Why New Businesses Should Outsource Company Secretarial Services
One of the most important roles in the business world is that of company secretary. It’s such a key position that even companies not legally obliged to appoint one still choose to do so. Increasingly, though, new companies opt to outsource company secretarial services. This article offers an overview of the company secretary’s responsibilities, and looks at why it’s a good idea to outsource.
What Is A Company Secretary?
Although the word ‘secretary’ conjures up images of shorthand, typing and filing, this kind of secretary has duties at a much a higher level. A company secretary is an officer of the company, and shares legal responsibilities with the directors for a wide range of tasks required by the Companies Act 2006.
These usually include, but are certainly not limited to, maintaining the company’s statutory registers (find out exactly what records companies are obliged to keep here), completing and submitting annual returns to Companies House, and arranging meetings of the company directors and shareholders.
Which Companies Need A Company Secretary?
Public companies are required by law to appoint a company secretary. The Companies Act 2006 made it unnecessary for private companies to appoint a company secretary, but many still choose to. The company secretary is usually appointed by the directors, and in smaller companies may even be one of the directors.
Who Can Be Appointed As A Company Secretary?
In a private company, the company secretary doesn’t require formal qualifications. However, the rules are much stricter for public companies. There’s a general requirement that the appointee has the ‘requisite knowledge and experience to discharge the functions’ of company secretary, plus a list of specific qualifications, of which the company secretary must meet at least one.
Undischarged bankrupts are not allowed to be appointed as company secretary without permission from the courts, nor can the company’s auditor be appointed to this role.
How Should A New Company Appoint Its Company Secretary?
New companies are required to name their company secretary in the documents establishing the company. Since the role of a company secretary is crucially important to the success of the business, and since the directors share legal liability with the secretary, it’s vital to choose the right individual for the role.
It becomes even more important when you consider that the directors and company secretary can be prosecuted if the required duties aren’t carried out properly, which—given the complexity of the task—can occur all too easily. The requirements set out in the Companies Act are numerous, and it specifies around 150 legal offences. For this reason alone, many new companies choose to outsource the duties of company secretary.
Why Outsourcing Is The Best Option
But it’s not all about the fear of prosecution: public and media scrutiny is turning with increasing intensity to the issue of corporate governance. In a 2013 article in New Statesman magazine, the head of corporate governance at ICAEW proposed five overarching principles for good governance. One of these is accountability, which is the particular (but not exclusive) domain of the company secretary.
New companies experience greater pressure on their internal resources while becoming established, so it can be especially difficult for them to fulfil the principles of good governance. Outsourcing company secretarial services to an experienced, qualified agency can free directors from the burden of statutory paperwork and the constant worry that they could do better.
In short, it allows them to exemplify the principles of good governance with the minimum of effort, and to concentrate on moving their business towards ever-greater success.
Linda Carr is the Founder of Linda Carr Accountants, a Chartered Certified Firm of accountants based in Peterborough. Linda recognises the need for SME’s to be able to access a reliable accountant for an affordable price.