The evolving role of the company secretary

By Professors Parmi Natesan and Prieur du Plessis

Company secretaries have become important custodians of corporate governance, and fulfil a much broader role than their traditional administrative one.

Company secretaries, as their name suggests, have traditionally fulfilled an administrative, supportive role. But while administration remains very much in the company secretary’s remit, the job’s scope has broadened to become much more strategic.

One new set of responsibilities relates to corporate governance, which has steadily grown in importance. In the wake of the Zondo Commission, it’s clear that governance must be an important guard against corruption in both the private and public sectors ̶ and the company secretary has effectively become its custodian.

In this country, it’s extremely noteworthy that the King IV Report on Corporate Governance chose to consider the company secretary as the logical provider of the professional and independent guidance on corporate governance it judges a board should have. Consequently, King IV believes that appointing a company secretary should be considered a “leading practice”, even if it is not mandated by regulation, in order to provide such specialist guidance to the board.

King IV goes on to consider the nature of the professional corporate governance services to the governing body within the Recommended Practices applicable to Principle 10: The governing body should ensure that the appointment of, and delegation to, management contribute to role clarity and the effective exercise of authority and responsibilities (Recommended Practices 90–99).

One could consider the company secretary’s role as falling into these key areas:

Keeping records. This is very much the traditional secretary’s role, and involves the maintenance of all the organisation’s legal documents. These include minutes of meetings, resolutions, contracts and regulatory filings. An important element of this role is ensuring that these important documents are both up to date and readily accessible to directors, shareholders and other stakeholders, including regulators.

Organising meetings. Another traditional role, but it has expanded in importance with the advent of stakeholder capitalism, which requires interaction with new groups to be facilitated.

Advising the board and management. This role includes the corporate governance portion, but now increasingly can include compliance and risk management. It requires the company secretary to provide guidance to both directors and senior management. Additionally, it’s necessary for the company secretary to remain on top of governance trends and best practices globally, and feed what is appropriate back to the board.

Parallel with, and complementing, this role as a strategic adviser, company secretaries also take on the job of putting together and overseeing the onboarding of new directors by ensuring they are properly oriented as regards corporate governance and legal compliance. A good company secretary would also play a key role in identifying training programmes to keep board members’ skills current. Overall, the company secretary should ensure that the company operates ethically and responsibly in line with Principles 1, 2 and 3 of King IV.

Compliance officer. To ensure the organisation complies with all applicable laws, regulations and industry standards, the company secretary needs to be fully conversant with an environment that is both complex and fast changing. In this role, the company secretary plays an important risk-mitigation role.

Bridge between board and senior management. Company secretaries are usually full-time employees and so can help bridge the “knowledge gap” that exists for non-executive directors, who lack intimate, day-to-day knowledge of the company. They can also facilitate interaction between senior managers and board members.

It’s not a well-recognised fact, but board meetings need to be carefully planned and prepared for in order for the best possible decisions to be taken. Company secretaries can play a huge role here by helping to ensure that the board packs support the directors with the right amount of accurate information.

It’s important to look at the personal qualities a thoroughly modern company secretary needs to have. These would include a high degree of commercial knowledge to ensure that his or her role as corporate governance custodian contributes to the company’s success. A company secretary needs a fair amount of EQ in order to facilitate a productive relationship between board and management, but must also be tough-minded enough to be independent.

Being a company secretary was always an important role ̶   now it has become strategic.

Professors Parmi Natesan and Prieur du Plessis are respectively CEO and facilitator of the IoDSA; email: info@boardgovernance.co.za

Prof Parmi Natesan		Prof Prieur du Plessis