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Whether you run a small local business or a large corporate enterprise, if you operate your business as a company, it is likely you have a company secretary. The main responsibility of a company secretary is to ensure that the company complies with all the relevant regulatory requirements in respect of operating a company. Failure to do so can lead to your company receiving fines from ASIC. This article will set out the:
- essential duties and responsibilities of a company secretary;
- tasks a company secretary might perform; and
- method for appointing or removing a company secretary.
What are the Legal Duties and Responsibilities of a Company Secretary?
A company secretary has an essential role in governing and monitoring how a company operates. This includes supporting the board of directors. Part of the role of a company secretary involves performing tasks to ensure the company is compliant with Australian corporate law. These include maintaining a registered office and lodging financial reports to ASIC. Part of the responsibility of a company secretary may also involve them reporting to ASIC of changes involving the:
- company office address;
- members register;
- share structure (of proprietary companies); and
- issuing of any shares.
A company secretary is also considered to be a company ‘officer’ under Australian corporate law. This is in addition to the tasks that specifically apply to the role of a company secretary. As a result, they have many of the same duties as directors.
These duties include:
- acting with care and diligence;
- acting in good faith and for a proper purpose;
- not improperly using their position to gain an advantage for themselves or someone else. They may not cause detriment to the company; and
- not improperly using information obtained by virtue of their position.
Company secretaries must ensure that they abide by these rules.
What are the Typical Tasks a Company Secretary Might Perform?
In addition to the legal obligations imposed by Australian corporate law, a company secretary will typically perform a number of tasks as part of their role. Generally, the typical tasks a company secretary will perform include:
- ensuring that the business discussed at meetings is accurately recorded in the minutes;
- confirming that meetings are called and held in the appropriate manner;
- monitoring the practice of the board to ensure that policy and procedures are followed;
- preparing and sending reports to the board;
- ensuring that the company’s financial reports are properly maintained;
- providing the board with advice on governance matters;
- helping to induct new directors;
- facilitate the professional development of existing directors; and
- updating, implementing and maintaining compliance policies and procedures for the company.
These new responsibilities centre around the performance of the board, and include:
- advising the board on standards of ethical corporate behaviour;
- ensuring that the board has the information needed to make an informed decision;
- organising board performance reviews;
- being involved in risk management and corporate responsibility matters;
- managing director induction;
- organising insurance for directors and officers;
- forming new policies for the board; and
- generally advising the board on the best way to conduct company business. This includes giving guidance on the consequences of the actions of the board.
The role of the company secretary can be quite broad. However, the tasks of a company secretary will vary depending on the size of the company and the structure of the board. A large company with numerous shareholders and a board of directors will generally require the company secretary to undertake more tasks and greater responsibility. On the other hand, a smaller company with only a handful of shareholders may not require as much input from the company secretary.Continue reading this article below the form
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How Do You Appoint and Remove a Company Secretary?
Australian corporate law outlines the rules and requirements for appointing and removing a company secretary.
Firstly, a public company must appoint at least one company secretary. At least one of the company secretaries must ordinarily reside in Australia. This means they must be regularly living in Australia. A private company is not required to appoint a company secretary, but if it does, at least one must ordinarily reside in Australia.
Secondly, a company secretary must be :
- a natural person (that is, not a company); and
- at least 18 years of age.
The company directors appoint the company secretary and determine the terms and conditions of that role. This includes nominating the secretary’s salary. Once appointed, the company must notify ASIC within 28 days, and the person must give their signed consent to act as the secretary before the appointment is official. The company must keep this consent.
When a company secretary leaves, the company must notify ASIC within 28 days. This is mandatory unless the secretary has given written notice along with a copy of their resignation letter.
A company secretary does not need to have any particular qualifications or experience to be appropriate for the role. However, companies expect their company secretaries to advise the company on legal compliance and corporate law. Therefore, it is common for company secretaries to have legal qualifications. Often, the company secretary will also be the general counsel of the company.
Once appointed, the company secretary will generally report to the chief financial officer (CFO) or the chief executive officer (CEO). The secretary will also often report to the chair of the board in larger companies or where the company secretary provides the board with advice.
Company Secretarial Services
The position of company secretary is a complex role that requires expertise and time. By ensuring that the company complies with the laws and processes imposed by Australian corporate law and regulations, a company secretary works to ensure the business is exposed to fewer risks. Therefore, the role of a company secretary is crucial. However, it can be costly for a company to appoint a secretary with the relevant experience needed to manage this role. It can also be challenging to add company secretarial duties to the stack of responsibilities that the company expects other directors to perform.
If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
The company secretary plays a vital role in the company. Most importantly, the company secretary should be capable of managing their duties. They can do so by ensuring the company complies with the legal and regulatory requirements imposed on a company by Australian law. Regardless of the size of your business, it is essential that your company secretary is aware of the legal requirements of their role. If you have any questions about the role of your company secretary, contact LegalVisions’s corporate and commercial lawyers on 1300 544 755 or fill out the form on this page.
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