The role of a company’s secretary has evolved significantly in the last couple of decades. It is no longer restricted to administrative roles of organizing board meetings and taking notes. Rather, the role has expanded to maintaining good corporate governance and adding significant value to the company’s performance and growth. The role of the company’s secretary is no longer restricted to administrative functions; rather, it encompasses a broader role of acting as a board advisor and being responsible for the organization's corporate governance. The Chairperson relies on the company secretary to advise about effective corporate governance practices and board processes. Thus, the role of the company’s secretary has become that of governance professional.
Like in other countries, the role of a company’s secretary in India has evolved from its traditional notions. Under the Companies Act of 2013, a company secretary is a managerial personnel occupying a senior-level management position while being an essential part of the company’s board. The Bankruptcy code 2016 and the Companies Act 2013 have considerably enhanced the role of the company’s secretary. The government has shifted its focus on ensuring compliance, and as such, the secretary is responsible for ensuring that the company is compliant with various industry-specific regulations. In this short piece, we’ll discuss how the enhanced responsibilities of the company’s secretary are raising the quality of board governance.
Advising Board Members
The company secretary acts as a governance advisor for the board members, shareholders, directors, board committees, chairperson, and other company stakeholders. The responsibilities of a company’s secretary have gone well beyond scheduling meetings to actively managing the meeting agenda, ensuring the board has all necessary information to contribute to the meetings constructively. The company secretary also acts as a line of communication, information, arbitration, and advice between the management and the board as well as between stakeholders/shareholders and the organization. It is the secretary's responsibility to manage productive working relationships across all members of the corporate ecosystem. Company secretaries ensure all the regulatory, legislative, and corporate governance standards are met.
The company secretary must have a sound knowledge of the company’s culture, working environment, business operations, and all the laws that govern the company’s activities. Thus, a secretary is in a unique position to foster a culture of good corporate governance within the organization while advising the management team about how to fulfill its responsibilities. Secretaries are also involved in decision-making processes along with the top-level management team - framing policies and structures that will govern the company.
Execution and Implementation of Policies
Good governance is not just limited to compliance with certain rules and regulations. Rather, it focuses on creating cultures of good business practices. Public listed companies need to be compliant as non-compliance leads to huge fines and loss of reputation. This could be disastrous for the future of the company. Some of the major companies have collapsed in recent times despite complying with all regulatory standards. This is because they fell short of good corporate governance.
The secretary can help board members to grow the company and increase profitability with integrity, professionalism, independence, and dedication. As someone dedicated to corporate governance, the company secretary can implement, enforce, build and upgrade governance policies, practices and procedures. Secretaries ensure effective execution and implementation of management policies set up by the board. Secretaries can assist various departments in the organization in developing governance instruments and update them periodically according to new regulations. Besides that, they also review and assess the business's compliance with various industry standards.
Regulators are aggressively pushing for active oversight of the Board over various matters which were hitherto used to fall in the operational domain. Changes in the CSR act, the Requirement to report BRSR, disclosures etc. require the company secretary to support the board to ensure not mere compliance but best practices in these areas.
An organization needs to have clear documentation and communication of governance policies, practices, and procedures. The role of a company secretary puts them in a suitable position to get a holistic view of the company’s governance framework. Therefore, they are the best people to document the framework and the supporting policies.
The company secretary helps the chairperson with the development processes in the company, such as induction, evaluation of the board, and training. This includes setting up timely, rigorous reviews of board members’ performance, assessment of Board committees and individual directors, and taking proactive steps to ensure the review actions are implemented. In addition to that, company secretaries take the lead in the development of tailored induction programs for newly assigned board members and directors. Although these roles are the primary responsibility of the Chairperson, the company secretary adds value by ensuring good governance practices are used.
In the last couple of years, all industries have been demanding good governance standards with increased accountability and transparency. With their new evolving roles, the company secretaries sit at a niche point to manage governance practices and procedures within a company.