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Whilst this may sound like an opportunity for finance directors to consider trimming their head office employment costs, care is needed as the company secretary still has an important role to play.

It is often an assumption made by directors that the company secretarial role can be absorbed into another role, e.g. that of the finance director. However, the work does not go away and there are a number of key company secretarial processes which still need to be attended to. These include:

• Maintenance of statutory books and records
• Maintenance of accounting records and filing of statutory accounts
• Annual return and other statutory forms to be filed at Companies House
• Execution of documents
• Organising shareholder meetings
• Retention of records

In addition, the company secretary can get involved in a variety of administrative matters including insurance, pensions, share options, contract vetting, property management and so on.

In recent years the company secretary has become a key element in the corporate governance structure of both public and large privately owned companies and one who influences and monitors a company’s governance by:

• Advising the chairman and the board on compliance and best practice issues;
• Overseeing the administration of board meetings and their follow up; and
• Being a source of information for both non-executive directors and shareholders.

Sometimes this workload warrants to employment of a full-time or part-time company secretary. The advantage of this approach is that there is a dedicated internal resource with the appropriate levels of knowledge and experience focused on dealing with such matters. By being a regular member of the management team, the employed company secretary will have a good feel for what is happening in the company and will be better placed to work proactively with board directors and senior executives.

Workload

Sometimes, however, the workload does not warrant the employment of a dedicated executive. This does not diminish the importance of what is required – just the amount of time that needs to be allocated to it. In such situations it may be appropriate to outsource the company secretarial support.

There are a number of company secretarial practices that are able to offer outsourced services. The advantage of this approach is that you pay for what you get and it allows the existing company executives to focus on their main priorities whilst ensuring that the compliance issues that the company secretary is responsible for are taken care of.

The Companies Act 2006 is the largest single piece of legislation ever passed by Parliament and keeping up with the wide range of new requirements that it contains is not easy. Employing an outsourced company secretary will provide access to best practice ideas from other company situations and reduce the risk that an important new requirement may be overlooked.

One of the main themes of the new Act is the emphasis that it places on directors’ duties and responsibilities, which for the first time in the UK have been codified in law. Increasingly directors need not only to demonstrate good governance in the way that they run their businesses and this will heighten the need for boards of directors to be well-supported in the performance of their duties.

The company secretary is well-placed to provide such support. Whether this support should be in-sourced though an employed company secretary or outsourced will depend on the nature of the company concerned and how its management team are configured. In a fast-changing corporate situation it may be sensible to have a resource that can be adjusted regularly to adapt to new circumstances.

Either way, the role of the company secretary is an important one and the way in which the duties of that role are conducted needs to be carefully considered. What is clear, however, is that outsourcing provides another way of achieving this.

Chris Stamp is a Fellow of the Institute of Chartered Secretaries and Administrators (ICSA).

Related links

• Institute of Chartered Secretaries and Administrators