The Role of a Company Secretary in Ensuring Regulatory Compliance for a Company

Introduction:

A company secretary is a professional with sophisticated responsibilities backed by law, typically serving as part of an organization’s management team. Before the Companies and Allied Matters Act, 2020, (“The Act”) was passed, every company, by virtue of the Companies and Allied Matters Act, 1990, was mandated to have a company secretary. Although it is no longer mandatory for private companies to have a company secretary, the Act mandates every public to have a company secretary with specific requirements for their qualifications, appointment and removal.

In this article, the role of company secretaries as well as their importance in ensuring regulatory compliance for your company, whether private or public will be thoroughly discussed.

Why is it important to have a company secretary?

1. Company secretaries play a key role in fostering good corporate governance. One of the principles in corporate governance is risk assessment and management. Risk management is the process of identifying, assessing, and mitigating threats or uncertainties that can affect your organization. Company secretaries are trained to identify and manage risks, therefore, employing a company secretary is crucial in navigating potential regulatory and financial risks in doing business.
2. It is mandatory for public companies: Having a company secretary is crucial for the effective management and administration of all companies, but only mandatory for public companies. This is in order to comply with the provisions of section 330 of the Act.
3. To ensure accurate and timely regulatory compliance: Every sector or category of business in Nigeria has laid down rules, guidelines, regulations and regulatory bodies that oversee its affairs. One of the statutory duties of a company secretary is to ensure accurate and timely compliance with these regulations, e.g., filing annual returns which is mandatory for every registered entity in Nigeria, and financial statements for companies, attending company meetings etc.

Who Qualifies to Act as A Company Secretary?

There is no specific qualification for the secretary of a private company, however the directors of the company must take necessary steps in ensuring that the secretary of the company is a person who appears to have the requisite knowledge and experience to discharge the functions of secretary of a company. On the other hand, the secretary of a public company must either be:

1. a member of the Institute of Chartered Secretaries and Administrators;
2. a legal practitioner within the meaning of the Legal Practitioners Act;
3. a member of any professional body of accountants established from time to time by an Act of the National Assembly;
4. any person who has held the office of the secretary of a public company for at least three years of the five years immediately preceding his appointment in a public company; or
5. a body corporate or firm consisting of members each of whom is qualified under paragraph (a), (b), or (c).

What Are the Duties of a Company Secretary?

The statutory duties of a company secretary include:

1. Attending the meeting of the company, the board of directors and its committees, rendering all necessary secretarial services in respect of the meeting and advising on compliance, by the meetings, with the applicable rules and regulations.
2. Maintaining the registers and other records required to be maintained by the company under the Act. For example, register of members, register of directors, index of members, etc.
3. Rendering proper returns and giving notification to the Corporate Affairs Commission (“the Commission”) required under the Act. Example of returns include, filing of annual returns, filing of any change made within the organization, such as change of directors, transfer of shares, allotment of new shares, change of registered address, change in the objects of the company, etc.
4. Acting as a liaison between the directors of a company and its stakeholders, ensuring that communication is effective and transparent. This includes shareholders, regulatory bodies, and employees.
5. Implementing and monitoring good corporate governance practices within the company.
6. Carrying out such administrative and other secretarial duties as directed by the director or the company.
7. Overseeing the development and implementation of Corporate Social Responsibility (CSR) policies and programs, ensuring alignment with the company’s values and stakeholder expectations.
8. Identify and assess risks related to corporate governance and compliance, advising the board on mitigation strategies.
9. Develop and implement policies related to risk management, ensuring that the company adheres to best practices.

Can a Director Act as a Company Secretary?

According to section 331 of the Act, a director can act as a company secretary. However, where any action is required by law to be done by a director and a secretary, such action cannot be satisfied by a director acting both as a director and as, or in place of the secretary.

Conclusion

The role of a company secretary remains critical for effective corporate governance in every type of company whether private or public; big or small; local or foreign etc. Companies that aim for high standards of governance and compliance will likely continue to see the value in appointing a company secretary. For public companies, the mandatory requirement ensures that they uphold stringent governance practices, emphasizing the need for a broader accountability to the public and investors.

It is also important to know that the failure of public companies to appoint a company secretary attracts penalties and sanctions to the company and its directors in such amount as the Commission shall specify and, in the case of continued contravention, to a daily penalty in such amount as the Commission shall specify.

Firmus Advisory has a team of corporate secretaries who are also experts and can ensure regulatory compliance for your company. Kindly contact us today for the services of an expert corporate secretary.