According to the Companies Act, Chapter 386 of the laws of Malta (the “Act”), it is not permissible to incorporate a company without having a company secretary appointed. The directors of a company have the power to remove the company secretary without prior notification and they shall appoint another individual in ones stead within fourteen days from the date of removal. In the case of prolonged vacancy, the Board may authorise one of its members to undertake the duties of a company secretary ad interim.
The Act states that a director can be a company secretary but the sole director of a company cannot also be the company secretary. An exception exists where a sole director of an exempt company shall also be entitled to hold office as a company secretary during his directorship. The company secretary is obliged to be an individual. Nonetheless, in the case of an investment company with variable share capital (i.e. a SICAV) the company secretary may be a body corporate.
The Act does not stipulate that any academic or professional qualifications are required to hold the post of company secretary. Notwithstanding this, directors must take all reasonable measures to ensure that the person acting as a company secretary has adequate knowledge and experience to carry out the required functions. However, in practice, appointing a company secretary who is a professional will, in the long run, add value to the board. The company secretary will have the possibility of guiding the directors to focus on specific issues or bring to their attention matters which should not be overlooked. A person shall not qualify for appointment or to hold office as company secretary if one:
- is interdicted or incapacitated or is an undischarged bankrupt;
- has been convicted of any crimes affecting public trust or of theft or of fraud or of knowingly receiving property obtained by theft or fraud; and
- is a minor who has not been emancipated or is subject to a disqualification order.
Without prejudice to the provisions of the Act regulating the appointment and functions of the company secretary, the conditions of holding office shall be determined by the directors. The company secretary shall be responsible for keeping and maintaining a register of members, a register of debentures and such other registers and records as the company secretary may be required to keep by the board of directors. The company secretary is further to ensure that all returns and other documents of the company are prepared and delivered in accordance with the requirements of the Act. The duties of a company secretary relating to meetings are:
- to ensure that proper Notice of the meeting and Agenda are circulated within the notice period (as specified in the Articles of Association);
- to ensure that proxy forms and/or appointment of alternative director forms, if required, are sent to be received in original by the company or any other person up to 48 hours (or as stipulated in the M&A) before the meeting for the appointment to be effective and to be tabled at the meeting;
- to inform the Chairman whether a quorum for the meeting is present and ensures that the meeting proceeds in accordance with the Agenda of the meeting;
- to minute proceedings of the board, general and any other extraordinary meetings held, which are then kept in the company’s Minute Book; and
- to record any resolutions put to vote.
A company may by extraordinary resolution, alter or add to its memorandum or articles (the “M&A”), and it shall be the duty of the directors and of the company secretary to prepare and deliver to the Registry of Companies (the “ROC”) for registration, a printed copy of the resolution within fourteen days after the date of the resolution, together with the respective Form/s, if any, and a revised and updated copy of the M&A as amended by the said resolution, incorporating all the changes of the company. Other changes submitted to the ROC include the change in representation of the company, change in directors and change in object clauses. All documents submitted to the ROC shall be authenticated, hence a document or proceeding requiring authentication by a company may be signed by a director, the company secretary or other authorised officer of the company. A company secretary is also authorised to certify company documents.
The responsibility of the company secretary is to ensure good governance throughout – from inception up to the winding-up of the company. In the case of the winding-up of a company, on the appointment of a liquidator, all the powers of the directors and of the company secretary shall cease.
Anything required to be done by a company under the provision of the Companies Act shall be deemed also to be required to be done by the officers of the company. Therefore, the responsibilities of the Company Secretary may emanate from the Act as per the board’s and company’s exigencies. Most notably, the responsibility for developing and implementing processes to promote and sustain good corporate governance has fallen largely within the remit of the company secretary. Although this mostly applies to listed companies, it is seen as best practice that these standards of corporate governance are also adopted by other companies. The company secretary plays a leading role in good governance by providing support beyond scheduling meetings, managing the agenda and ensuring the presentation of information in advance of meetings in addition to pursuing and managing follow up action points on matters arising. The company secretary nowadays also acts as an interface between the Board and management and is entrusted in communicating with external stakeholders, such as investors, and more often than not is the first point of contact for queries.
By way of conclusion, the role of a company secretary has expanded beyond simply ensuring statutory compliance to becoming a pivotal one. A company secretary can add real value and impact by bringing, to the board and company strategic understanding and softer people skills in addition to their already much sought after legal and governance knowledge.
Author: Rachael Spiteri