By Mfonobong Ukpe
The office of a company secretary is a strategic position of considerable influence at the heart of governance operations within an organisation.
It is considered a senior position in a private or public company. Despite the name, the role is not clerical or secretarial in the literal sense of the term.
A Company Secretary according to Lord Denning M.R in Panorama Developments (Guildford) Ltd. v. Fidelis Furnishing Fabrics  2 QB 711, is a much more important person nowadays than he was in 1887 when Lord Esher, M.R. in the 1887 case of Barnett Hoares & Co. v. South London Tramways Co. , 18 QBD 815, described a secretary as a mere servant who does what he is told, and no person can assume that he has any authority to represent anything at all, nor can anyone assume that statements made by him are necessary to be accepted as trustworthy without further inquiry.
Who should be appointed Company Secretary?
In appointing a Company Secretary, the Board of Directors must secure an eligible person who possesses cognition of corporate issues, regulatory issues involved in the running of companies and who understands the protocols of meetings, record keeping, documentation and correspondence. Further, a suitable person for appointment should be a person who understands.
Pursuance to Section 295 of Companies and Allied Matters Act Chapter C20 LFN 2004 (“CAMA”), “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.”
The above provision is the only requirement a person must fulfill to be qualified for appointment as company secretary in the case of a private company.
The Act (same section) further state…… “And in the case of a public company, he shall be;
- a member of the Institute of Chartered Secretaries and Administrators; or
- a legal practitioner within the meaning of the Legal Practitioners Act; 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 years of the five years immediately preceding his appointment in a public company; or
- a body corporate or firm consisting of members each of whom is qualified under paragraphs (a), (b), (c), or (d) of this section.”
Section 294 of CAMA forbids the same person from carrying out any act which is required to be done by “a director and the [company] secretary”. A clear interpretation of this section would be that there must be a secretary of the company as distinct from its directors. Section 296(1) of CAMA provides that a company secretary shall only be appointed and removed by the board of directors.
The Concept of Corporate Governance
Governance describes the way that an organisation is directed and controlled. This 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.
The concept of corporate governance has aroused the interest of shareholders, investors, creditors, regulatory agencies and governments all over the world owing to developments in the financial and economic markets globally. The governance of corporations is now as important in the world as the governance of countries. Developments at the global level have made it necessary for companies and their shareholders to imbibe the full complement of corporate accountability and efficiency.
However, in a bid curb incessant corporate failures in Nigeria, the Federal Government had begun the process of adopting a unified code of corporate governance for business organisations as a way of instilling accountability and transparency in the conduct of businesses. Currently, there exist a few corporate governance codes applicable in Nigeria, a number of which have been codified by regulatory bodies such as the Central Bank of Nigeria (“CBN”), the Securities and Exchange Commission (“SEC”) and National Insurance Commission (“NAICOM”). For example, the CBN has recently been releasing revised banking rules (e.g Nigeria Bankers’ Clearing System Rules 2018 inter alia) to regulate the economic activities of financial institutions, especially as it relates to financial instruments and credit facilities.
Part of the major responsibilities of the Financial Reporting Council of Nigeria (“FRC or In todays’ corporate system, the significance of a Company Secretary can be seen in the role which he undertakes in the day-to-day business of companies, the regular representations on behalf of the company and entering into contracts on behalf the company, which falls within the purview day-to-day running of the company’s business. The Nigerian law, specifically section 293(1) of CAMA makes it compulsory for every company to have a company secretary and filing of the particulars of the appointment of a company secretary with the enabled Commission, Corporate Affairs Commission, is a mandatory exercise for every company registered in Nigeria.
The Role of a Company Secretary in Corporate Governance
The management structure and modus operandi of a company will determine whether such company will succeed or fail. The most recent cases of corporate failure involving Nigerian corporate entities revealed excessive corporate fraud, lack of internal control measures, regulatory complacency and generally, non-compliance with the acceptable codes of corporate governance. Every company must have a corporate governance structure in place and most importantly, someone who must oversee the implementation of the structure. This is the responsibility of a company secretary.
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.
Notwithstanding, the specific responsibilities of a company secretary vary depending upon the level of the job role, the size of the corporation and the sector in which it operates. However, responsibilities typically include;
- Guiding the chairman and board on their responsibilities under the rules and regulations to which they are subject and on how those responsibilities should be discharged (Cadbury 1992).
- Supporting the chairman in ensuring the board functions efficiently and effectively.
- Ensuring good information flows within the board and its committees and between senior management and non-executive directors, as well as facilitating induction and assisting with professional development as required.
- Maintaining statutory registers and other records of the company;
- Rendering proper and timely returns as required under Companies and Allied Matters Act
- Having responsibility for facilities, HR, insurance, investor relations, pension administration, premises and share registration (this only applies to some company secretaries).
- Maintaining good shareholder relations and keeping the board informed on shareholders’ views.
- Developing and overseeing the systems that ensure that the company complies with all applicable laws and policies, in addition to its legal and statutory requirements.
- Monitoring changes in relevant legislation and the regulatory environment and taking action accordingly.
- Overseeing the day-to-day administration of the company, e.g. maintaining statutory books, including registers of members, directors and secretaries, organising board meetings and AGMs, preparing agendas and taking minutes.
The perplexed state of affairs for Nigerian Companies is that, they are currently regulated by more than one body such as the publicly listed banks regulated by both the CBN and the SEC. In instances where the provisions of corporate governance codes are at variance on the same subject, the company secretary has the onerous task of finding the middle ground in addressing such matters.
Financial Reporting and the Company Secretary
The Financial Reporting Council of Nigeria Act (“FRCN Act”) was signed into law in 2011. The Financial Reporting Council of Nigeria (“FRC or the Council”) which is established and enabled by the Act is vested with the mandate to develop a national code of corporate governance for Nigeria. This code is expected to harmonise the existing corporate governance codes in Nigeria, including;
- the 2011 SEC Code of Corporate Governance
- the 2009 NAICOM Code of Corporate Governance
- the 2006 CBN Post-Consolidation Code of Corporate Governance
- the 2008 Code of Corporate Governance for Licensed Pension Operators as well as the SEC Code for shareholders associations.
The FRC is the first unified independent regulatory body set up in Nigeria to oversee corporate reporting, actuarial practice, monitoring of accounting and auditing standards, valuation and corporate governance. The passage of the FRCN Act enables the Council to undertake responsibilities which were previously unavailable to other regulators. The Council acts through its eight directorates, the directorate for accounting standards (private sector), accounting standards (public sector), audit practices standards, inspection and monitoring, auditing practices standards, actuarial standards, valuation standards and corporate governance. The Council’s Committee on Corporate Governance is vested with the mandate to issue a Code of Corporate Governance and industry specific guidelines.
The Company Secretary has a cardinal role in ensuring the company complies with provisions of FRCN especially the conversion to reporting in accordance with International Financial Reporting Standards within the required timeline. It is pertinent to add that the FRCN requires that every individual who signs a financial statement must be a member of a professional body recognized by Law.
In light of the foregoing, the perspicuous fact that the office of a Company Secretary is very critical to the operations of a company cannot be over-emphasised. This article has elucidated a concise guide in respect of the Company Secretary’s role in corporate governance. Thus, it is pertinent for every organisation in the public and private sector to appoint a prescribed individual as Company Secretary and allow such professional to function in his/her full capacity.