THE LEGAL PROPHET ----0755422881
QUESTION: A COMPANY SECRETARY IS A PROMINENT OFFICER OF A
COMPANY EXPLAIN THE LAW REGARDING HIS OR HER APPOINTEMENT,
POWERS AND DUTIES IN THE RUNNING OF A COMPANY.
TABLE OF CONTENTS
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
meaning of company secretary……………………..page 3
Qualification of company secretary………………..page 3 to 4
The changing role of a company secretary…………page 4
Statutory roles of the company……………………..page 5 to 7
Role of company secretary in corporate governance…page 7 to 8
Institution of suits…………………………………….page 8
Removal of company secretary………………………page 9
Conclusion…………………………………………….page 10
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THE COMPANY SECRETARY INTRODUCTION
1.0
The meaning of company secretary.
Section 21 defines a company's officer as including the company's secretary and Section 187
provides for a company secretary however there is no conclusive definition of company secretary
in the company Act but Various meaning has been ascribed to a Company Secretary. H. Black in
the Black’s Law Dictionary Defines: A Company Secretary, in references to a corporation or
association as an officer charged with the direction and management of the part of the business
of the company which is concerned with the keeping of records, the official correspondence,
with giving and receiving notices, countersigning documents etc.
Also Professor Gower, whilst recognizing the importance of the Company Secretary, said thus:
“speaking generally, the Secretary functions are purely ministerial and administrative and he is
not as Secretary, charged with the exercise of any managerial powers.
It is worthy of note that the definition of a Company Secretary is shrouded in the role or
functions of a company Secretary, also in ADEBESIN V MAY AND BAKER NIG LTD.
KARIBI WHYTE J (as he then was) stated that-….the secretary is an officer of the company
with important duties and responsibilities .the secretary merely acts in a ministerial and
administrative capacity .He has no managerial functions and managerial Powers are prima facial
vested in the directors and any managing director
The secretary is appointed by the directors on such terms as they think fit and the directors may
also remove the secretary. Qualifications of a company secretary depend on the type of company
or venture but Section 190 provides for the qualifications of a public company secretary and
under sections 178, 179, 180 and 1892, provide for the disqualification of a person from
becoming a company secretary are contained.
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2
company Act 2012
Company Act 2012
2
However A sole director is prohibited from being a secretary Appointment of a company
secretary is necessary for a company by virtue of Section.187 of the companies Act Article 110,
Table A3 provides that the secretary shall be appointed by the directors for such term on such
remuneration and upon such conditions as they may thing and that any secretary so appointed
may be removed by them.
2.0 QUALIFICATION OF SECRETARIES
Section 190(1)4provides that it is the duty of the directors of a public company to take all
reasonable steps to ensure that the secretary, or each joint secretary of the company is a person
who appears to them to have the requisite knowledge and experience to discharge the functions
of secretary of the company and who—
a. Is an advocate of the High Court.
b. is a person who, by virtue of his or her holding or having held any other position
or his or
her being a member of any other body, appears to the directors to be capable of dis
charging those functions;
c. is a member of or is qualified to be a member of any of the bodies specified in
subsection (2) including:
d. The Institute of Chartered Public Accountants in Uganda; or
e. The Institute of Chartered Secretaries and Administration
3.0 THE CHANGING ROLE OF COMPANY SECRETARY
Thus far, it could be seen that the Company Secretary is the Chief Administrative Officer of the
Company are unessential ingredient in the implementation of sound corporate Governance
Procedures. Yet, this Enviable position of a Company Secretary has not been accorded the
position it deserves in corporate Governance. A high degree of non-recognition by the common
law as the Secretary even when his influence is felt in the Boardroom.
The veracity of this position is extended to the day-to-day functions of the Company’s affairs as:
“Not too long ago, the attitude of Director to Company Secretary was contemptible, many
Company Secretaries have experienced situations where the Board met in their absence and all
they were asked to do was to prepare minutes handed out to them with no question asked. After
all, they are supposed to act by order of the board However, the case of PANORAMA
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4
Company Act 2012
Company Act 2012
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DEVELOPMENT GUILDFILED LTD VS FIDELIS FURNISHING FABRICS5 could be
considered to be a major shift from this misconceived perception of a company secretary’s role
in corporate governance as just a subordinate or a minor clerk without any ostensible authority to
make representations on the Company’s behalf. The Court held in this Case that signing or
entering into certain contracts are inherent in or incidental to the administrative nature of his
Office. In the same vein, Chief N. Edun stated thus “we are now in an era in which Company
Secretary are usually among the most respected and take most highly paid officers of their
Companies and their appointment to such high office pre-supposes the possession of certain
basic qualification and experience. Conception of a Secretary’s role as that of a more clerk or
servant now clearly boarders on heresy it is in order to give statutory recognition to this
incontrovertible fact that today,
4.0 STATUTORY ROLES OF COMPANY SECRETARY
1.
Board Meetings
Facilitating the smooth operation of the company’s formal decision making and reporting
machinery; organizing board and board committees meetings (e.g. audit, remuneration,
nomination committees etc.); formulating meeting agendas with the chairman and/or the chief
executive and advising management on content and organization of memoranda or presentations
for the meeting; collecting, organizing and distributing such information, documents or other
papers required for the meeting; ensuring that all meetings are minutes and that the minute books
are maintained with certified copies of the minutes and that all board committees are properly
constituted and provided with clear terms of reference.
2. General Meetings
Ensuring that an annual general meeting is held in accordance with the requirements of the
Companies Act and the companies’ Articles of Association; obtaining internal and external
agreement to all documentation for circulation to shareholders; preparing and issuing notices of
meetings, and distributing proxy forms; trying to prepare directors for any shareholder questions
and helping them create briefing materials; overseeing the preparations for security
arrangements. At meetings, ensuring that proxy forms are correctly processed and that the voting
is carried out accurately; coordinating the administration and minuting of meetings.
5
(1971) 3WLR 12
4
3. Memorandum & Articles of Association
Ensuring that the company complies with its Memorandum and Articles of Association and,
drafting and incorporating amendments in accordance with correct procedures.
a.
b.
c.
d.
e.
f.
4. Statutory Registers
5. Maintaining the following statutory registers:
Members
company charges
directors and secretary
directors’ interests in shares and debentures
interests in voting shares (substantial holdings & those notified in pursuance of a s.212
notice
Debenture holders (if applicable).
6. Statutory Returns
Filing information with the Registrar of Companies to report certain changes regarding the
company or to comply with requirements for periodic filing. Of particular importance in this
regard are:
a. annual returns
b. report & accounts
c. amended Memorandum & Articles of Association
d. returns of allotments
e. notices of appointment, removal & resignation of directors and the secretary notices of
removal resignation of the auditors
f. change of registered office
g. Resolutions in accordance with The Companies Act.
7. Report & Accounts
Co-coordinating the publication and distribution of the company’s annual report and accounts
and interim statements, in consultation with the company’s internal and external advisers, in
particular, when preparing the directors’ report.
8.
Share Registration
Maintaining the company’s register of members; dealing with transfers and other matters
affecting share-holdings; dealing with queries and requests from shareholders.
9. Shareholder Communications
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Communicating with the shareholders (e.g. through circulars); arranging payment of dividends
and interest; issuing documentation regarding rights issues and capitalization issues; maintaining
good general shareholder relations; maintaining good relations with institutional shareholders
and their investment committees.
10. Shareholder Monitoring
Monitoring movements on the register of members to identify any apparent ‘stake building’ in
the company’s shares by potential take-over bidders; making appropriate inquiries of members as
to beneficial ownership of holdings. 10. Share and Capital Issues and Restructuring
Implementing property authorized changes in the structure of the company’s share and loan
capital; devising, implementing and administering directors’ and employees’ share participation
schemes.
11. Acquisitions, Disposals & Mergers
Participating as a key member of the company team established to implement corporate
acquisitions, disposals and mergers; protecting the company’s interests by ensuring the
effectiveness of all documentation; ensuring that due diligence disclosures enable proper
commercial evaluation prior to completion of a transaction; ensuring that the correct authority is
in place to allow timely execution of documentation.
12. Corporate Governance
Continually reviewing developments in corporate governance; facilitating the proper induction of
directors into their role; advising and assisting the directors with respect to their duties and
responsibilities, in particular compliance with company law and, if applicable, Stock Exchange
requirements; counseling them when preparing presentations and memoranda 13. Non-Executive
Directors Acting as a channel of communication and information for non-executive directors.
13. Company Seal
Ensuring the safe custody and proper use of any company seals.
14. Registered Office
Establishing and administering the registered office; attending to the receipt, co-ordination and
distribution of official correspondence received by the company, sent to its registered office;
ensuring the provision of facilities for the public inspection of company documents.
15. Company Identity
Ensuring that all business letters, notices and other official publications of the company show the
name of the company and any other information as required by the statutes and that company
name plates are displayed in a conspicuous place.
16. Subsidiary Companies
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Ensuring that procedures are in place for the correct administration of subsidiary companies and
that correct information is given to the holding company; maintaining a record of the group’s
structure.
17. General Compliance
Monitoring and laying in place procedures which allow for compliance with relevant regulatory
and legal requirements, particularly under the Companies Acts including legal requirements on
retention of documents; retaining the minimum set of records required for commercial reasons;
ensuring that procedures are in place to allow adequate historical archive to be maintained.
5.0 THE ROLE OR FUNCTIONS OF COMPANY SECRETARY IN
CORPORATE GOVERNANCE
Corporate Governance is a system of managing the affairs of Corporations with a view of
increasing shareholders value and meeting the expectation of the other stakeholders. This
objective cannot be achieved without component Company Secretary.
According to H.A.J Ford, Corporate Governance is about the management of business
enterprises organized in corporate form, and the mechanisms by which managers are supervise.
Corporate Managers have a measure of power to deal with other people’s money. The funds
provided by shareholders in the Company, Managers owe duties to their Companies, duties
which put legal constraints on their activities yet there is no one-size fit-all job description for
Company Secretaries. On the contrary, role responsibilities and positions differ significantly
from company to company, depending on the Organization of the firm its corporate governance
design. This is as a result of a new phenomenon of corporate governance arising from the
growing complexity of corporate practice; the role of the Company Secretary includes specific
responsibility for the sound governance of the Company and for the guidance of the Board in the
execution of its tasks.
This salient role of a Company Secretary could be segmented to include:
a. Ensuring the smooth running of the Board’s and Board Committee’s activities by Helping
the Chairman to set agendas,
b. preparing and presenting papers to the Board and Board Committees, advising on Board
procedures and ensuring that the Board follows them:
c. Acting as primary point of contact and source of advice guidance for
d. Particularly, non-executive Directors as regards the Company and its activities in order
to support the decision making process
e. Facilitating induction of new Directors into the business and their roles and
responsibilities, and assisting in the ongoing training and development of directors
f. Keeping under close review all legislative, regularly and corporate governance
developments that might affect the company’s operations, and ensuring the Board is fully
briefed on these and that it has regard to them when taking decisions
g. Ensuring complaisance with all legal and regulatory requirements including the
continuing obligations of the listing Rules and all statutory filing requirements
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h. Together with Human resources Director, keeping in touch with the debate on Corporate
Social Responsibility and stakeholders, and monitoring all developments in this area and
advising the Board in relation to its policy and practice with regard to Corporate Social
Responsibility and its reporting on that matter
i. Managing relations with investors, particularly institutional investors, with regard to
corporate governance issues and the Board’s practices in relation to corporate
governance’ and making arrangements for and managing the whole process of the of the
Annual General meeting and establishing , with Board’s agreement, the items to be
considered at the AGM, including
j. Resolutions dealing with governance matters.
6.0 INSTITUTION OF SUITS
Institution of Suits Although the Secretary is the officer mainly charged with the duty to institute
suits on behalf of the company as it was held in the earlier judicial view in the decision in
Bugerere Coffee Growers Ltd. V Zukuberi Kikuya and Another6 These have been held as
no longer good law by the Court of Appeal of Uganda in the case of M/s Tatu Naiga &
Emporium V Uverjee Brothers 7citing United Assurance Co. Ltd V Attorney General, and 8
which overturned those earlier decisions. Any authorized director can give the necessary
authority to institute a suit in the name of the company
7.0
REMOVAL OF A COMPANY SECRETARY
However secretaries, being officers of companies are generally removable in accordance with
terms of their contract however
CONCLUSION/RECOMMENDATIONS
Thus far, the gradual progression of a Company Secretary in corporate governance is easily
discernible. In addition to being an office of the company with substantial authority in the
administrative sphere, he is Also imbued with powers and duties derived directly from the
Article and the Company Act 2012 This position has been given full consideration by the
Supreme Court in Okeowo V. Migiore where Idigbe J.S.C. observed that in Nigerian Law, a
company secretary is “a principal office of the Company”. To the same effect was Wimpey Ltd.
Balogun’s case
However, the new phenomenon of corporate governance, due in part to the growing complexity
of corporate practice, clearly places additional responsibilities on a Company Secretary, not least
in cases of reconstructions, mergers and takeover of companies. The managerial and
administrative machinery of a company is such that requires protection of shareholders and
outsiders against directors who may want to use their position as insiders to benefit themselves at
6
1970] EA 147
(U) Ltd (C.A-U),
8
Civil Appeal No. 1 /1986
7
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the expense of the former. It is therefore, suggested that a company secretary would need to carry
out diligent checks, with a view to protecting the shareholders and not leaving them at the mercy
of the board.
Section S.190 (1) of the Company Act 2012 has fleshed out the qualification of a Company
secretary, it is however, suggested that the qualification of a company secretary especially of a
public company would need to be strengthened. There are clearly very sound reasons for a
Company of knowledge required in company administration certainly administration certainly
cannot be achieved without professional training.
It is therefore necessary, to restrict the professional qualification to those areas important to
company administration if sound corporate governance, procedures are to be implemented. In
addition, corporate governance, as thus far analyzed above, is the set of processes, customs,
policies, laws and institutions affecting the way a company is directed, administered or
controlled. This situation clearly makes the role of the Company secretary an important,
especially in ensuring that the company establishes and maintains good corporate governance
rules and that these rules are respected throughout the organization. Thus, given this increasingly
challenging legal and regulatory requirements, the role of a company secretary will most
certainly develop into that of corporate governance professional. It is therefore, suggested that in
addition to a sound professional qualification of a company secretary, the job description should
include a broad knowledge about corporate standard and rules, international developments in this
field and the ability to Judge where change in the company are necessary and where they would
not add value.
Finally, it is necessary for every company to have a secretary, for financial institutions in the
group structure, the parent and the subsidiary should each have their separate company
secretaries .there is always a danger that the company secretary of the parent company would
attempt to get involved in the company secretarial affairs of the subsidiary. This should not be
encouraged. While it is necessary that the policy direction of the two companies are aligned and
that officers of the parent company offer help where necessary, it should not degenerated
excessive interference by the parent in the affairs of the subsidiary .similarly, the loyalty of the
subsidiary company’s has to lie with subsidiary’s board and not with the parent company or its
board.
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REFERENCES
Books
(1) Boyle & Bird …………….. Company Law 2nd ed. Jordans
(2) Blacks Law Dictionary……Blacks Law Dictionary 6 Edition.
.(3) Danjuma N.
(4) Edun N ….Company Secretaries in Public Companies (1989) 2 GRBPL (No.2) 12 at 17
(5) FARRAR, J. H. Farrar’s Company Law 3rd ed. Butterworhs
(6) Fabian ajogwu SAN.
(7) Gower L.C.BCorporate governance and group dynamics copyright Principle of Modern
Company Law: London, Stevens & Sopns 1979.
(8) Orojo J. O. Company and Practice in Nigeria: Mbeyi &Associate Nigeria Ltd. 1992.
(9) Olugbeoga Oshoyele…..Duties, Power & Responsibility of Company Secretary to the Board
Management, Current Jos Law Journal Vol. 5; November, 1999.
(10) A.S. Hornby
(11) Sealy, L.S…..Oxford Advance Learners Dictionary. 6th Edition. Cases & Materials in
Company Law, (London Butterworth’s 1992).
(12) Smith and Keenan 1992 Associated Publishers Company Law for Students (London:
Pitman Publishing. 1996)
Statues
(1) The companies Act of Uganda 2012
Internet Resources
(1) w.w.w.c.b.s. Cartain. Edu.wu/files/Article – 9 – Corp. Gov. I pdf 1/03/07.
(2) IMD web letter. Utm 16/03/07
(3) http://www.educationifoindia.com
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