Company secretary is not only responsible for compliance of companies act and listing regulations but he is also responsible for compliance of various other laws like provident fund laws, civil laws, and intellectual property laws etc. Secretarial Audit means a process to check the company's compliance with the relevant laws. Company secretaries should communicate with their colleagues about good corporate governance standards and practices as well as the importance of ensuring compliance within the company. The policy shall also be hosted on the website of the company. 10 Responsibilities of the Corporate Secretary in the Boardroom, Board Management for Education and Government, Internal Controls Over Financial Reporting (SOX), Get Our Guide For "Governance Reporting For Corporate Secretaries", Agenda management and Board reporting solutions. The principles of Corporate Governance which are usually issued in the form of Codes, are a set of guidelines which essentially direct the activities and ethics of a company. Some of the corporate governance practices would include independent oversight of management and accounts of the company, fair and equitable treatment for all the shareholders of the company, fair voting processes conducted by the company, prohibition of insider trading and abusive self-dealing, open and efficient markets, timely and effective disclosure of financial and operating results to the stakeholders of the company, foreseeable risk factors and matters related to corporate governance and regulation and legal recourse if principles of fair dealing are violated. Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. The Essential Company Secretary Overview of the Guide: A member serving as a company secretary is regarded as both an officer and part of the senior management team, and at the center of the board's decision-making process. We generally welcome the recommendations contained in the Main Menu; by School; by Literature Title; by Subject; by Study Guides; Textbook Solutions Expert Tutors Earn. The Company Secretary in playing its role in promoting the Corporate Governance principles act as a compliance officer: To ensure proper compliance with all relevant statutory and regulatory requirements. He/ she have also to ensure that the quorum requirements have been meet during the board meeting. Ratification of the same by the audit committee or post facto approval by the audit committee after the transaction has been entered into is not accepted and would be treated as a non-compliance of the regulations. Along with proper combination of executive and independent directors. In practice, the Company Secretary's job has expanded far beyond the minimum legislative duties. Likewise, government also need to shape an effective regulatory framework that gives enough flexibility to permit markets to function effectively and respond to shareholders expectations and other stakeholders. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. Over the last decade, there has been about five different sector-specific Codes of Corporate Governance in Nigeria this includes; Code of Corporate Governance for the Telecommunication Industry 2016, issued by the Nigerian Communications Commission; Code of Corporate Governance for Banks and Discount Houses in Nigeria 2014 issued by the Central Bank of Nigeria; Code of Corporate Governance for Public Companies in Nigeria 2011 issued by the Securities and Exchange Commission; Code of Good Corporate Governance for Insurance Industry in Nigeria 2009 issued by the National Insurance Commission; and Code of Corporate Governance for Licensed Pension Fund Operators 2008 issued by the National Pension Commission. It was observed that the. The functional responsibility is to the Board through the Chairman, while administratively, he reports to the MD/CEO. In more recent times the provision of advice on corporate-governance issues has become an important responsibility for company secretaries as sound corporate . That being so, much of what constitutes corporate governance has to be voluntary. just a note its Kumar Mangalam Birla Committee (not Mandalay!). Committees usually include the audit, finance, compensation, risk management and disclosure committees. Company secretaries all over the world have been assigned the responsibility for good corporate governance practices to be followed by the companies where they work or for their clients by the institute of company secretaries of india. It the responsibility of the company secretary to conduct the annual general meeting of the company. See you there. Innovation will bring tremendous resistance from vested interest. The regulations, however, state that all the related party transactions shall require the prior approval of the audit committee. The management must have freedom to drive the company forward. Company secretary shall ensure that company shall have a policy on preservation of documents and shall divide the same in two parts whose preservation is permanent and which needs to be preserved for not less than 8 years. The Company Secretary is often referred to as the Chief Governance Officer/ Legal Officer of a company, and this emphasises on its role in promoting compliance with corporate governance practices. The organization for the economic co-operation and development define corporate governance as a set of relationship between companys management, its shareholders and other stakeholders. Company secretary is responsible for appointment of independent directors in such a way that the directors fulfill the criteria laid down in companies act and listing regulations. Includes 'Checklist: for an effective board' In other words, if the audit committee has 3 members of which 2 are independent, both the independent directors should be present to constitute quorum for an audit committee meeting. On the other hand Section 134(3) of the companies act, 2013 states that all the companies must have a risk management policy, which shall be responsible for identification of risks which in the opinion of the board may threaten the existence of the company. Having said that, it is pertinent to note that, good corporate governance involves a commitment of a company to run its business in a legal, ethical and transparent manner- a dedication that must come from the very top and permeate throughout the organisation. While the duties of a corporate secretary are stipulated in a . Providing general advice on matters relating to company secretarial matters. The Role of the Corporate Secretary. Business people as well as general public expect good business ethics and effective corporate governance from the business leaders. However the companies (appointment and qualification of directors), rules 2014 specifies that public companies having a paid up capital of Rs. Due to developing economies around the world, many companies can enter new markets and play a vital role in enhancing nations. Corporate Governance Codes (2) "Under the direction of the chairman, the company secretary's responsibilities include 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". Through the use of the Companies Act and the Kings report the company secretary ensures directors are kept abreast of relevant legislative and regulatory developments. The company secretary should work closely with the Chairman and the Board to ensure that effective shareholder relations are maintained. Corporate governance also affords a structure in which the goals of a company are determined, including the ways of obtaining such objectives and the monitoring of performance where necessary. Corporate Compliance and Corporate Governance are important areas for effective capital markets and corporate growth. Company secretary shall act as a secretary of the all the above mentioned committees. The Company Secretary in playing its role in promoting the Corporate Governance principles act as a compliance officer: To ensure proper compliance with all relevant statutory and regulatory requirements. ICSI, The Journal for Governance of Professionals, 49 CS 1, 1-132 (2019). D.S. In case the chairperson of the board of directors is a non-executive director. Taking role in share issues, mergers, demergers and takeovers In SME's the role is reduced to: Monitoring and administration of pension schemes Overseeing insurance issues Overseeing. A company secretary's role involves performing legal and financial functions for a company. All Rights Reserved. This officer holds the ostensible authority to carry out certain legal and administerial duties and may also make binding representations for the company. The empowerment, combined with accountability provides an impetus to performance and improves effectiveness, thereby enhancing shareholders value leading to excellence. Recently, the narrative has somehow changed, and the position of a Company Secretary is now regarded as that held by an officer of the company and it has been made mandatory for Companies to have Secretaries. The function provides that the CS shall: It is reported that about 2.50 lakh companies have been identified for de-registration under the Companies Act as part of the measures against curbing menace of companies engaged in illegal activities, and out of it, about 2.2 lakh companies were struck off as they were not carrying on any business activity. The legal and regulatory components of Statutory Compliance. The responsibilities of the company secretary have developed substantially over time such that today, the company secretary does not merely carry out administrative functions but plays a key role in ensuring that the company's internal operations run smoothly, effectively contributing to the company's good corporate governance. Published: June 4, 2019 The traditional role of the company secretary used to be heavily slanted towards ensuring regulatory (or legal) compliance and corporate records administration. The Company Secretary should have both functional and administrative responsibilities. The Board is confident that it is applying the QCA Code across the main areas of delivering growth, maintaining a dynamic management framework and building trust. Also a CS has to ensure that the same information is disclosed in the annual report of the company as well it shall be placed on the website of the company. Role of the Company Secretary IoD Professional Development Or get in touch with our team Active and engaged shareholders. Also, the corporation must respect the right of society, as well as shareholders. Most notably, the responsibility for developing and implementing processes to promote and sustain good corporate governance has fallen largely within the remit of the . It further stipulates that every whole time KMP should be appointed by a resolution of the board of directors of the company having the term and conditions of their appointment. Unless some serious steps are taken, the matter can go from bad to worse, and the public credibility in the company management may be lost, therefore, as an in-house whole time conscience keeper, Role of Company Secretary is a major one, and if needed, his service conditions should be strengthened to give him independence. The company secretary in many organisations is a governance specialist who provides advice to the board as well as fulfilling their legal responsibilities under the Corporations Act. Breach of these duties may result in the secretary becoming liable to the company for damages. These principles such as transparency, accountability, integrity, fairness and responsibility are universal in their application. This imports duties not to act where there is a conflict of interests or to make secret profits. Communication. One key function of a Company Secretary is taking proactive steps in ensuring compliance with applicable rules and regulations guiding corporate practice. There have been cases where the companies management, despite having respectable independent and representative directors from the banks, have indulged in financial frauds for the benefit of promoters/management in control, and there has been no clear policy by the central government as to how these loopholes in the system can be plugged and how the money that has been looted can be brought back to the economy. This paper seeks to highlight the concept of Corporate Governance and the role of the Company Secretary in promoting good Corporate Governance. A company secretary shall ensure that the company holds at least 1 meeting of the board of directors in each quarter but the gap between two meetings shall not exceed more than 120 days. It was believed that Secretaries are not liable to the company for their actions and thus, were not regarded as an officer of the company. Section 205 stipulates the functions of CS in a company. Thus the company secretaries are not only compliance officers and kmps of the company but they are corporate professionals of the company governing the companys core area. The central role of the Company secretary is to help the Board put in place structures, policies and procedures that comply with those industry codes and best practices, while also creating a. board, its shareholders and other stakeholder. World over, several committees and task forces have strongly advocated for corporate governance viz. The role of CS includes advising the Company's Board of Directors of the Company on good corporate governance practices and compliances with the rules and regulations. The laws in governing a corporation are meant to protect the public and society. 1/3rd of the board shall comprise of independent directors and where the chairperson is an executive director, of the board shall comprise of independent directors. Assist the Chairman and MD/CEO in coordinating activities regarding the annual Board plan and with the administration of other strategic issues at the Board level; Notify Board members of upcoming meetings of the Board and its committees as well as other matters that warrant their attention; Compile Board papers and ensure that the Boards discussions and decisions are clearly and properly recorded and communicated to relevant persons in a timely manner; Provide a central source of guidance and advice to the Board and the Company on matters of ethics, conflict of interest, and good corporate governance.In addition to his statutory functions, the Company Secretary should carry out the following duties and responsibilities. The team specialises in supporting clients on all aspects of governance, transactions and compliance and are front of UK and global corporate governance reforms, providing market leading thought leadership in the industry. This is achieved by assisting the Chairman in ensuring that the development processes which includes board evaluation, training, and induction is adopted. It mainly involves balancing interests of a companys stakeholders like shareholders, management, customers, financiers, government, and the community as well. The World Bank defines corporate governance as the following: A good summary of corporate governance entails solid codes of practice that provide a governing structure in which a company operates. The Company will provide annual updates on its . By the principles of the Nigeria Code of Corporate Governance 2018, particularly principle 8, the duties of a secretary in promoting the corporate governance principle is highlighted. This will also strengthen the economy of the company whilst eliminating the chances of any fraudulent activities and mismanagement. The regulations require the disclosure of all related party transactions in the quarterly corporate governance compliance report submitted to the stock exchange while such a similar requirement has not been stipulated in the Companies Act, 2013. a company secretary plays a critical role in the governance and administration of a company, for example ensuring compliance with financial and legal regulations (i.e. The Role of the Corporate Secretary in Sustainability Governance summarizes the key drivers of this trend, including: Board awareness of the materiality of the risks and opportunities from sustainability trends. Financially literate has been defined to mean the ability to read and understand basis financial statements and having accounting or related financial management expertise is defined to mean having requisite professional certification in accounting or any other comparable experience or background which results in the individuals financial sophistication including being a CEO or CFO or such other senior officer with financial oversight responsibilities. Ensuring and complying with corporate governance. Here the role of a company secretary is to ensure that he/ she develop the code of conduct for the board of directors in consultation with the top management of the company. The Company Secretaries Act, 1980. Overall, the idea of corporate governance is based on the balance of social goals and economic well-being. The duty for creating and executing measures to promote and maintain good corporate governance has primarily fallen under the purview of the Company Secretary. Other documents such as the constitution, minute books, financial statements, meeting minutes, resolutions are also managed and kept at the registered office by the company secretary. In practice, the role of the company secretary has developed into much more than the basic statutory requirements outlined above. What Is Sarbanes Oxley and Corporate Governance? Want High Quality, Transparent, and Affordable Legal Services? Some of the key roles played by the Company Secretary include; The company secretary plays an important role in good governance by assisting the Board of Directors and its committees in effectively carrying out their duties. Company Secretary and Corporate Governance, Corporate Governance Law: Everything You Need To Know, Importance of Corporate Law: Everything You Need To Know, Difference Between Corporate and Non-Corporate. The duties of a secretary are delegated to the position by the directors. Therefore, the position of the Company Secretary is mandatory for proper compliance under CAMA. The listed entity, as per the listing regulations shall formulate a policy on materiality of related party transactions and on dealing with the related party transactions. In case the non-executive chairperson is a promoter or related to the promoter or any other person occupying management position in the board of directors or at one level below the board of directors, at least of the board of directors shall comprise of independent directors. Therefore, companies that engage in such unlawful conduct face public backlash and consequences from officials. It is also incumbent on the corporation to treat locals who work for a company with respect and not unjustly absorb most of the natural resources of an area, with the locals seeing little benefit. Therefore from the above it can be gauged how important a role CS plays. The role and responsibility of the company secretary is outlined in Section 88 (1) - (2) of the Act and can be summarised as follows - noting that this is not an exhaustive list. of the board shall comprise of independent directors and where the chairperson is an executive director, of the board shall comprise of independent directors.
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