3.6 COMPANY SECRETARY
Another officer of the company is in fact the Company Secretary of the company who in my opinion has a very important position. As a rule, the Company Secretary does not play a role in the smaller company but is very important in the larger listed company as he is the person responsible for corporate governance to make sure that the Directors are kept in line and conduct themselves in terms of the Act and all other laws.
You can do your own reading on the Company Secretary, however by and large the person involved in the accounting firm where the accounting firm or their own practice has been appointed as the Company Secretarial Practitioner (CSP) has also been placed in a very important position in that they have to ensure that the company conducts itself in accordance with the Act. The CSP needs to ensure that they know company law so that they can guide the directors of the company. Where this is the case it’s important that a mandate or engagement letter is signed in relation to secretarial duties by the client so that responsibilities are clearly defined. With all the work that we do with the CIPC and the Masters a mandate or engagement letter has to be in place.
The problem today is most CSPs are unfamiliar with the duties and functions of the Company Secretary. There are certain things that could go wrong where the client or company could hold the CSP liable for damages. Later on, we will be dealing with the situation when a private company can become a regulated company which could result in a damage claim against the practitioner. Sections from 86 to Section 89 govern the situation of the Company Secretary. It is important to understand that the Company Secretary is accountable to the Company’s Board and the duties may include providing the Directors collectively and individually with guidance as to their duties, responsibilities and powers. As a company secretarial practitioner how much of this have you taken on. We would need to look at the mandate signed with your client. An accounting firm should never appoint themselves as the company secretary, however it is absolutely essential to have a mandate that governs the relations between the firm and the client where the firm just processes secretarial transactions as I have already mentioned.
The problem is that Directors of smaller companies do not know anything about company law therefore it is up to the practice to fulfill this role. One also has to look at the requirements of FICA.
Some of the duties of the company secretary are listed below.
Reporting to the company’s board any failure on the part of the company or director to comply with the MOI or Rules of the Company or the Act.
Ensuring that the minutes of all the shareholders meetings, board meetings and meetings of any committee of the Directors or of the Company Audit Committee are properly recorded in accordance with the Act.
Certifying the Company’s Annual Financial Statements and whether the Company has filed the required returns and notices in terms of Act and whether all such notices and returns are true, correct and up to date.
Carry out the functions of a person designated in terms of s 33 - Company’s Annual Return.
As you can see from the above that the Company Secretary has a large number of functions which in the listed company environment would include all the JSE listing requirements and King requirements etc. It is because of this today that most accounting firms do not appoint their firms as the company’s secretary because clearly on a part time basis you cannot take on this onerous responsibility. It is therefore most important that you have a mandate for your clients where you specify exactly what aspects of secretarial practice you are going to attend to so that a client is totally aware of your responsibilities and their own responsibilities.
Accfin has designed a mandate that can be used.