How your business would benefit from appointing a company secretary

Jun 12, 2024 | News

In South Africa, private companies are not legally required to appoint a company secretary unless stipulated in their Memorandum of Incorporation (MOI). However, the appointment of a company secretary can be highly beneficial for the governance and compliance of the company.

Legal Requirements

While the Companies Act 71 of 2008 mandates the appointment of a company secretary for public companies and state-owned enterprises, private companies are generally exempt from this requirement unless specified in their MOI. For companies that choose to appoint a company secretary, the following conditions must be met:

  1. Qualifications and Experience: The individual or entity must possess the necessary knowledge, experience, and qualifications to perform the duties effectively. This typically includes a background in law, and commercial and corporate lawyers who are well versed in the Companies Act and company law principles are best placed to fulfil this role.
  2. Independence: The company secretary should act independently and be capable of providing unbiased advice to the board.
  3. Residency: The appointed company secretary must be a South African resident.

Duties and Responsibilities

The role of a company secretary encompasses various administrative and compliance functions, including:

  • Corporate Governance: Ensuring that the company complies with the Companies Act and other relevant legislation.
  • Board Support: Organising board meetings, drafting board and shareholder resolutions, preparing meeting notices and agendas, and recording minutes, as well as vetting and preparing important company documents such as MOIs and Shareholder Agreements.
  • Statutory Records: Maintaining the company’s statutory registers and records.
  • Communication: Acting as an independent communication link between the board, shareholders, and stakeholders.
  • Compliance: Filing annual returns and other necessary documents with the Companies and Intellectual Property Commission (CIPC).

Benefits of Appointing a Company Secretary

Appointing a company secretary, even when not legally mandated, offers several advantages:

  1. Enhanced Compliance: A company secretary ensures that all regulatory requirements are met, minimising the risk of legal penalties and fines.
  2. Improved Governance: Company secretaries have expertise in corporate governance which helps in the implementation of best practices, thereby strengthening the company’s governance framework.
  3. Efficiency: By managing administrative and compliance tasks, the company secretary allows directors to focus on strategic decision-making and the day-to-day operations of the company.
  4. Stakeholder Communication: The company secretary can serve as a crucial link between the board and shareholders, enhancing transparency and trust.
  5. Risk Management: A proactive management of compliance and governance issues helps in identifying and mitigating potential risks.

While a private company in South Africa may not be legally obligated to appoint a company secretary, doing so can provide significant benefits that enhance compliance, governance, and operational efficiency. By entrusting this critical role to experienced professionals, companies can ensure that their administrative and regulatory responsibilities are met with the highest standards of integrity and efficiency.

Article By Marcus Schaefer | Senior Associate