Company secretary: An introduction

Out-Law Guide | 17 Jun 2010 | 12:44 pm | 3 min. read

This guide is based on UK law as at 1st February 2010, unless otherwise stated. The job of the company secretary has changed over the years, both in perception and in fact. As long ago as 1971 the...

This guide is based on UK law as at 1st February 2010, unless otherwise stated.

The job of the company secretary has changed over the years, both in perception and in fact. As long ago as 1971 the influential judge Lord Denning commented that the secretary "is an officer of the company with extensive duties and responsibilities… He is no longer a mere clerk."

That process has accelerated more recently, with the post coming to play a key role in the governance of many companies. (See: Company secretary: Governance and liabilities, an OUT-LAW guide.)

The role

Until 6 April 2008 all UK companies, public or private, needed to have a company secretary. The paradox is that then, as now, there was no job description for the company secretary in companies legislation. As a result, many small private companies filled the post by giving it to one of the directors. A company with only one director could not double up the role, so a spouse or employee was often press-ganged into service.

Private company

The implementation of the Companies Act 2006 means that private companies can now choose whether to have a company secretary or not. They are under no statutory requirement to fill the role. (They may,though, have to change their articles before dispensing with the job: the Act does not overrule the articles on the point.)

Very small private companies where there is no real need for the role are the most obvious beneficiaries of the new rule. But it’s been good news for others, too.

In many private companies there remains an administrative job to be done, whether a company secretary is formally appointed to do it or not. There are still returns to be filed with Companies House, registers to be kept up to date, paperwork to be processed. The difference is that there is now no requirement for the person doing the job to be registered at Companies House as secretary, or to file new particulars when the secretary changes. In large corporate groups, with a hundred or more subsidiaries, that is a worthwhile benefit.

Where there is no company secretary, and no deputy or assistant, the Companies Act says that anything required to be done by the secretary can instead be done by someone authorised by the board. Similarly, anything to be done to the secretary, such as the service of a notice, can be done to anyone authorised by the directors for that purpose.

Public company

A public company, by contrast, must have a secretary. Not only that, the person doing the job must have some qualification for the post. The Companies Act says:

  • the directors of a public company have a duty to take all reasonable steps to ensure that the 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’;
  • the secretary must also:
    • have been secretary of a public company for at least three of the five years preceding the appointment;
    • be a member of the Institute of Chartered Accountants in England and Wales (or the Scottish or Irish equivalent), or of the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants or the Chartered Institute of Public Finance and Accountancy;
    • be a member of the Institute of Chartered Secretaries and Administrators;
    • be a barrister, advocate or solicitor called or admitted in the UK; or
    • be a person who, by virtue of holding or having held any other position or being a member of any other body, appears to the directors to be capable of discharging the functions of secretary of the company.

That last alternative ‘qualification’ is rather a catch-all, allowing the appointment of anyone else the board favours, but it at least makes the point that the directors need to be able to justify their selection on the basis of the candidate’s past experience.

The job will often be combined with other roles in the company. The general counsel or in-house lawyer may double up as secretary, giving directors the benefit of on-the-spot legal advice as they make their decisions. (The company secretary always attends board meetings.) A finance director filling the post may be a less desirable option, particularly when a degree of independence is required. (See: Company secretary: Governance and liabilities, an OUT-LAW guide.) In some cases, a director may nominally act as company secretary, but an assistant or deputy secretary will do the day-to-day work.

Corporate secretaries

A company secretary does not have to be an individual but can instead be another company or a partnership. Indeed, many lawyers and accountants provide company secretarial services to their clients by means of a corporate secretary. A company cannot be a member of any of the organisations listed above as qualifying bodies for a public company secretary, so reliance has to be placed on the final category of holding ‘any other position’. Alternatively, the post may be filled nominally by a qualified individual at the plc, but with most of the work outsourced to the corporate body.

ICSA

The Institute of Chartered Secretaries and Administrators (ICSA), the membership body for company secretaries, awards the qualification Chartered Secretary through a programme that is now international in its scope. ICSA also liaises with government on questions of practice and law and produces useful publications and guidance notes, many of which are available on ICSA's website for free.