THE COMPANY SECRETARY PDF

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Lecture notes on the company secretary...

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Week 4 Coporate Governance 2 Lecture Notes

UNIT 4: THE COMPANY SECRETARY Purpose

This unit enables the reader to appreciate the importance of the company secretary as a person responsible for providing the directors of the company collectively and individually with guidance as to their duties, responsibilities and powers. He/ she informs the directors about any law relevant to or affecting the company.

Learning Outcomes

By the end of this unit, you will be able to:

Time Important terms and definitions

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Discuss the role of the company secretary.

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Explain the duties of the company secretary.

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Understand the key result areas of the company secretary.

It will take you 10 hours to make your way through this unit. Company Refers to one of the highest ranking within a company or an secretary organisation who ensures that the company is managed correctly and within law.

5.4.1 Introduction The Company Secretary is responsible for ensuring sound corporate governance practice, is to be the repository of governance knowledge and advice, and is the source of the company ’s conscience ensuring corporate integrity takes precedence over short-term gain and personal benefit. The Companies Act, No 71 of 2008 (the Act) prescribes that all public and state-owned companies are required to have a company secretary. The company secretary is responsible for providing the directors of the company collectively and individually with guidance as to their duties, responsibilities and powers. He/ she informs the directors about any law relevant to or affecting the company. He / she reports to the company ’s board any failure on the part of the company or a director to comply with the Memorandum of Incorporation or rules of the company or the Act. The Company Secretary ensures that minutes of all shareholders' meetings, board meetings and the meetings of any committees of the directors, or of the company’s audit committee, are properly recorded in accordance with the Act. In this unit, we will cover: • •

The role and responsibilities of the company secretary Qualifications of the company secretary

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Core functions of the company secretary

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Key functions of the company secretary according to King III

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The company secretary performance and evaluation

5.4.2 The role and responsibilities of the company secretary According to the Companies Act (2008), sections 84(4) and 86, a public company or state owned company must appoint a company secretary. The company secretary is responsible for ensuring adherence to compliance requirements of the company and accords support to the board. According to the provisions for the appointment, the incorporators initially appoint the company secretary. Alternatively the board of directors can appoint the company secretary within the first 40 days. He/ she can also be appointed by an ordinary resolution of the holders of securities. When the position is vacant, it must be filled within 60 days by the board of directors (Hendrikse, 2019, p. 452). Qualifications of the company secretary •

Must be knowledgeable and experienced in relevant laws.

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Must be a citizen/ permanent resident of South Africa.

Core functions of the company secretary •

Reports to the company’s board.

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The company secretary is a prescribed officer with extensive duties and responsibilities The company secretaries for Johannesburg listed companies must provide guidance with respect to duties, responsibilities and powers to the directors of companies.

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According to section 88 (2) of the new Companies Act, the company secretary must inform the directors about relevant laws that affect the company. He/ she informs the company’s board about any failure on the part of the company or director to adhere to memorandum of incorporation or rules of the company or the Companies Act.

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Ensures that meetings start and finish on time.

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Ensures that everyone has an agenda, understands it and keeps to the agenda. Identifies relevant people to perform certain agreed actions.

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The secretary records the exact wording of any decisions taken for recording in the minutes of all shareholders meetings, board meetings, directors’ or audit committee meetings are in compliance to the act.

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Records financial transactions correctly.

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Confirms in the financial statements whether the company has filed required returns and notices in terms of the Act and whether all returns and notices are authentic and up-to-date.

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The company secretary files all the company’s annual returns with the commission. Circulates a copy of the company’s annual financial statements to relevant people according to the act.

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Ensuring that a copy of the company ’s annual financial statements is sent, in accordance with the Act, to every person which is entitled to it

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Carrying out the functions of a person designated in terms of Section 33(3) of the Act.

Key functions of the company secretary according to King III •

The company secretary reports directly to the chairperson. The company secretary should have a direct channel of communication to the chairman and should be available to provide comprehensive practical support and guidance to directors, with particular emphasis on supporting the non-executive directors, the chairman of the board, the chairman of committees and the audit committee.

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The company secretary must help the nomination committee and ensures that the procedure for the appointment of directors is carried out correctly. The company secretary ensures that company directors are correctly inducted, oriented, trained and developed. He/ she gives guidance to individual company directors and the board and is also a key source of information and advice of aspects of good governance and of any changes in legislation. He/ she ensures that the board and board committee charters and terms of reference are updated timely.

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The secretary records the exact wording of any decisions taken for implementation in the minutes of all shareholders meetings, board meetings, directors’ or audit committee meetings in compliance to the act.

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Ensures that meetings start and finish on time. Ensures that everyone has an agenda, understands it and keeps to the agenda during the meetings. Facilitates relevant responses and feedback to specific agenda items. • Compiles documents for the board and circulates to relevant people. He/ she ensures that the performance of the board is assessed correctly every year.

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The company secretary should be responsible for ensuring the proper compilation and timely circulation of board papers and for assisting the chairman of the board and committees with drafting of yearly work plans.

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The company secretary should have the duty to obtain appropriate responses and feedback to specific agenda items and matters arising from earlier meetings in board and board committee deliberations.

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The company secretary’s role should also be to raise matters that may warrant the attention of the board. The company secretary should assist the board with the yearly evaluation of the board, its individual directors and senior management.

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5.4.3 The company secretary performance and evaluation The following are key result areas of the company secretary which from which performance evaluation is carried out:

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Board meetings administration ➢ Preparation of agendas for board, audit and AGM meetings. ➢ Preparation of information packs for meetings. ➢ Managing successfully meetings and recording of correct minutes.

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Governance, risk and compliance administration ➢ Gives advice and guidance to the chairperson on aspects concerning corporate governance. ➢ Evaluates board performance. ➢ Enforces compliance to the Companies Act, Johannesburg Stock Exchange Listing Requirements, King III.

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Management of the compliance and secretarial function Responsible for board evaluation and statutory duties of the company (Hendrikse, 2019, p. 455).

Conclusion The role of the company secretary cannot be looked at as merely fulfilling administrative secretarial or clerical duties. Regardless of the title, the role is not a clerical or secretarial one in the general sense. The company secretary keeps board members informed of their legal responsibilities. It is true and important that a company secretary does not take part in the day-to-day management of the company as this is the responsibility of the Directors. The role of company secretary is increasingly becoming that of a special advisor to the board. The responsibility of the company secretary is to ensure good governance throughout i.e. from inception up to the termination of the company. The role of a company secretary has expanded beyond ensuring simply statutory compliance to becoming a key one....