In a relatively short period of time, the institution of a corporate secretary has taken on fairly clear contours by historical standards. Mainly due to the development of company law.
Today, the corporate secretary is a separate position in many public corporations. The influence of his work on the activities of various bodies and employees within the organization, as well as the organization’s relationships with stakeholders such as regulators and shareholders, is increasing.
It can be said with certainty that the institution of the corporate secretary is developing in qualitatively new directions.
- First, the function is gradually spreading up the corporate vertical, reaching non-public companies with state participation and gradually reaching medium-sized companies with private capital.
- Second, the corporate secretary acquires the qualities of a leader in developing the corporate governance system in the organization.
- Third, the corporate secretary’s professional community, which he is the face of, has become stronger and more active. The important aspects of this activity include the further popularization of the profession, study and dissemination of best practices, as well as creating conditions and incentives for the professional development of corporate secretaries.
- Another direction of development of the institution of the company secretary seems to be important – the formation of a system of generational succession in the profession. This is facilitated by the naturally growing number of highly qualified “stars” who serve as guides for the “newcomers” and gradually pass on the secrets of the championship to them.
The Status of a Corporate Secretary in an Organization
The status of a corporate secretary in a given organization varies from “technical specialist” to “architect of the corporate governance system”. It depends primarily on the attitude of the owners, the board of directors and management towards corporate governance.
For example, in a small public company with a single shareholder involved in the management of the business, the role of the corporate secretary is likely to be technical and limited to a nominee secretary to the board of directors. Since there is no specific position for the Secretary of the Board of Directors in the staffing table, an employee from one of the departments – Legal or Accounting – is assigned additional tasks. The purpose of this approach is to ensure compliance with the law so that the status of the corporate secretary does not need to be discussed in this case. On the contrary, in a large public company, where shareholders see the need for quality corporate governance, a strong, truly functioning board emerges. The chairman of such a board, interested in effective organizational support, delegates this to the rest of the directors and management and ensures that the corporate secretary appears, is functionally subordinate to the board and his duties and powers legally underpin the board’s high status position .
The balance of power between the board and management of the organization also influences whose assistant the corporate secretary actually becomes and how “technical” or “substantive” his role will be. Another important factor is the professional competence and personal qualities of the corporate secretary himself. Those who indulge in high regard and allow themselves to be dismissive of others are unlikely to earn the respect and trust of their colleagues that is so necessary in everyday work. Even those who are willing to give up their independent status and functionally subordinate themselves back to the CEO for his benefit will hardly be successful.
The Road to Office and the Value of Legal Education
According to the majority of study participants, the corporate secretary community consists primarily of legal professionals. In fact, the path to becoming a corporate secretary often begins with working in the legal field. At the same time, getting into this position is more of a coincidence than a planned career move in about half of the cases.
Since there are not many company secretaries participating in the study who have not been previously involved in the legal work of companies in one way or another, it is easy to conclude that a higher legal education is a mandatory trait of an effective company secretary. However, this question proved controversial.
In the list of qualifications for the positions of managers, specialists and other employees, the requirement for training as a corporate secretary is formulated as follows: “Higher professional (legal or economic) training and special training in corporate governance …”. The Corporate Governance Code mentions that “it is recommended that a person with an advanced legal, business or commercial education be appointed to the position of Corporate Secretary”.
According to many company secretaries involved in the study, higher legal education is essential as day-to-day work is closely related to the law. Questions from the collegial bodies can go beyond company law, so that knowledge of company law alone is not sufficient. In order to be able to form your own opinion, it is important to have both a solid legal basis and knowledge of other areas of law. Relying on the opinion of corporate lawyers is not always safe as they are subordinate to management and protect their interests. In addition, during meetings of the Board of Directors or committees, the Corporate Secretary must promptly respond to questions raised by those attending the meeting. In such a situation, there is usually no time to contact the legal department for a certificate or opinion.
On the other hand, other participants in the study believe that it is enough for a company secretary to have practical knowledge in the field of company law, and higher education can be everything. In some cases, only having a legal education can even be perceived as a disadvantage, since a “fully qualified lawyer” sees limits and risks instead of opportunities and perspectives. Despite the differing opinions, all study participants agree that a corporate secretary should ideally have both a legal education and an economics or business administration education. This combination will make it possible to transfer the work from a purely technical level to a meaningful level.