Introduction
The role of a company secretary has evolved significantly over time. As Lord Denning MR stated in Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd, the company secretary is no longer just a clerk but an important officer with extensive responsibilities. The Ghanaian Companies Act, 2019 (Act 992), reflects this change by highlighting the central role company secretaries play in corporate governance.
The first schedule to the Act states that a company secretary is an officer of the company. Also, a company secretary can be described as the chief administrative officer of a company, responsible for ensuring that a company adheres to its constitutional and legal obligations.
It is mandatory for a company to have a company secretary. The Act states the penalty for companies that operate for more than six (6) months (after incorporation) without a company secretary. The appointment of a company secretary can be done by the board of directors, members in a general meeting or by any other person authorized to do so in the company's Constitution.
Qualifications of a Company Secretary
Under the repealed Companies Act, 1963 (Act 179), there were no specific qualifications required for a company secretary. However, the Companies Act, 2019 (Act 992) introduced clearer qualifications to ensure that individuals holding the position are competent.
A company secretary can be an individual or a body corporate. If a body corporate is appointed, one of its promoters, directors or subscribers must meet at least one of the following qualifications:
- A professional or tertiary qualification relevant to secretarial duties.
- Experience as a trainee under a qualified company secretary for at least three (3) years.
- Membership in the Institute of Chartered Secretaries and Administrators or the Institute of Chartered Accountants, Ghana.
- Being a Barrister or Solicitor in good standing.
- A relevant academic qualification that demonstrates the capacity to perform the secretary's duties.
These qualifications ensure that company secretaries possess the necessary expertise to carry out their duties effectively.
Roles and Responsibilities of a Company Secretary
The responsibilities of a company secretary under the Companies Act are both statutory and based on common law principles.
Statutory Duties
The statutory duties can be found in section 212 of the Act. They include:
- Assisting the Board to comply with the company's constitution and with any relevant enactment. Thus, the secretary acts as a compliance officer ensuring that regulations governing the activities of the company are adhered to timeously to avoid penalties.
- Keeping the books and records of the company. Registers, minutes books of Directors and general meetings and financial records are to be kept by the secretary in the appropriate files for future reference.
- Ensuring that the minutes of meetings of shareholders are properly recorded.
- Preparing and issuing notices in the name of the company.
- Ensuring that the annual Financial Statements are dispatched to those entitled to receive them.
- Ensuring that all statutory forms and returns are duly filed with the Registrar.
- Maintaining the statutory registers of the company like the Register of Members and beneficial owners, Register of Directors and company secretaries, etc.
- Providing the board with guidance as to its powers, duties and responsibilities and on changes and developments in the laws affecting the operation of companies.
- Informing the board of relevant legislation affecting meetings of shareholders and directors and their failure to comply with legislation and reporting accordingly at any meeting.
- Advising the Directors on their responsibilities to the company.
Common Law Duties
In addition to statutory duties, a company secretary also has fiduciary duties under common law, which require them to act in the best interests of the company. Section 5 of the Companies Act is to the effect that rules of equity and common law in relation to company secretaries are applicable in so far as they are not inconsistent with any provision of the Act. These duties include:
- Confidentiality: Company secretaries must maintain confidentiality and avoid disclosing corporate matters to outsiders.
- Diligence: They are required to act promptly and conscientiously to ensure the company complies with legal and regulatory requirements, thus avoiding penalties.
- Faithfulness: Company secretaries must act with integrity and avoid conflicts of interest or making secret profits. Their interests must always align with those of the company.
By section 213 of the Companies Act, a director who doubles as a company secretary cannot act in both capacities in respect of the same transaction.
Powers and Liabilities of the Company Secretary
The powers of a company secretary have been clarified in several cases. In the Panorama Developments case, the court held that a company secretary has implied authority to bind the company in administrative matters. The company secretary has ostensible authority to engage in contracts related to the day-to-day running of the business, such as administrative contracts. However, the company can challenge these actions if it proves that the secretary did not have the required authority to enter into the contract or that the third party had actual or constructive knowledge that the secretary had no authority to enter into the impugned contract or transaction.
In that case, the company secretary hired cars from the plaintiff for his private business, but he claimed they were for the defendant company's use. The plaintiff sued the company for the payment of the hire charges, but the defendant company denied liability. The court held the company to be liable for the payment of the hire charges.
A company secretary is expected to act in the direction of the Board of Directors or the chairperson, or in response to the requisition of the members or other authorized parties. Their powers are generally limited to administrative matters, though they have significant responsibility in carrying out their duties.
Conclusion
The role of the company secretary under Ghana's Companies Act, 2019 (Act 992) has grown significantly, becoming crucial to corporate governance. Company secretaries are not just administrative officers but key figures responsible for ensuring compliance with the company's constitution, maintaining records, advising the board, and upholding legal and ethical duties. With stricter qualifications and statutory responsibilities, their role has become more professional and central to a company's operations.
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