In Hong Kong, the Companies Ordinance requires that all registered companies must have a company secretary, and only those with a qualified company secretary can be listed on the stock exchange. Initially looked at as a support function with main duties to perform secretarial tasks and meet regulatory obligations, the role of a company secretary has evolved significantly over the last two decades, with responsibilities and challenges continuing to increase substantially.
Looked at as a guardian of corporate governance, the responsibilities of the company secretary comprise of providing advice to the board on governance and regulatory matters through clear and transparent communication. The company secretary plays a vital role in raising governance standards of a company, while ensuring the board decisions comply with statutory regulatory requirements. With the pandemic causing significant impact on many business operations, it is the duty of the company secretary to make sure the directors pay full attention to critical processes, while managing business continuity risks and succession planning. Additionally, the company secretary is looked upon as the key communication liaison with stakeholders, supporting the investor relations team in informing the board about the stakeholders’ legitimate concerns and needs.
Compliance Responsibilities of Company Secretary
It is paramount in today’s complex regulatory environment to have compliance as the top priority for all businesses. With an everchanging and evolving regulatory environment, the margin for error is very thin. Company secretaries have a legal obligation to guide the board in meeting their regulatory obligations in every aspect of the business while following best practices at all times. Using a proactive approach to compliance, with advance planning on important compliance matters, can help the board respond and act on these matters in a timely manner.
The compliance responsibilities of a company secretary typically include:
- At board level
- Managing board processes – Managing the meeting process and circulating all board documents and proposals for consideration of all board members.
- Making sure that all relevant meetings are correctly scheduled and conducted as per schedule.
- Ensuring records of members’ and directors’ meetings are stored in a compliant manner
- Benefits and pension administration
- Providing advice to directors on legal and regulatory requirements
- At corporate level
- Managing the development and maintenance of all compliance policies, processes and procedures
- Ensuring the necessary registers are established and properly maintained
- Understanding and ensuring that the company complies with its statutory obligations
- Ensuring company's financial records are maintained, and reports are prepared in accordance with the legal requirements
- Filing tax returns and audited financial statements
Raising Governance Standards
As regulators and shareholders call for better corporate governance, there is increasing pressure for companies to establish a proper and effective governance system. The Company Secretary has a central role in enhancing and maintaining high level of corporate governance of the company and its board. The company secretaries can offer professional advice based on years of experience with various companies as well as across tenures of different board members. They can recommend holistic governance frameworks for the board’s consideration and ensure that governance related policies, frameworks and procedures are clearly documented and conveyed to all stakeholders.
In the modern world driven by digital technologies and principles of sustainability, company secretary needs to ensure they are well versed with ESG factors, diversity metrics as well as the use of modern technology and related cybersecurity frameworks. They will need to keep a close eye on all legislative, regulatory and corporate governance developments not only from a compliance perspective, but also to monitor how these may affect the company’s operations and the board in decision making.
This level of responsibility calls for a thorough knowledge of the business environment in which the organization operates, as well as of the laws, rules and regulations that govern its activities. This allows the company secretary to be in a unique position to create the right culture for good corporate governance, and to guide management and the board of directors on how best to meet their responsibilities. With the intensified emphasis on transparency, company secretary can assist the board to enhance a company’s corporate governance by:
- Advising the board on good practices in corporate governance, for example, giving guidance on the legal implications of the way it discharges its duties, runs meetings, and makes decisions
- Advising the board on appropriate ethical and corporate behaviour best practices
- Presenting the board with all relevant information to make informed decisions
- Organizing board performance reviews
- Formulating policy for the board
- Managing director induction and maintaining a director manual
- Promoting compliance best practices to enhance and protect the organization’s reputation and integrity.
- Being involved in risk management and corporate responsibility matters
Digitizing Corporate Governance
Moving away from the traditional methods of operations and organizational bureaucracy is fundamental to successfully building yourself into a digitally savvy and advanced company. Everything from banking to government services happens at the click of a button through a handheld device that is authenticated and very often synchronized with other critical services. Everywhere you move, the cloud follows.
Corporate governance is often defined on the basis of the big ‘P’s – Process, People, and Performance. A good digital strategy and program will connect the three seamlessly and ensure that companies are in better control of the direction they take. At the crux of digital corporate governance is the ability to empower the company boards with tools to make better strategic decisions.
While the trend of digital transformation is irreversible, by leveraging and incorporating advanced tools into the daily workflow, corporate governance can be taken to a new level with improved efficiency, engagement, security and transparency. In this digital world, company secretary must be able to leverage technology and provide inputs and insights to facilitate better decision making by the board. Following are a few examples about how digital solutions can help raise corporate governance:
- An advanced board portal can enhance board efficiency by managing board activities in a more structured way. As a secure and centralized platform to manage sensitive board materials and processes, it offers security, efficiency and administrative ease for board members, management and administrators alike, enabling seamless collaboration between board members and management.
- A secure e-meeting solution with integrated functions such as e-proxy can make a difference by transforming traditional meetings digitally with scalability, and can be used for shareholder meetings, board meetings, online conferences, trainings in either hybrid or virtual approach. The adaptation of technology makes it easier for people to attend important meetings, thus encouraging participation and transparency.
- E-signing, digital HR tools and other electronic solutions can help streamline daily operations, while enhancing process control.
Engaging Company Secretary Suited to Modern Governance
With the role of company secretary transforming in the modern age, it is essential that companies engage a company secretary that is well versed in digital technologies as well as corporate governance for sustainability. Use of technology will streamline the company secretary’s operations, while increasing time and cost efficiencies. With data insights, company secretary can ably support the board in making measured decisions.
A qualified and experienced company secretary equipped with the right expertise will be able to handle all aspects managing the secretarial, compliance and corporate governance tasks that fall under a company secretary’s responsibilities. Engaging a qualified partner can lift a considerable amount of secretarial and compliance responsibilities off one’s shoulders, giving peace of mind to focus on core revenue-generating business activities, while upholding the highest standards of governance and ethical behaviour in the organization.