As the breadth of responsibilities has increased over the years, the corporate secretary’s role has increased in scope and visibility.
Today’s corporate secretaries serve as key strategic advisers to their boards and executive teams to assure proper corporate governance.
The Modern Corporate Secretary’s Roles – Corporate Governance
Typical corporate secretary responsibilities include the nominal legal requirements, as noted by the Society for Corporate Governance – maintaining the minutes of boards and committees meetings, ensuring dividend payments and maintaining company records – in addition to a broad range of activities that have evolved over the years.
According to Paul Marcela of Governance Partners Group, LLC, corporate secretary responsibilities can be broken down into six categories, many of which are related to setting and maintaining corporate governance – the set of practices according to which the company operates:
- Structure, design, implementation and maintenance of the company’s corporate governance: ensuring that the board and its committees operate according to the articles of incorporation and other foundational documents
- Development and enhancement of corporate governance programs and processes: implementing best corporate governance practices and conducting audit and evaluation programs for board members and executives
- Board and board committee support: management of shareholders, board and board committee meetings, serving as liaison among company stakeholders
- Engagement and management of third-party corporate governance service providers, such as agenda management and board portal providers
- Collaboration with the executive management team to plan and set up activities for board activities, producing financial reports and press releases and managing corporate governance activities
- Legal entity governance management: assuring and verifying that subsidiaries, joint ventures and non-US entities meet corporate governance standards.
Assuring Data and Communications Security
Much of the corporate secretary’s role communicating with multiple entities in the company and serving as a keeper and overseer of all company documents and files, including:
- Meeting minutes
- Financial documents
- Legal documents
- Personnel documents
- Internal communication
- And others, many of which are confidential and / or sensitive
The security of exposing board and other sensitive data requires a secure and efficient means of file storage. The Sarbanes-Oxley Act of 2002, for example, aims to enhance corporate governance by promoting board independence and new responsibilities on the board audit committee. Many companies start appointing outside of their boards (NYSE and NASDAQ even require a majority of independent directors in both exchanges’ listed companies, as described in this University of Georgia’s Terry College of Business 2007 study.) This company is responsible for the provision of information security best practices.
One of the best practices for ease of use and data security is to use a board portal for all executive and board files. Board members can easily share notes during material review via a portal and communicate over secure channels. Security, file retention, file distribution and reporting are tightly controlled by the IT department.
Minimizing Liability Risks
The corporate secretary is therefore responsible for facilitating good corporate governance practices as a bulwark against personal liability claims, according to the report, ” Piercing the Corporate Veil . “
Plaintiffs suing a corporation. Separate Legal Liability Between the Corporation and Shareholders.
The directors of a company have acted on it and have failed to do so An informed, in good faith, and in the true sense that the action is taken in the best interests of the corporation, “according to” A Look at the Modern Business Judgment Rule. ” To minimize this type of risk, the corporate secretary must provide evidence of proper board decision-making through orderly minutes or board and board committee meetings. He or she must be informed,
Maintaining Readiness for Change of Ownership
Private companies may go public or undergo a change of ownership. The corporate secretary must maintain the company’s readiness for sale, merger or going public. This includes prepaid and maintaining documentation demonstrating the company’s corporate governance and transaction authorization, as well as adequate financial documents. The corporate secretary is responsible for the US Securities and Exchange Commission requirement compliance. The corporate secretary is required by lenders, auditors and government authorities.