When you have a limited company, you may wish to appoint a company secretary, but what is the role of a company secretary and do you need one for your business?
What is a company secretary?
A secretary is defined as ‘a person employed by an individual or in an office to assist with correspondence, make appointments, and carry out administrative tasks’, however a company secretary is slightly different, in that they are an officer of the company.
A company secretary is responsible for advising the board on matters of governance, and in reality their duties can vary from company to company. However, as a rule a company secretary is appointed to take on some of the duties and responsibilities of a company’s director or directors.
These duties can include:
- Completing and filing annual returns: statements, accounts, and tax returns
- Maintaining company registers and records
- updating HMRC and Companies House of relevant changes to the company’s structure, management etc
- Arranging meetings and minutes of meetings
- Signing contracts or documents on the directors’ behalf
- Advising directors of their duties and ensuring they comply with corporate legislation
Who can be a company secretary?
To be a company secretary in a private limited company you do not need any formal qualifications or certifications. The role is however skilled and requires competence, skill, and trust, as it directly takes on responsibilities that would otherwise belong to a director.
Provided that you are satisfied that an individual has the required skills, anyone may be hired in the role of secretary for a private company, as long as they are not an auditor for the company, an undischarged bankrupt or a disqualified director.
Interestingly the role of company secretary can be taken on by another company, as opposed to an individual – law firms for example often take on the role of company secretary particularly if the business is fundraising or their shareholder register is complicated.
Is it a legal requirement for my business to have a company secretary?
If you have a private limited company then you are not required to have a company secretary. Up until 2006 it was a legal requirement, however as of the Companies Act in 2006 this was removed. This was down to the recognition that while a company secretary has an incredibly valuable role for many companies, smaller private companies, especially those who did not yet have a ‘board’, found that it could be a problem for them in terms of resources and time.
Private limited companies therefore are not required by law to have a company secretary, although they may of course choose to appoint one for various reasons. Public companies however are required to have a company secretary by law.
Should I appoint a company secretary for my business?
If you have a private limited company, although you are not required to have a company secretary by law, it does not mean you should rule out the importance of their role.
Particularly as a company begins to grow, a company secretary can take the weight of some of the directors’ duties; appointing a company secretary means you have someone focused on making sure board procedures are followed, reviewed, and operating to the best of their abilities.
It is worth being aware however, that should you appoint a company secretary, while they are there to support, guide, execute and maintain procedures around corporate governance, compliance remains the legal responsibility of the company director or directors
For more information on the Companies Act please visit legislation.gov.uk.
Find out how Governance360 can help you understand the different types of directors and board roles in our director training course here.