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Accountancy  •  Business Services  •  company secretarial  •  governance

The importance of a company secretary for a private company

By RJP LLP on 26 February, 2013

The advent of the Internet has brought about a very strong DIY culture and the potentially misguided perception that you can pretty much take care of anything yourself, with minimal professional guidance. This is prevalent in the areas of company formation and statutory compliance. Entrepreneurs tend to use online facilities to incorporate and take an increasingly relaxed view of their statutory duties as directors.

It is easy to overlook the importance of statutory compliance, especially now that legislation introduced by the 2006 Companies Act makes it optional for a private company to appoint a company secretary. However, for public companies, a company secretary remains mandatory and is becoming a key advisory role with the spotlight on Corporate Governance and Board Effectiveness.

For private companies, having a professional company secretary can be very useful and cost effective. This is because as well as allowing directors to concentrate on what they do best, the company secretary will also ensure the company is actively complying with very strict legal requirements.

What are the duties of a company secretary?

In a nutshell, they take care of a lot of important compliance activities and may be appointed an officer of the company in a private company. A company secretary is effectively the chief administrative officer and is appointed by the company’s directors. He or she is legally responsible for acting on the company’s behalf to undertake specific requirements, which are written into the Companies Act. This will include the preparation and filing of the Annual Return; failure to file an Annual Return may result in the company being struck off and the directors being prosecuted.

The broad range of duties of a company secretary include preparing and filing the following documents with Companies House each year:

-       Annual Returns - giving details of share capital and directorships held;

-       Financial statements - outlining the company’s assets and liabilities;

-       Director’s reports, which, depending on the company’s turnover, may also require a full business review and details of the individual responsible for approving accounts;

-       Depending on company turnover, the company secretary may also need to file an auditor’s report;

Other duties which fall under the remit of the company secretary, include:

-       Maintaining statutory books and records i.e. a register of directors and shareholders and any charges held on the company assets;

-       Safeguarding legal documents including share certificates, certificates of incorporation and other official documentation;

-       Organising board meetings of shareholders and taking formal minutes.

In addition to these duties, the company secretary is required to establish and maintain a registered office for official communications.

In summary, the role of company secretary is a critical one of supporting the directors in ensuring that the company is compliant. Although it is not a requirement that a company secretary of a private company be qualified, it is essential that either the directors performing the function or the person that they entrust it to, is competent. Failure can be costly as professional advice is inevitably required. Increasingly, private companies are opting to engage the services of a qualified company secretary to ensure that they have peace of mind that all compliance is taken care of -  on time and to the correct standards.

To find out more about the wide range of company secretarial services offered by RJP, please contact Colette Reeves by emailing cosec@rjp.co.uk.

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