For a public company, the answer is clear. The Corporate Secretary may or may not be part of the senior management team, but they have a key role in the organization. The directors know them, and they attend every board meeting. They are a key source of institutional knowledge about the company, and maintaining an absolutely accurate record of corporate activity is their primary, but not only, role.
For a private small or mid-size business, however, the answer is often less clear. Yes, there may be a Secretary listed in the company’s filings with the state – along with the President – because “Secretary” is technically a required officer position in most states. But what does that person do? And how consistently and accurately do they do it? Who checks to be sure it’s being done correctly?
Proper entity maintenance is not complicated, but it may be tedious and easily procrastinated and so often it does not happen in small to mid-size companies, despite its legal importance. It is often delegated within an organization to positions where turnover can be frequent. The responsible person may not have a complete understanding of the requirements or the right attention-to-detail skills. For these reasons, the accuracy of the record-keeping is often suspect. And if the position is one with frequent turnover, there may be no significant element of institutional knowledge beyond whatever written record exists.
There are several approaches that a prudent business can follow. For all, the first step is to clearly assign the responsibility to an executive of the company, who is designated Corporate Secretary. They are responsible for the performance of all Corporate Secretary functions. In some cases they may delegate day-to-day work to another company employee, but as Corporate Secretary this executive must know what needs to be done and verify that it is being done accurately and regularly. The Corporate Secretary must be senior enough to be aware of all significant activity of the Company, so that activities requiring more formal approval are recognized and documented. The Corporate Secretary must manage transition through support employee changes. And their performance in these areas must be reviewed and their solid performance of those responsibilities must be a key job requirement. Granted, “Secretary” is not widely regarded as an executive title and the title may not be proudly displayed.
The important organization once known as the Society of Corporate Secretaries has transitioned its name over the years to the Society for Corporate Governance to phase out the use of the term Corporate Secretary and highlight the role of that executive in broader corporate governance matters and board interactions. But for most privately-held companies the “governance” role is secondary to the primarily administrative function of the Corporate Secretary.
An alternative is for the Corporate Secretary to outsource the performance of the Corporate Secretary functions to a knowledgeable third party. Legal counsel is often the best option for this outsourcing because they would be knowledgeable of the legal requirements and would likely be aware of, if not involved in, material transactions and activities requiring minute book documentation. Not all law firms prioritize or value this work, however, and there can be variations in quality and consistency. Cost is also a consideration, but with proper staffing and processes these services can be provided in a cost-effective and efficient manner.
In all cases, what is most important is that the Corporate Secretary job gets done, and the initial questions above can be clearly answered.
Corporate Counsel Group LLP is a law firm that helps businesses cover the Legal Essentials so they can focus on growing their business. Addressing “Governance and Corporate Secretary” needs is one of these Legal Essentials.