As a critical element of any board of directors, the company secretary must overcome a number of challenges in order to effectively fulfil their role. We’ve come up with a list of what we believe are the Top 10 challenges for a company secretary.
Every Board is Different….
1. Understanding the business
This is essential to be an effective company secretary. The company secretary needs to be able to provide valuable guidance at a moment’s notice, from anything relating from corporate governance to finance to operations. Access to and working with the management of the company is essential to be able to develop a strong understanding of the business.
2. Understanding company specific reporting obligations
While all good company secretaries will have a thorough knowledge of the company’s reporting obligations under the Corporations Act 2001 (Cth), ASIC and ATO, they must be aware of company specific reporting requirements to other regulatory or industry bodies. Be it a financial services company with an AFSL, a biotechnology company with a TGA license, or reporting obligations under the Work Health and Safety Regulation 2011, companies must comply with a multitude of reporting requirements. The company secretary must familiarise themselves with all aspects of a company’s obligations to mitigate risk and ensure continuity of business.
3. Knowing and understanding board members
Most Boards have a multitude of personalities that sometimes do not gel with each other. Some directors are appointed to the Board as nominees of shareholders or members, and are there in part to protect certain interests. It is important for the secretary to be aware of these in order to identify any potential conflicts.
4. Knowing your place on the board
All Boards are different and have different expectations of the secretary. Some Boards expect the secretary to make strong contributions during board meetings, and others expect a more passive, offline, coordinator role that does not impede Board discussion. Knowing the board's expectations and considering your own duties as an officer of the company is critical.
5. Know and develop a strong rapport with your Chair
This is a crucial element of being an effective company secretary, as the secretary has an important part to play in Board strategy, setting the tone for meetings, interactions with management, auditors, shareholders etc. Further, the Chair often needs guidance on how best to manage issues that arise at a Board level, whether conducting CEO performance reviews, Board performance assessments, or more sensitive issues such as director resignations. It is important that the Chair feels that they can call on the company secretary to not only provide sound and practical advice, but also to communicate such advice to the Board as a whole on their behalf.
6. Blurred reporting lines between executive management and the board
Many company secretaries have an additional role in the company, such as CFO or General Counsel. In one role they are accountable to the CEO, and in another role they are accountable to the Chair of the Board. The company secretary must exercise discretion in their dealings with both the Board and executive management to avoid conflicts of interest and ensure confidentiality where required.
7. Maintaining simultaneous relationships between the board, management and shareholders
A misalignment of goals between any of these stakeholders can represent a significant challenge for the company. The company secretary is often the first point of contact for each of these stakeholder groups, so being a confident and effective communicator is essential.
8. Keeping board meetings clear, concise and cohesive through well prepared board information
As the collator and distributor of Board information, the company secretary has a large role to play in the efficiency and effectiveness of Board meetings. Directing the Board to important information, distributing Board packs with plenty of time for review and a logical, flowing agenda structure are essential. Communicating clear expectations with those providing these documents is also beneficial to avoid delays.
9. Recording minutes in a fashion that the board supports
Some Board members want brief and concise minutes that cover major decisions, while others want a full account of all discussions during the meeting. Finding that balance early in the engagement can be a challenge for the secretary, while keeping in mind that minutes are effectively prima facie evidence should any matter go before a court. Either way, the company secretary also needs to ensure that the minutes accurately reflect the content of the meeting, both in terms of matters that were considered and discussed by the board, and decisions that were made in respect of them.
10. Timely and accurate reporting from Management
Forthcoming information from management in a timely manner is essential for company secretaries to succeed in their role. The secretary must foster strong relationships with management and proactively obtain information to ensure expectations are met.
This is by no means an exhaustive list. Feel free to contribute in the comments section below, or tweet us at @CosecConsulting.