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Does Your Business Really Need A Company Secretary?

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Whilst the word ‘secretary’ might conjure up images of answering phones and managing appointments, a company secretary’s role is quite different. A company secretary is a senior officer responsible for the efficient administration of a company, particularly with regards to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented.

 

Every registered company is mandated to have a company secretary by virtue of Section 293 of the Companies and Allied Matters Act, 1990.  The company secretary is usually appointed by the directors and may also be removed by them. There is no special qualification required for being a secretary of a private Company; however he is expected to possess the requisite knowledge and experience to discharge the functions of his office.  In the case of a public company, a company secretary has to be:

 

  1. a member of the Institute of Chartered Secretaries and Administrators; or
  2. a legal practitioner; or
  3. a member of the Institute of Chartered Accountants of Nigeria or such other bodies of accountants; or
  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 any of the afore-listed professions.

 

Role Of Company Secretary

The Company Secretary plays vital role in the effective and efficient administration of any organisation. A few of those roles are highlighted below:

  1. Arranging of Meetings: He is to convene the General and Board meetings of the company and is expected to render necessary secretarial services in respect thereof. He must circulate the notice and agenda of meeting to members in advance. Failing to issue notice of meeting to any member entitled to receive same may invalidate the proceedings of such meetings. The company secretary must take minutes of meeting and forward copies of same to the attendees.
  2. Maintaining Statutory Records: He is responsible for the maintenance of company’s statutory books and records, such as, minutes meetings, register of directors, register of shareholders, a register of debenture holders etc.
  3. Corporate Compliance: The company secretary ensures that an organisation complies with relevant legislations and regulations, and keeps board members informed of their legal responsibilities. He is expected to file annual returns and duly notify relevant authorities in the event of any alteration in the company’s structure e.g change of name, change of registered address, appointment of additional director, etc.
  1. Advisory Duties: Company secretaries are the primary source of advice on the conduct of business and this can span everything from legal advice on conflicts of interest, through accounting advice on financial reports, to the development of strategy and corporate planning.
  2. Managerial Support: The company secretary assists the directors in discharging their duties by providing information on the practice of other companies, and helping the Board to tailor corporate governance principles and practices to fit the board’s needs and expectations of investors.
  3. Security of Legal Documents: He is to ensure the security of the company’s legal documents including the certificate of incorporation, memorandum and articles of association, company seal, share certificates, directors’ service contracts, etc.

Relevance Of Company Secretary

Undoubtedly, there is need for an effective company secretariat management for smooth business operations. However, some have questioned the necessity of company secretary for small businesses.  The National Assembly appears to favour this view. Recently, the Senate passed a Bill to repeal and re-enact the Companies and Allied Matters Act. The Bill (“new CAMA”), aimed at eradicating unnecessary regulatory bottlenecks in business operations, removed the requirement of company secretary for small companies. A ‘small company’ as defined by the Bill is a private company whose turnover is not more than N120,000,000.00 and whose net assets value is not more than N65,000,000.00.

Whilst we commend the proposed business innovations by the National Assembly, company secretarial duties cannot be completely dispensed with in business operations. Every well run business, at some point, would need someone to ensure its activities are carried out within the ambit of law. For instance, directors may fail to file their business monthly VAT, annual companies’ income tax, renew necessary licenses and other manner of regulations due to business exigencies. Also, they may not want to concern themselves with administrative duties in order stay focus on the core business objectives. A company secretary would therefore be needed to fill this gap.

Conclusion

We understand that most SMEs can’t afford the services of a company secretary on a full time basis. There are several professional company secretarial outfits with good service package for SMEs which could prove a better option. Until the new CAMA becomes law, company secretary is still a must have for every company in Nigeria. The current business environment is still heavily regulated and non-conformity can be catastrophic.

This article is provided for general information purposes only. It does not constitute advice or an opinion on any specific facts or circumstances. If you have any enquiries about this article or require further information, please contact the writer at eki.durojaiye@lawbrief.org.

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