INTRODUCTION:
In the complex landscape of corporate governance and regulatory compliance in Nigeria, the role of company secretaries is often underestimated or overlooked. However, these professionals play a critical role in ensuring that businesses adhere to the ever-evolving legal and regulatory framework. In this article, we will explore the indispensable role of company secretaries in upholding corporate compliance standards in Nigeria.
Corporate governance is the system by which companies are directed and controlled.
The recent instances of corporate failure involving Nigerian companies and banks have shed light on pervasive corporate fraud, inadequate internal control mechanisms, regulatory oversights, and a prevailing lack of adherence to established corporate governance standards. It underscores the essential need for every company to establish a robust corporate governance framework, with a particular emphasis on appointing a dedicated individual responsible for overseeing the proper implementation of this structure. This pivotal role is typically filled by a company secretary.
WHO IS A COMPANY SECRETARY?
A company secretary is a corporate professional who is responsible for ensuring that a company complies with all applicable laws and regulations. They also play a key role in corporate governance, providing advice and support to the board of directors. A company secretary is a highly specialised and regulated role in Nigeria, required by law for most companies. It is compulsory for a public company to appoint a secretary, but it is not compulsory for small companies to have a secretary according to Section 330(1) of the CAMA 2020. The company secretary serves as a link between the company's board of directors, management, and regulatory bodies.
A company secretary is charged with the duty of ensuring the effective administration of a company. He or she also makes sure that the firm complies with all legal and regulatory requirements and that the board of directors' decisions are carried out.
REQUIREMENTS FOR BECOMING A COMPANY SECRETARY
Normally, a private company's qualification for a company secretary differs from that of a public company. According to Section 332 of the CAMA 2020, in order to qualify to become a secretary in a public company, an individual must be:
A member of the Institute of Chartered Secretaries and Administrators
A legal practitioner within the meaning of the Legal Practitioners Act
A member of any professional body of accountants established from time to time by an Act of the National Assembly
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
A body corporate or firm consisting of members each of whom is qualified under (a), (b), or (c).
It is the duty of the directors to take reasonable steps to ensure that the company secretary has the necessary skills and experience to perform their duties effectively.
MANDATORY RESPONSIBILITIES OF A COMPANY SECRETARY ACCORDING TO SECTION 335 OF CAMA 2020
Duties to the board of directors
- Advise the board on compliance with applicable laws, rules, and regulations. The company secretary advises the board on legal and regulatory compliance, encompassing corporate governance, risk management, internal controls, and adherence to the company's articles and memorandum of association. They ensure the company aligns with evolving laws and industry standards, fostering transparency and accountability.
- Provide support to the board in its decision-making process
The secretary supports the board's decision-making by preparing reports, drafting resolutions, and coordinating meetings. Their role streamlines the decision-making process and maintains the official record of board actions.
- Act as a confidential advisor to the board
Serving as a confidential advisor, the secretary leverages their deep knowledge of the organisation to offer impartial insights to the board. This role encompasses strategic guidance, adherence to governance documents, and legal compliance.
Duties to the company
- Maintain the company's statutory registers and other records
The company secretary is responsible for the maintenance of vital statutory registers and records, which encompass registers of members, directors, shareholders, and loans. These records serve as a legal foundation for the company's operations and decision-making.
- Filing statutory returns with the CAC
They oversee the timely and accurate filing of statutory returns with the Corporate Affairs Commission (CAC). These filings encompass the annual return, financial statements, and other required documents, ensuring that the company meets its legal obligations.
- Overseeing the company's compliance with all applicable laws, rules, and regulations
The company secretary plays a central role in ensuring adherence to all applicable laws, rules, and regulations. This involves contract review, risk mitigation, and active communication with regulatory authorities, maintaining the company's legal and operational compliance.
Duties to shareholders and other stakeholders
- Communicate with shareholders and other stakeholders on behalf of the board of directors
The company secretary serves as the primary liaison between the board of directors, shareholders, and other stakeholders. They are responsible for tasks such as preparing and
disseminating annual reports, addressing inquiries from shareholders, and participating in shareholder meetings.
- Promote good corporate governance and ethical conduct within the company The secretary plays a key role in fostering good corporate governance and ethical conduct within the company. This includes the development and implementation of governance policies and procedures and the provision of staff training on corporate governance matters.
The company secretary also plays a vital role in ensuring that meeting notices are sent to the appropriate recipients. This duty involves sending notices to the board of directors, shareholders, and other relevant meeting participants. The notices inform recipients about essential meeting details, including the agenda, date, time, and location, while complying with legal requirements and the company's governing documents. This responsibility helps maintain transparency, compliance, and effective organisational communication.
CONSEQUENCES OF FAILING TO APPOINT A COMPANY SECRETARY
According to Section 330(4) of CAMA 2020, if a public company fails to appoint a secretary, both the company and its directors will be liable to fines as specified by the commission. In cases of continued contravention, daily penalties will also be imposed. This underscores the seriousness of not having a company secretary as required by CAMA, with potential financial penalties for both the company and its directors for non-compliance.
In addition to these legal consequences, it is highly recommended that all companies in Nigeria appoint a company secretary to ensure compliance with legal requirements, effective corporate governance, and improved operational efficiency.
CONCLUSION
Navigating regulatory compliance is a complicated and ever-changing task, but it is essential for all businesses. A company secretary plays a crucial role in helping businesses comply with their regulatory obligations. By providing expert guidance and support, company secretaries can help businesses avoid costly fines and penalties, protect their reputations, and maintain a competitive advantage.
By ensuring that businesses adhere to the highest standards of transparency, accountability, and fairness, company secretaries can help to build trust with stakeholders and create a more sustainable and ethical business environment.
In the increasingly complex and regulated world of today, the role of the company secretary is more important than ever. By working with company secretaries, businesses can meet their regulatory obligations and promote good corporate governance practices. This can help them avoid costly fines and penalties, mitigate reputational risks, and maintain a competitive advantage.