Does your SME need a Company Secretary?

compliance meterWhile a public company is legally required to have a Company Secretary, since April 2008, private Limited Companies are not.
However, if the private company’s articles of association state that it should have one, this clause should be removed from the articles or the company is legally required to have an appointed Company Secretary at all times.
There may still be advantages for a SME to appoint someone specific to the role that is carried out by a Company Secretary, given the duties involved.

What does a Company Secretary do?

The Company Secretary is usually appointed by the directors and the person in the role is responsible for the company’s efficient administration particularly in ensuring compliance with statutory and regulatory requirements.
He or she must also ensure that decisions of the board of directors are implemented.
While in a private company the Company Secretary is not required to have specific qualifications, unlike in a public company, it makes sense for a person appointed to the role to have a thorough knowledge of their duties and if possible to gain chartered status with the Institute of Chartered Secretaries and Administrators (ICSA).
Alternatively, some SMEs use a suitably qualified outside specialist, such as their accountant, to take care of Company Secretary duties.
Historically the Company Secretary was responsible for producing accounts, dealing with finance, insurance, personnel and legal matters but most of these functions are now outsourced with the role becoming one of administering the board of directors, maintaining board and shareholder minutes and registers, and ensuring the company complies with regulatory requirements such as filing annual returns and changes to the registers.

Why do we recommend SMEs appoint a Company Secretary?

Most SMEs can’t afford a dedicated Company Secretary but they still are required to comply with all manner of regulations and all too often the directors have too much on their plate to deal with boring administrative functions. As a result, when something goes wrong it is normally because something basic wasn’t done but the consequences can be catastrophic, for example failure to renew insurance or check fire extinguishers are maintained with inspections up to date. Even though most compliance related functions are now outsourced, those doing them need monitoring and the documentation needs maintaining.
We advocate that one person should be responsible for overseeing all the non-operational aspects of a business and that producing accounts, dealing with finance, insurance, HR, health & safety and legal matters all come under the Company Secretarial remit for a SME.
The Company Secretary can be the chief executive, an independent director or professional adviser or a responsible member of staff but whoever it is needs be organised, sufficiently experienced and have the time to do the job.
It need not be onerous as most of the functions can be outsourced. It can also be combined with other functions but the real benefit in having one person nominated as Company Secretary is that they are clearly responsible for all the non-operational activities and can report on these matters to the board.

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