Company Secretary

FUNCTION OF A COMPANY SECRETARY

A company secretary is recognizes as one of the principal officers of the company. The company secretary is the

person who entask the compliance of the corporate laws. He is also responsible for managing the various statutory

meetings of the company. The code of Corporate Governance which is now a part of the listing regulations of all

Stock Exchanges sets various responsibilities of a company secretary in relation to compliance of corporate laws and

code of Corporate Governances. The qualification of a company secretary was not previously defined under the

Companies Ordinance, 1984 however, the code of Corporate Governance prescribes the qualification of a company

secretary of a listed company. The knowledge and training makes a company secretary versatile to carry out various

functions in finance, accounts, legal, administrative and personnel areas in addition to his own secretarial duties and

responsibilities. In fact his role starts from the very moment when the idea of formation of a Company is conceived.

The Securities and Exchange Commission of Pakistan (SECP) has observed that the role and
responsibilities of the company secretaries has been expanded beyond simply ensuring statutory
compliance and their portfolio responsibilities covers corporate governance, risk management and role
of Board advisor.

Sources told Business Recorder here on Thursday that one of the key responsibilities of Board of the
company is to delegate authority to competent management, monitor and evaluate the implementation
of policies, strategies and business plans. The position of the company secretary is thus key senior
management position that enables Board to have a holistic view of the governance framework. As a
result Company Secretary is generally tasked with the responsibility of ensuring that this framework and
any supporting policies and procedures are clearly documented. This should include ensuring that the
formal documentation and legal responsibility posed through the regulatory ambit are in place.

The Company Secretary is required to fulfil traditional responsibility of administrative nature in Company
i.e. servicing meetings of the Board and committees, producing agenda and minutes, ensuring effective
flow of information, advising the Board through the Chairman on all governance matters and other
matters relating to Board effectiveness. Moreover, communicating with shareholders through circulars,
dividend payments, most importantly engaging with major shareholders, particularly on corporate
governance issues e.g. Board composition, succession and remuneration is part of responsibilities of
Company Secretary.

The responsibilities of the modern day company secretary have now evolved from that of a note taker
at board meetings or administrative servant of the Board to one which encompasses a much broader
role of acting as Board advisor and issues such as corporate governance, risk management etc. have
been added in his portfolio of responsibilities. Moreover, globalization and the acceptance of globally
harmonized reporting standards, now and in years to come, are bound to have significant effect on office
of Company Secretary, they said.

At present, capital market players are looking beyond their home ground for financial resources. Therein,
maintaining a robust capital market is quite a challenge for regulator as well as it seeks clarity and
reliability of information being presented by companies to stakeholders. At Company level, Company
Secretary has to play the said challenging role.

The business decisions assert the increased role of the Company Secretary as a person drawing focus of
Board on liquidity, capital, risk management, regulatory compliance of the Company. This focus aids the
Board in channelizing resources to take advantage of strategic opportunities, specifically at a moment
when the industry grows risk-averse. Thus Company Secretary is as the moral rudder and compass of the
organization. This is even more significant in context of Pakistan where legal liability of Company
Secretary is defined in regulatory ambit. Board and senior management also reinforce the presumption
that Companies are now looking beyond mere technical competency and prowess in Company Secretary.
Instead, firms are looking for those individuals who can handle the unknowns that lie just around the
bend, who bring not only experience but also the abilities and instincts to see around corners. Moreover,
the Company Secretary must be able to ask tough questions.

The regulator has a keen eye to financial reporting supply chain, comprising people and processes
involved in the preparation, approval, audit, analysis and use of financial reports. All links in this chain
embrace standards of excellence specifically in financial reporting. Effectively this cycle starts from
preparation of records by CFO and ends with presentation of same by Board before shareholders and
other perspective investors that access publically available financial information in order to make
informed economic decisions. In this perspective, the role of Company Secretary as part of management
is extensive, as effectively, shareholders place their trust on the Board which is lead through senior
management team including the Company Secretary.

The SECP law requires corporate officers to assume responsibility for the actions of the company and
regulator has the responsibility to ensure that the integrity of the law is maintained and that those who
breach the law are made accountable for their actions. Consequently, Board is expected to be vigilant in
identifying problems and seeking to improve the integrity of corporate environment. Currently,
Companies Ordinance, 1984 as primary corporate law in Pakistan instills accountability in officers of
company including some direct responsibility on Company Secretary. But mere laws and prescriptive
rules are not necessarily the conclusive answer. In this regard, developing a culture that embraces virtues
of good corporate governance and contributes to corporate performance and shareholder value is the
step in right direction.

The SECP has also actively synergized with market participants for discussing various regulatory
intervention, Code of Corporate Governance for listed companies and most recently Principles of
Corporate Governance for unlisted companies. This includes discussion on introducing mandatory
qualification criteria for CFOs and Company Secretary. Clarity of their role and responsibilities has also
been made part of Code of Corporate Governance. Companies have positively responded to inculcation
of corporate governance approach. SECP has given its vision behind good corporate governance is
commitment by companies to the outcomes of corporate practices rather than simply a focus on the
process of compliance. Hence a good performing company or market will not simply comply with the
relevant rules and regulations. It will be engaged in practices, that promotes a culture of good
governance and effective checks and balances. This requires firm commitment from all market
participants including Board, senior management, Company Secretary and CFOs to improve the
substance of governance, which will necessarily involve a commitment to strong internal controls, audit
efficacy and independence and the improvement of actual disclosure practices.

The SECP has recognized that the focus of the company secretarys responsibilities will differ depending
on the type of company, whether it is public or private, and also depending on the industry. No matter
what is the type organisation, the role has expanded beyond simply ensuring statutory compliance to
become a pivotal one where the skills of the company secretary are directly impacting the effectiveness
of the Board and organization. Company secretaries can add real value to their role and increase their
impact by bringing commercial acumen, strategic understanding and softer people skills in addition to
their already much sought after legal and governance knowledge.

In future, the role of Company Secretary will be foreseen increasingly to lead from the front, to be an
important contributor to strategy and of advice to the Board. Lesson must be learnt from history when
the role of Board, Company Secretary and CFO was limited to more of trouble shooting and less on
financial integrity that facilitated corporate collapses. The role of management as value addition is
essential to avoid corporate collapses, they added.