THE ROLE OF A COMPANY SECRETARY
- Posted by admin
- 29 December 2017
- Company Secretarial
Under Section 171(1) Cap 50 of the Companies Act, every company shall appoint one or more company secretary who is a natural person and whose principal place of residence is in Singapore. The responsibility of ensuring that the appointed company secretary is competent and has the requisite knowledge rests with the directors of a company. Public companies, in addition to the above requirements, have to ensure that the company secretary has the required academic and or professional qualifications. A company secretary can operate as the chief administrative officer of the company. They share a number of key responsibilities as stated in the Companies Act. The company secretary handles various legal aspects of the business.
Appointing a Company Secretary
A company secretary is usually appointed by the board of directors in the business. If the company is new, the company secretary has to be appointed with six months from the date of incorporation. It is worth pointing out that company secretaries do not need any formal qualifications for a private company although for public companies there is a set criteria. For smaller companies, the company secretary may be one of the directors of the business.
While there is no strict set of requirements, certain individuals cannot be appointed a company secretary. Legally, this includes the auditor of the business and those charged with bankruptcy. Single director and shareholder cannot act as a company secretary.
Though qualifications are not needed for a small company, company secretaries must still adhere to a number of requirements and will be held accountable for negligence, default, breach of duty, breach of trust. If a company secretaries fails in their duties, they can be legally prosecuted.
There are various sections of the Companies Act that state clearly who should function as the role of the company secretary. For instance, while no qualifications are needed, they must have the knowledge and necessary experience required to complete the role in question.
Public companies must appoint a qualified individual or a registered filing agent.
Company Secretary Delegation
Despite having a number of set roles company secretaries are able to delegate. However, in situations like this they are still required to sign the paperwork and check it. For delegation purposes, a professional chartered secretary or the accountant for the company may be used. Company owners may even hire a solicitor however, this can weigh on the costs of the company.
To understand why a company secretary is still required in the company, we need to explore the extensive role of this position. This covers a number of key responsibilities and legal requirements.
Role of the Company Secretary
One of the most important roles of the company secretary is ensuring that within a corporate office, information is recorded and noted effectively. The role of filing documents with ACRA on behalf of the company will typically be handled by the company secretary. This can include filing reports of changes in the administration or share capital that are deemed to be substantial or significant. This will be handled based on the strict guidelines set. For instance, a company secretary may be required to notify in no less than 28 days if new shares are allotted. As well as this, the company secretary will be required to handle any issues related to shares including handling the shareholder register and dealing with any complications when transferring shares.
This is an example of the administrative role that company secretaries take on. As well as this, company secretaries are in change of all compliance work related to the ACRA. The individual is also responsible for ensuring that the company does match the deadlines.
The company secretary is also responsible for a number of other key roles related to filing and updating with the ACRA. They must make sure that the ACRA is notified through documents for changes such as the resignation, death or a new appointment of company officers. Naturally, this includes updating of directors’ particulars and any amendments to the company constitution.
The company secretary will also be required to notify the ACRA of a change in name of the business.
Company secretaries are required to attend all the meetings of directors and shareholders while also preparing the minutes. During these meetings the company secretary may also assist the chairman with the meeting conduct. On top of this, they will also be responsible for the distribution of the financial reports of the company and perhaps even preparing the meeting of the agenda. If resolutions are discussed at the meeting, the company secretary will also be responsible for preparing the resolutions of the directors.
This is an example of the advisory role that company secretaries take in the business. Despite there being no legal requirement for company secretaries to have formal qualifications they are often well versed with an extensive knowledge of the law as well as understanding compliance frameworks. As such, company secretaries often interact and communicate with shareholders as well as directors.
During this time, they provide them with key information and strategies for the company as well as providing necessary aid in key decisions. With their advice owners can make sure that the company stays within the guidelines and regulations of legal frameworks in Singapore.
Indeed, as well as providing advice in meetings, company secretaries are also expected to update directors on changes in the law and ensure that the company remains compliant.
As such, it could be said that company secretaries handle the majority of administrative tasks and tasks related to legal compliance that are necessary to help the company function effectively. This includes ensuring the company is legally compliant with regulatory boards like the ACRA and that deadlines are met to a high level of punctuality. However, the role of the company secretary also extends beyond administrative issues.
Company secretaries certainly have a fiduciary role in any business. They are always required to act in good faith and trust, particularly when interacting with shareholders and directors. A company secretary is expected to either disclose or indeed avoid potential conflicts of interest that could become apparent within the company. It is important to be aware that company secretaries are bound by both the Companies Act and the Company Constitution.
As well as this, the company secretary must make sure that the company adheres to the company constitution. The full and comprehensive company constitution will be set in place at the start of the business and will dictate all the laws and regulations that the company must follow and abide by. One of the many duties of the company secretary is to make sure that the directors do stay within the guidelines of this constitution and follow it to the letter. As well as this, the company secretary must make sure that the company complies with other regulations including the Companies Act, Memorandum of Association, Article of Association and any or all other legal documents that are binding. This is a crucial role in the company as it prevents the company from dealing with legal issues.
Other Roles of the Company Secretary
As well as making sure that the company follows the strict legal deadlines, they are responsible for a range of other small yet significant factors.
For instance, a company secretary must ensure that the company seal is kept safe and that it is used effectively. The company seal is something that is highly recognized and crucial to business proceedings. In the wrong hands, it could be used to falsify documents or commit fraudulent activities using the company as false representation. It is used to emboss all important documents relating to the company to show clearly that they are legal and binding. However, with the new rules under the Companies (Amendment) Act 2017, the common seal is now optional. Documents once requiring the usage of the common seal now needs to be authorized by a director and company secretary, or two directors of the company. If there is only one director then the sole director can sign in the presence of a witness who will attest his signature.
Requirement for New Registers
Under the first phase of the Companies (Amendment) Act 2017 which commenced on 31st March 2017, every company in Singapore is required to maintain a register with a view to mitigate the risk of misuse of the companies.
Register of Controllers – All companies, both local and foreign, are required to maintain documentation which clearly show who is a controller of the said company. A controller need not be a shareholder or director, but a person or company who exercises significant control over the running of the business. The onus for keeping this register rests with the company secretary and this information, although not publicly available, must be shared with the relevant authorities when requested.
Register of Nominee Director – A nominee director is usually appointed by companies to satisfy the legal requirement of having one director normally resident in Singapore. The nominee is usually not involved in the running of the business but takes instruction from the controlling directors. This register must also be shared with the relevant authorities when requested.
Register for Foreign Companies- All foreign companies registered in Singapore are also required to maintain a register of its members in Singapore. This register is available to the public.
The shareholder registers must also be monitored effectively, ensuring that information regarding changes are kept up to date.
As well as this, the company secretary must keep good relations with shareholders and ensure that they are kept up to date with any changes to meet legal compliance within the company.
When corresponding officially with employees and individuals outside of the company, it is the company secretary’s responsibility to ensure that all the information provided is correct and accounted for. This will include everything from the company name and address to the proper entity number.
The company secretary may also be responsible for ensuring that insurance policies are in place with regards to employees’ officers, directors, and indeed the office premises. As well as handling these insurance policies, the company secretary will make sure that they do provide the necessary coverage that the company needs.
Why Do Companies Choose To Hire A Company Secretary?
As explained, despite not being legally required many companies do choose to hire a company secretary. Understanding the role of the company secretary, it may be apparent why this is the case. However, the issue can be further examined by examining the problems that could occur if the company secretary was not hired.
Failure of Legal Compliance
Of the many roles the company secretary undertakes one of the most important is perhaps ensuring that legal compliance is maintained by the company. They monitor law changes and update the directors on new regulations. As such, without a company secretary, it is possible and indeed likely that a company would not be aware of new legal regulations. It is important to understand that issues with compliance will result in the breaking of the law. As such, mistakes in this area can be incredibly damaging to the company and company officials.
The impact of a failure to comply could result in anything from financial penalties to the company to imprisonment. Indeed, in the wake of a failure to comply, a company could be forced to shut down, or the director could be removed from their position. A company secretary will ensure that this is never the case by keeping the officials in the company up to date with legal changes.
Necessity of Knowledge
Although not legally required in private companies to have formal qualifications company secretaries will often have an extensive knowledge of the law and legal compliance. As such, they do operate as a valuable and vital resource when investigating any commercial legal issues.
Due to the fact that they provide advice to the directors of the company they are not just a necessary hire but one that provides a number of advantages and benefits.
One such benefit would be the additional time that directors can dedicate to other areas of the business. This is because company secretaries can work in their role to ensure that the company continues to run smoothly through work in administration and ensuring that it abides by legal compliance.
Issues with taxes and similar processes can be time-consuming and complicated for a typical director. The company secretary handles issues like this including tax assessments that take place annually. With an effective company secretary, directors do not need to concern themselves with issues in this area of the company.
A company secretary is going to be a particularly important hire for foreign investors in Singapore. Relocating, or setting up a company in Singapore, a business may not be aware of the legal regulations, compliance and structures of law that differ from other international locations. Since an individual suited to be hired as a company secretary is often highly knowledgeable in legal regulations, they can be an essential hire and an important asset to new business owners unaware of what they need to do to remain compliant.
And of course, one could argue that local business owners may also be unaware of the legal requirements. The law is constantly changing, and a company secretary can guarantee that important altercations of regulations and legal requirements are noted.
Not Legally Needed But Necessary
As such, one can easily argue that despite that fact that they are no longer required, a company secretary is still a necessary hire and this is why many companies continue to appoint a professional company secretary. Indeed, the role is so important that companies often use specialized services to find the right individual for this role and position. Alternatively, those companies who choose to use outsourcing agents for their company secretary must select the business they work with to ensure that they do get a person who is ready to fill the role effectively.