ALL companies in Malaysia are required to have one or more named company secretaries in the Form 49 as stated in section 139 of the Companies Act 1965. This person has to be a natural person of full age and one who has his principal and only place of residence in Malaysia.
Once a person is appointed company secretary, he becomes an officer of the company and assumes the responsibilities accorded to an officer under whatever jurisdiction. No person can act as a company secretary unless he is a member of a professional body or a body that has been prescribed by the Minister by notification and published in the Gazette or licensed with the Companies Commission of Malaysia. Any person who consents to act as a company secretary has to fully understand his obligations as an officer of that company.
A company secretary is required to maintain the statutory records and books of a company. As the custodian of the statutory records of the company, he should at all times ensure that the records are updated and current. The company secretary is required to lodge all forms with regulatory authorities within the stipulated time frame, advising members of the board of the deadlines to ensure these are met.
At board meetings or AGMs, company secretaries are the advisers who ensure that proceedings are conducted in a manner that is within the regulations and should be able to advise where there is a deviation.
In the early 19th century, the role of the secretary was likened to that of a “mere servant” as quoted by Lord Esher in 1887 and he/she was “one who would do what he/she was told to do.” (Barnett, Hoares & Co. vs. South London Tramways Co.).
This role has evolved over the past century and the company secretary now has a very crucial role in the formation of companies, maintenance of statutory records, advising board members, shareholders and stakeholders and in ensuring that the company adheres to the various legislations and regulations in its business. This role is further enhanced and likened to that of an adviser to the board and management of the company.
In a recent interview on the development of corporate governance, Sir Adrian Cadbury said: “I see the company secretary very much as a professional and independent adviser to the board. For individual directors concerned about what their obligations are, the first port of call is the company secretary.
“We are putting a great deal of responsibility on the company secretary – in fact, it may be that some directors put more than they should, expecting the company secretary to cover their backs.”
Company secretaries comprise those who are employed as staff within a company and more often than not have other jobs assigned to them, for example as either a finance officer, legal adviser, compliance officer or even communications officer. Company secretaries can also comprise those who either have their own public practice and provide secretarial services to a group of companies under their portfolio or are employed in one such company.
Most public and large companies that have subsidiary companies usually prefer to maintain their corporate secretarial department within the group and the company secretary would not only maintain the statutory books and other documents relating to the holding company and its many subsidiaries but will have to be responsible for all meetings and matters relating to the other companies in the group. This could be a one-man department or a division with more than two staff, depending on the responsibilities placed on the corporate secretarial department.
Where a company secretary is in public practice, he may take on work for a variety of companies and businesses and under such circumstances his role and relevant exposure would be broadened to the many different industries in the market.
Under such circumstances, the company secretary would need the assistance of other equally competent and qualified staff to ensure proper records are maintained at all times. A person who is the named company secretary may delegate routine tasks to other staff, so long as he is aware that the ultimate responsibility for maintaining the statutory records of the company remains with him.
The onus of ensuring the company’s existence as a legal entity lies very much in the hands of the company secretary. As the company secretary, such a person is responsible for maintaining the company’s registered address for any formal communications. By establishing the registered address, it would allow for service of documents to the company to be sent to this address. It would allow shareholders and others who have the right to inspect the various registers maintained by the company at this address.
The company secretary is expected to update and amend the registers of all companies regularly, to advise members of the board when they need to lodge their statutory forms so as not to pay a penalty, to notify the Companies Commission of Malaysia on the relevant forms, all changes in particulars of the company structure or management within the stipulated period. The company secretary has to refer to the company’s Memorandum and Articles of Association to ensure that specific procedures are followed.
It is the responsibility of the company secretary to summon meetings of the board and shareholders upon requisition by the board and to ensure that the proceedings of meetings are properly recorded. Summoning a meeting would include sufficient notice being given, otherwise the proceedings of the meeting can be nullified or challenged. All records of proceedings at meetings have to be properly recorded and kept in the company’s minute book and once these are approved, the chairman of the meeting should sign them.
Company secretaries in smaller companies may take on additional functions and roles, which may include payroll maintenance, registration with government departments for licences, insurance, and pension plans and maybe even preparing corporate profiles for their clients. In such instances, the company secretary may act as a one-stop agency in the provision of value added services to the company and the owners.
Why then is the role of the company secretary considered not important? Given the various duties and tasks that may be handled by company secretaries, which represents a small portion of the many other tasks undertaken by them, they are indeed very relevant and necessary to an organisation.
Their value and worth have to be redefined and due recognition be given to them for the enhanced profile they now have to assume. It is therefore not surprising that company secretaries ought to redefine themselves as corporate advisers, for indeed they are advisers to the board and very involved in the corporate affairs of a company.
* Kulwant Kaur is technical director, MAICSA.