The corporate collapses of the late 1990s and early
2000s resulted in an increased shareholder focus on
corporate governance and transparency. Some could say
that this focus has emphasized the company secretary's
role in assisting with and supporting the governing and
monitoring role of the board within their organisations.
As the responsibilities of the board have increased, the
volume of work and necessary skills to support the board
have added to the role of the company secretary.
Depending on the size and resources of a company,
the company secretary can be considered the chief
governance specialist within an organisation, and it is
a role which is increasingly relied upon by the board
to provide advice and implement good governance
practices. This chief governance specialist role is a
more proactive role than in previous times.
Company secretaries have legal responsibilities in
addition to their work in support of the board,
which will vary according to the specific needs of
The value of company secretaries is recognised in
the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations 3e (2014)
which state in the commentary to Recommendation 1.4:
What are their legal duties and obligations?
Company secretaries fall under the definition of
‘officer’ of a corporation (s 9 of the Act), so they have
many of the same duties and obligations as directors.
These duties include:
- To exercise their powers and discharge their duties
with care and diligence (s 180);
- To exercise their powers and discharge their duties
in good faith and for a proper purpose (s 181);
- Not to improperly use their position to gain
an advantage for themselves or someone else,
or to cause detriment to the company (s 182);
- Not to improperly use information obtained by
virtue of their position (s 183);
- It is also a criminal offence if a company secretary
is either reckless or intentionally dishonest and fails
to exercise their powers and discharge their duties
in good faith in the best interests of the company,
or for a proper purpose (s 184).
"The company secretary of a listed entity plays an
important role in supporting the effectiveness of the
board and its committees. The role of the company
secretary should include:
- Advising the board and its committees on
- Monitoring that board and committee policy and
procedures are followed;
- Coordinating the timely completion and despatch
of board and committee papers;
- Ensuring that the business at board and committee
meetings is accurately captured in the minutes; and
- Helping to organise and facilitate the induction and
professional development of directors.
Each director should be able to communicate directly
with the company secretary and vice versa. The decision
to appoint or remove a company secretary should be
made or approved by the board.”
What are the legal requirements for appointment
and departure for a company incorporated under
the Corporations Act 2001?
The Corporations Act 2001 (‘Act’) outlines rules regarding
the appointment and departure of a company secretary:
- Public company must have company secretary –
Each public company must appoint at least one company
secretary and at least one of its secretaries must
'ordinarily reside' in Australia (s 204A(2)). A proprietary
company is not required to appoint a company secretary
(s 204A(1)) but, if it does have one or more secretaries,
at least one must 'ordinarily reside' in Australia.
- Natural person – A company secretary must be a
natural person who is at least 18 years of age (s 204B(1)).
- Disqualified persons – Generally, a person disqualified
from managing companies under Part 2D.6 may not be
appointed as a company secretary. However, such an
appointment can be made where it is approved by ASIC
(s 206F) or by leave of the Court (s 206G). Similarly, a
person automatically ceases to be a company secretary
if they are disqualified from managing companies under
Part 2D.6 during their term (s 204G), unless permitted
to continue by ASIC (s 206F) or by leave of the Court
- Appointment and terms – Directors appoint the
company secretary (s 204D) and determine the terms and
conditions of the office, including remuneration (s 204F).
- Notification – ASIC must be notified of the appointment
within 28 days (s 205B(1).
- Consent required – The person must give their signed
consent to act as secretary before being appointed (s
204C(1)) and the consent must be kept by the company
(s 204C(2)). Failure to obtain or keep the consent is an
offence under the Act (s 204C(3)).
- Act by secretary effective – An act done by a secretary
is effective even if their appointment, or the continuance
of their appointment, is invalid because the company
or secretary did not comply with the company's
constitution or the Corporations Act 2001 (s 204E(1)).
Section 204E(1) of the Act does not deal with the
question of whether an effective act by a secretary
binds the company in its dealings with other persons or
makes the company liable to another person (s 204E(2)).
However, a person may assume that anyone who
appears to be a company secretary of the company
(from information provided by the company that is
available from ASIC) has been duly appointed, and has
authority to exercise the powers and perform the duties
customarily exercised or performed by a company
secretary of a similar company (s 129(2)).
- Leaving a company – When a company secretary
leaves, the company is required to notify ASIC within
28 days of the resignation/retirement (s 205B(5)). If
the secretary has given ASIC written notice of their
resignation/retirement in prescribed form (Form 370),
together with a copy of the letter of resignation given
to the company (under s 205A), the company is excused
from the requirement to notify ASIC (s 205A(6)).
- Director and secretary – There is no prohibition in the
Act on a person acting both as director and secretary
of a company.
Should the company secretary be covered under the board’s D&O policies and deeds
of access and indemnity?
Because company secretaries are subject to many of the same liabilities as directors, they may be covered under the
organisation’s D&O policies.
Company secretaries may also enter into deeds of access and indemnity, although it is important to note that anything
that purports to indemnify or insure a company secretary against a liability, or exempt a company secretary from
liability, that contravenes s 199A or 199B of the Act is void.
What are typical tasks of a company secretary?
The role of the company secretary has elements of
both compliance and performance. While their formal
legal duties (see discussion above) have not changed
enormously in the last decade, their additional tasks
have. Section 188 lists the provisions of the Act which
the company secretary will be held responsible for, if
contravened by the company.
- To maintain a registered office, and to notify ASIC of
any change in address within 28 days (s 142);
- To keep the registered office open to the public during
certain hours (public company only) (s 145);
- To notify ASIC of a change to the principal place
of business (s 146);
- To notify ASIC of changes to the member register
(proprietary company only) (s 178A);
- To notify ASIC of changes to the share structure
(proprietary company only) (s 178C);
- To lodge notices with ASIC regarding personal details
of directors and secretaries (s 205B);
- To notify ASIC of any issue of shares (s 254X);
- To lodge financial reports with ASIC (s 319(1));
- To respond to extract of particulars, and to return
of particulars (ss 346C, 348D);
- To notify ASIC of changes to ultimate holding company
(proprietary company only) (s 349A).
In defence of an allegation of contravention, the company
secretary may argue that he/she took all reasonable steps to
ensure that the company complied with the provision (s 188(3)).
If a proprietary company does not appoint a secretary,
each director of the company is responsible for the
company's contravention of these provisions.
In addition to the responsibilities listed in s 188 of the
Act, compliance responsibilities would typically include:
- Managing board processes – board and committee papers
and circulation of agendas, minutes, discussion papers,
proposals for the board and its committees;
- Ensuring members’ and directors’ meetings are properly
called and held. Note a company secretary cannot call
a meeting without authority (for example, a delegation/
instruction from the board);
- Ensuring the necessary registers are established and
properly maintained and ensuring that the company's
financial records are maintained, and reports prepared
in accordance with the requirements of the Act;
- Ensuring records of members’ and directors’ meetings are
kept in compliance with the Act and the organisation’s
constitution (again, the company secretary cannot do this
- Understanding and ensuring the company complies
with its statutory obligations, ensuring requirements
of ASIC and other regulators are met, including
- Providing or procuring advice for directors
regarding application of the Act, company
constitution, ASX requirements and other legal
and regulatory requirements;
- Development, implementation, communication
and maintenance of compliance policies, processes
Newer roles relating to board performance include:
- Advising the board on good practice in corporate
governance, for example, giving guidance on the legal
implications of the way it discharges its duties,
runs meetings, and makes decisions;
- Promoting the compliance framework to safeguard
the integrity of the organisation;
- Counselling the board on standards of ethical and
- Ensuring the board has the information it needs to
make informed decisions (for the business judgment
- Organising board performance reviews;
- Being involved in risk management and corporate
- Policy formulation for the board;
- Managing director induction and maintenance
of a director manual;
- Organising directors’ & officers’ (D&O) insurance.
To whom does a company secretary report?
Historically, the company secretary has reported to the chief
financial officer or chief executive officer. Given that the
board technically appoints the company secretary and that
the role is heavily focused on board performance, it is also
appropriate that they report to the chair of the board. The
Corporate Governance Principles and Recommendations
recommend that the company secretary be accountable to
the board through the chair on all governance matters.
What qualifications should a company
There is no legal requirement for a company secretary
to have any particular qualifications or experience. However,
for public companies, the experience and qualifications of
each company secretary must be disclosed in the annual
report (s 300(10)(d)).
Because of the volume of legal compliance work and
required knowledge of the Act and other legislation, it is
common for company secretaries to have legal qualifications.
Their role is often combined with that of general counsel,
although this is apparently decreasing.
If boards prefer their company secretary to have a formal
qualification signalling their commitment to high governance
standards, the Governance Institute of Australia (GIA) offers
a Graduate Diploma in Applied Corporate Governance.
GIA is the professional body for company secretaries and
membership is denoted by the post-nominals AGIA or ACIS
for an associate member, and FGIA or FCIS for a Fellow.
How does the board evaluate the company
The board should regularly evaluate the performance
of the company secretary. The appraisal should
be based on their written position description and list
What is the situation of a company secretary/
A high percentage of company secretaries also act as their
corporation's general counsel. The High Court has made
it clear in the James Hardie case (Shafron v ASIC (2012)
HCA 18) that a person with these twin roles has a high
responsibility to protect the corporation from legal risk and
generally cannot operate in one capacity some of the time
and in the other capacity at other times.
In that case, the High Court approved earlier court decisions
that the company secretary/general counsel had breached
the duty of care under s 180(1) of the Act:
"A company secretary with legal background would be
expected to raise issues such as potential misleading
statements (in relation to the draft ASX announcement)
and disclosure obligations...with the board."
Before the High Court, the company secretary/general
counsel argued that the contraventions alleged against
him concerned his responsibilities as general counsel,
not company secretary, and should not be subject to s 180
(1). The High Court rejected this argument, holding that
his responsibilities in this case were indivisible:
"A fundamental difficulty with Mr Shafron's submission
is that there was no evidence demonstrating or suggesting
that Mr Shafron performed certain tasks in one "capacity"
and other tasks in another. Mr Shafron did not give
evidence at trial. What evidence there was about the
role of a "company secretary and general counsel" of
a listed public company did not support the distinction
Mr Shafron's submissions sought to draw. Yet as has
been stated, what responsibilities Mr Shafron had was a
question of fact.
As the title "general counsel and company secretary"
given to Mr Shafron indicates, he was qualified
as a lawyer ... An important element in Mr Shafron's
responsibilities was his giving advice about and,
where appropriate, taking steps necessary to ensure
compliance with all relevant legal requirements,
including those that applied to JHIL as a listed public
company. The primary judge and the Court of Appeal
described this aspect of Mr Shafron's responsibilities
as a duty to protect the company "from legal risk". No
doubt that included ensuring that purely administrative
functions were performed like transmitting necessary
material to the ASX and maintaining appropriate
records of the board. But Mr Shafron's responsibilities
did not end at that point. His responsibilities were wider
than administrative, and extended to the provision of
All of the tasks Mr Shafron performed were undertaken
in fulfilment of his responsibilities as general counsel
and company secretary. More particularly, because
of his qualifications and the position in which he was
employed, his responsibilities as general counsel and
company secretary extended to proffering advice about
how duties of disclosure should be met. And when he
procured advice of others and put that advice before the
board for its use, his responsibilities could, and in this
case did, extend to identifying the limits of the advice
that the third party gave."
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