities. The functional responsibility is to the Board through the Chairman, while administratively, he/she reports to the MD/CEO. Where the Company Secretary is also the Legal Adviser, the reporting responsibilities are more often than not blurred and could impact the independence of the individual. It is good practice to separate the roles as much as is practicable.
The Code recommends that Board should approve the performance evaluation of the Company Secretary.
The Company Secretary provides guidance to the Chairman and other Directors on their responsibilities and should in conjunction with the Chairman ensure that new Directors undergo a comprehensive induction programme that will cover the expectations of their role as well as an introduction to the Company’s operations.
The Company Secretary is required to ensure adequate information flow from the Board to Management and should keep track of implementation of Board decisions. It is the responsibility of the Company Secretary to keep the Board up to date with trends and regulatory requirements that impact the Board and the Company. This underscores the imperative of constantly building on their professional knowledge and staying up to date with legal and regulatory trends and developments.
The Company Secretary must endeavour to protect and safeguard his/her independence and the Board should provide support in this regard. Maintaining an independent stance allows the Company Secretary to provide objective advice to the Board. Strong values and a high moral compass will serve the Company Secretary well in maintaining his/her independence. Consequently, it is imperative that prior to accepting an appointment as a Company Secretary, prospective appointees should undertake their own due diligence on the entity as would a prospective Director. It is also imperative that the Company’s values align with their personal values and should be mindful of the reputation they have built and nourished over the years.
It is interesting to note that the word ‘secretary’ is originally derived from the Latin “secernere”, meaning “to distinguish” and “to set apart”. Its etymology clearly links to the idea of independence, freedom from outside control and of not being directly subject to the authority of another. It is therefore safe to say the notion of independence has been “wired” into the role of the “secretary” from the start. However, Company Secretaries require exceptional judgement, tact and diplomacy to manage this independence – hence the requirement of appropriate “gravitas”.
As regulators and other stakeholders become more demanding, it becomes imperative that Company Secretaries should embrace their strategic role as one that puts them in a position of considerable influence at the heart of organisational governance.
Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to [email protected]
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