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CCA > P1 - 1. Role of the CoSec > Flashcards

P1 - 1. Role of the CoSec Flashcards

1
Q

What does.270 state?

A

A private company is not required to have a company secretary

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2
Q

What does s.271 state?

A

A public company must have a secretary

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3
Q

What does s.273 state?

A

(1) The directors of a plc must make sure, as far as reasonably possible, that the secretary,
(a) is a person who appears to them to have the proper knowledge and experience to carry out the functions of cosec
(b) has one of the following qualifications

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4
Q

What is the UK Corporate Governance Code (Governance Code), what does it drive and in which companies?

A

Collection of best practice for the processes and oversight

Drives the highest standards of leadership, accountability and behaviour

In listed companies

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5
Q

Historical growth of the CoSec?

A

Companies Act (1948)

Court case in the Court of Appeal Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971])

CA (1980) – Role filled by suitable qualified person (plc member of specified professional body)

1992 – The Cadbury Report

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6
Q

Where does the CoSecs authority derive?

A

Employment contract (unlike directors, which derives through authority under CA and associated legislation)

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7
Q

What benefit may it serve to appoint a corporate company as a CoSec?

A

Facilitates the use of multiple signatories if sole director

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8
Q

What types of corporate bodies appoint a company secretary?

A

A partnership
A LLP

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9
Q

What are the core duties of the company secretary?

A
  1. Board meetings
  2. General meetings
  3. Memorandum & Articles of Association
  4. UK Listing Authority requirements
  5. Statutory registers
  6. Statutory returns (share capital returns, amended articles
  7. Directors duties and transactions (service contracts, directors long term incentive plans)
  8. Corporate governance (Board Effectiveness)
    Report and accounts (annual reports, statements)
  9. Share registration
  10. Shareholder comms
  11. Share and capital issues and restructuring
  12. Maintenance of the share capital and distribution
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10
Q

What are the additional duties of the company secretary?

A

Legal - commercial law, intellectual property, pensions law, ABC

Accounting - payroll, treasury, taxation

Personnel & employees - SAYE Schemes, H&S

Financial services - ML, Investment trusts, CDD

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11
Q

What are the categories of CoSec duties?

A

Statutory requirements (CA, 2006)

Legislative duties (Articles)

Three broad categories (The Board, The Company, The Shareholders)

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12
Q

What are the CoSec duties in relation to The Board? (The UK Corporate Governance Code, requirements to an effective board)

A

Board procedures are in place and adhered to

Relevant papers are circulated to board members in advance of meetings

Provide support and guidance to directors both as individuals and as a collective with particularly NED’s

Monitor and guide company’s corporate governance policies

Ensure procedure for the appointment of directors is properly carried out;

Assist in induction of directors, including assessing the specific training
needs of directors/executive management;

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13
Q

What are the CoSec duties in relation to The Company?

A
  • listed company = compliance with the FCA, Prospectus, and Disclosure and Transparency Rules (‘LPDT Rules’)
  • ensure compliance with statutory and regulatory requirements
  • regard for specific business interests of the company (regulatory framework will be different if bank, charity etc)
  • assist with implementation of corporate strategies
  • ensure board’s decisions and instructions are properly carried out and communicated
  • provide a central source of guidance and advice within the company on business ethics, good corporate governance and legal and regulatory compliance

(for example with regard to share dealing by directors and staff and the application of the Model Code.)

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14
Q

What are the CoSec duties in relation to The Shareholders? (4)

A

Centre of matters of the company, shareholders or stakeholders

communicate with shareholders and ensure regard to their interests;

  • primary point of contact (often via the share registrar) for all shareholders and proxy voting/corporate governance advisers
  • improve engagement dialogue between investors and the company.

The UK Stewardship Code sets out the principles of effective stewardship by investors.

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15
Q

What are the company secretarys fiduciary duties?

A

Duty of loyalty.
Duty not to make secret profits.
Duty to act with care and skill.
Duty to avoid conflicts of interest

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16
Q

Qualifications required for the CoSec of a private company?

A

No professional or other qualification

nor have any previous experience are required

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17
Q

Qualifications required for the CoSec of a public company?

A

Under s.273 directors must ensure cosec has necessary knowledge and experience and meets the qualification requirements

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18
Q

What are the four categories of persons who are automatically deemed to have the relevant qualifications to be appointed as company secretary of a public company?

A
  • a barrister, advocate or solicitor, called or admitted in any part of the UK;
  • a member of the following bodies: CGI (Chartered Accountant), Institute of Chartered Accountants in England and Wales (ICAEW), (ICAS), (ACCA), (ICAI), (CIMA) (CIPFA);
  • a person who by being a member of any other body or having held any position appears to the directors to be capable of discharging the functions of the company secretary; and
  • a person who, for at least three of the five years immediately preceding their appointment as company secretary, held the office of company secretary of another public company
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19
Q

Who is prohibited from acting as company secretary?

A

The auditor of a company and any employee of the auditor (CA2006 s. 1214).

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20
Q

What is the appointment process for a company secretary that takes two forms?

A
  1. The company secretary may be appointed with effect from the date of incorporation by virtue of being the person named as company secretary on Form IN01 and is deemed the first CoSec of the company (not obligatory for private company)
  2. In all other cases and whether the appointment is as company secretary to a public or private company, the appointment is made by the directors in accordance with the provisions of the Articles and CA2006 ss. 275–8.
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21
Q

What are sections 275-278 of CA 2006

A

s.275 - Duty to keep register of secretaries

s.276 - Duty to notify registrar of changes

s.277 - Particulars of secretaries to be registered: individuals

s.278 - Particulars of secretaries to be registered: corporate secretaries and firms

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22
Q

What is an AP03?

A

Form used to appoint an individual as secretary

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23
Q

What is an AP04?

A

Form used to appoint a corporate body/ firm as a secretary

24
Q

What is a CoSecs resignation subject to?

A

Any service contract in force

25
Q

How may the board remove and replace the company secretary?

A

Simple majority

26
Q

Does the removal from office of a cosec require termination of employment?

A

Only if their contract stipulates that they are specifically employed as company secretary

26
Q

What procedures should be followed regardless of whether the cosec has resigned or been removed?

A
  • In the case of a removal, the directors must approve a resolution to remove the company secretary, either at a meeting or by written resolution.
  • The fact of the resignation or removal of the company secretary must be entered in the company’s register of directors and secretaries and notified to the Registrar using Form TM02,within 14 days of the resignation or removal (CA2006 ss. 276 and 277).

The form can be filed either in paper form or electronically. If an election to hold the register of secretaries on the central register maintained by the Registrar is in force, there is no obligation to update the company’s own register and the obligation to notify the Registrar of the resignation under CA2006 s. 276 is replaced by a matching obligation under CA2006 s. 279D.

  • If the company secretary is an authorised signatory on the company’s bank account, notification of the change in company secretary should be given to the bank.
27
Q

When should a new cosec be appointed?

A

Public – as soon as practical

Private – as position is optional, no urgency to replace appointed cosec

28
Q

Who are the two people the cosec may report in to?

A

The Chair
CEO

29
Q

What does the Governance Code recommend the CoSec reports into the chair on?

A

All board governance matters

30
Q

What does the Governance Code recommend the CoSec reports into the CEO or another line manager (legal counsel) on?

A

Executive responsibilities `

31
Q

What are some of the responsibilities of the cosec included in the Governance Code and associated guidance (governance focused)?

A
  • advising the board on all governance matters;
  • supporting the board to establish the necessary policies, processes, information, time and resources to function effectively and efficiently;
  • ensuring that board procedures are complied with;
  • ensuring good information flows within the board, its committees, between senior management and non-executive directors;
  • facilitating induction, board training and board professional development;
  • ensuring that the directors and, in particular, the non-executive directors have access to independent professional advice at the company’s expense where they judge it necessary in the performance of their duties; and
  • together with the chair, periodically reviewing corporate, board and committee governance and considering any improvements or initiatives that could strengthen these governance processes.
32
Q

Who does the cosec advise?

A

The Chair and Directors

33
Q

In addition to the governance role, what are some of the compliance duties of a cosec?

A

Maintaining the company’s statutory registers

Ensuring filings are made promptly and on time with Companies House.

Taking and drafting minutes of board and committee meetings

Co-ordinating and drafting the non-financial parts of the annual report and accounts such as the strategic report, directors’ report, remuneration report

Convening and managing meetings of the members.

34
Q

Who does the cosec advise?

A

The Chair and Directors

35
Q

What are the benefits of electronic collation and distribution of board packs?

A

Savings in time, cost and significantly enhanced levels of security.

Environmental benefits through the reduced use of printing, paper, and couriers.

Ability to issue updated reports directly to directors’ laptops or tablet devices.

36
Q

When board meetings occur regularly, what are likely standing items?

A

Finance update, business development, risk management, H&S

37
Q

What should cosec do before the board meeting?

A

Enquire with directors and senior executives if any matters they wish to be discussed or brought to the attention of the board

38
Q

What things should the cosec keep a note of during the board meeting?

A

Persons present
Apologies of absence
Details or anyone joining or leaving
Quroum is present
Notes on actions decided
Decisions reached and appropriate justification

39
Q

What should the minutes provide?

A

Accurate summary of matters discussed

40
Q

What are some examples of a notifiable event?

A

Payment of a dividend on the companies shares

Yearly or half-yearly accounts approval

Decision for the appointment or resignation of a director

An issue of shares or debentures

Postponement of the payment of a preference dividend or of interest

41
Q

What should happen following a board meeting if a decision with regard to a notifiable event has been made?

A

An announcement via a regulatory information service (RIS) must be made as soon as possible.

42
Q

As the cosec would usually be aware in advance of a meeting that a notifiable event is likely required what should they do to prepare?

A

Draft announcement available for approval by the board for immediate release following the meeting.

43
Q

Post meeting actions?

A

Preparation of minutes of the meeting
Once approved minutes may be circulated to directors

44
Q

What is schedule 4 of the CA 2006?

A

Documents and information sent or supplied to a company

45
Q

Who does schedule 4 of the CA 2006 not apply to?

A

Communications from another company, even one that is a member

46
Q

Which part of the Companies Act is relevant to communication by a company (company to company communication)?

A

Schedule 5

47
Q

Who does schedule 5 apply to?

A

The companies communications to its members

Any other company such as a corporate director, supplier or a company it itself is a member of.

48
Q

What is s.333 or 333A?

A

Members other than corporate members, may send documents electronically means to the company

if it has agreed, generally or specifically, or can be deemed to have agreed as set out in any provision of the Act

49
Q

What is the default method of communication?

A

Hard copy other than for communications being forwarded to a third party where the default method is via a website. A member reviewing a communication by electronic means has the right to request a hard copy version free of charge (CA2006 s. 1145).

50
Q

How might minutes of directors’ meetings differ between a regulated and unregulated company?

A

Minutes of a regulated company will often be more detailed and contain details of challenges, reviews and reports in the decision-making process

51
Q

Is it good practice to permit directors to amend meeting minutes to reflect what they meant to say?

A

No

52
Q

Can companies print documents in very small ‘fine print’?

A

Documents must be legible with the naked eye

53
Q

Can companies unilaterally decide to issue their report and accounts by email only to their members?

A

No. Consent is required and members can elect to receive a hard copy

54
Q

What does s.273 (2) state?

A

2)The qualifications are—

(a)that he has held the office of secretary of a public company for at least three of the five years immediately preceding his appointment as secretary;

(b)that he is a member of any of the bodies specified in subsection (3);

(c)that he is a barrister, advocate or solicitor called or admitted in any part of the United Kingdom;

(d)that he is a person who, by virtue of his holding or having held any other position or his being a member of any other body, appears to the directors to be capable of discharging the functions of secretary of the company.

55
Q

What does s.273 (3) state?

A

3)The bodies referred to in subsection (2)(b) are—

(a)the Institute of Chartered Accountants in England and Wales;

(b)the Institute of Chartered Accountants of Scotland;

(c)the Association of Chartered Certified Accountants;

(d)the Institute of Chartered Accountants in Ireland;

(e)the Institute of Chartered Secretaries and Administrators;

(f)the Chartered Institute of Management Accountants;

(g)the Chartered Institute of Public Finance and Accountancy.

CCA (16 decks)

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