Directors’ New Duty - Skilled Secretaries
Written by 22nd July 2014on
Presently, under the Companies Acts 1963-2013, only the directors of a public limited company had a duty to ensure the secretary had the necessary skills.
While one of the Companies Act 2014's major reforms is to permit single director private companies, it retains the requirement that private companies must have a company secretary. The secretary may however be a body corporate so a single director company may exist without requiring a second individual. In so doing, the Act does not follow the position in the UK where the office of company secretary is an optional one.
While a director might currently also be the secretary (which continues to be the case for multi-director companies), under the Act the sole director of a single director company must appoint a separate person to act as the company secretary.
Whether the role of company secretary is fulfilled by one of the directors or a separate person, under the Companies Act, all of the directors have a duty to ensure that the person appointed as secretary has the skills necessary to discharge the statutory and other legal and delegated duties of the office.
The introduction of this new duty on directors of private companies seeks to ensure that companies comply with their internal record keeping and external filing requirements under law. This area of compliance has become increasingly enforced. It is common for companies that do not file annual returns to be struck off. The office of the Director of Corporate Enforcement has also taken court actions against directors for not keeping proper books of account which resulted in personal liability for the debts of the company being placed on the directors.
Flaws subsequently found in the appointment or qualification of a secretary will not affect the validity of acts done by that secretary.
To be sure that a company's secretary is fully compliant and this duty has been discharged, a company may appoint a company secretarial ("CoSec") services provider. LK Shields can assist by providing companies with the CoSec services they require.