Τhe role and functions of the secretary as contemplated by the Law are administrative in nature. The secretary cannot assume any executive or managerial powers in the absence of express authority from the Board of Directors of the Company.
Specifically, it is noted that a secretary must not take and/or assume any power entrusted upon the directors. For instance, the secretary cannot summon a general meeting on his/her own as he/she issues and sends notices in regards to general meetings, under the instructions of the Board of Directors.
It is noted that, exempt from certain statutory duties, the responsibilities and duties of the secretary are not stipulated by Companies Law Cap.113 (hereinafter referred to as the "Law"). The duties of the secretary are assigned to him/her either by the Articles of Association of the company, or by the contract of service signed between the secretary and the Company, or by the Board of Directors of the Company, which is the most common case. Moreover, it is mentioned that in practice, certain duties and responsibilities of the secretary are implied by a course of conduct. Ordinarily, the duties and responsibilities of the secretary include, inter alia, his/her presence at all general meetings of the Company and of the Board of Directors, keeping proper minutes of the general meetings and other proceedings, the issuance and dispatch of the necessary notices, under the instructions of the Board of Directors, to the members and other relevant persons in regards to the general meetings etc, the conduct of correspondence with the members of the Company regarding to transfers of shares, calls, forfeiture etc. Additionally, the secretary is responsible for the submission of the relevant returns to the Registrar of Companies. He/she also has the responsibility to keep the books of the Company which relate to the internal affairs thereof, such as the register of members, the register of debentures, the share ledger etc.
Kindly note that the Law imposes the following statutory duties upon the Secretary:
- In respect of a public company to make the statutory declaration required prior to the commencement of business (s. 104(1) (c) and 104(2)(c) of the Law);
- To sign the annual return and the accompanying documents (s.122 of the Law);
- In case of winding up of the Company by the Court, to verify the statement to be submitted to the Official Receiver (s.224(2) of the Law);
- In respect of a receiver being appointed by debenture holders whose debentures are secured by a floating charge on substantially the whole of the Company's assets, to verify the statement to be submitted to the receiver (s.341(2) of the Law);
It is noted at this point that according to Palmer's Company Law (21st edition), many of the duties imposed upon the companies by the Law, are so clearly within the province of the Secretary that default by the company to comply with such duties and/or obligations shall in appropriate occasions and circumstances give rise to liability on the part of the secretary, where the relevant applicable section(s) imposes liability upon officers in default. This may be applicable in relation to defaults in regard to the following obligations:
- To deliver a return of allotments (s.51 of the Law);
- To issue share or debenture certificates (s.78 of the Law);
- To cause the registration of charges with the Registrar of Companies (s.91 and 92 of the Law); and to keep the Company's register of charges and make it available for inspection (s.99 and 100 of the Law);
- To publish the Company's name outside its places of business, on its seal and on its publications (s. 103 of the Law);
- To permit the inspection of the register of members (s. 108 of the Law);
- To permit the inspection of the register of debenture holders and to forward copies and to forward copies of the trust deed (s.84 of the Law);
- To keep the register of directors and secretaries (s.192 of the Law);
- To ensure the publication of particulars with respect to directors in trade catalogues, circulars, etc. (s. 193 of the Law);
- To keep minutes (s. 139 of the Law) and to make available for inspection the minutes of the general meetings (s. 140 of the Law);
- To send out copies of the balance sheets and auditors' reports (s. 152 of the Law).
It is mentioned that in many of the aforementioned cases, the secretary is liable to a fine in the event the Company fails to comply with its obligations under the Law. However, the conditions of criminal liability may vary. For instance, in sections 104(6) and 341(5) of the Law, the statutory provisions lay down their own criminal sanction in cases of non-compliance. On the other hand, in the instance of sections 120(2) and 78(2) of the Law, the provisions refer to the "default fine" as defined in section 375 of the Law. There are also instances, such as section 108(3) of the Law, where both a fine and a default fine are mentioned. It is noted at this point that in cases where under the applicable provision of the Law a fine is imposed on the secretary in his/her capacity as the "officer in default", mens rea has to be proved against him/her due to the fact that section 375(2) of the Law provides that the phrase "officer in default" means an officer of the company "who knowingly and wilfully authorises or permits the default, refusal or contravention mentioned in the enactment".
In any case, the Board of Directors of the Company has the power to dismiss the Secretary in case the secretary exercises his/her duties negligently and/or without due diligence.
Originally published 05 July, 2021
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.