The corporate secretary, glorified clerk or guardian of governance?

Corporate Secretary is a role commonly integrated in the Anglo-Saxon corporate culture. In continental Europe, it’s often seen as an administrative support function only. However, societal expectations, regulatory pressure and court decisions are drastically changing the perception of the corporate secretary, which is becoming a key element for organisations’ success.

The intention of this article is to trigger some reflection on the corporate secretary’s role and its potential. It summarises the nice exchange of ideas between Raphaël Docquier—who is in charge of EGC (Entity Governance and Compliance, corporate secretary services) at PwC Luxembourg, and Pierre Schaubroeck—who holds a solid work experience in corporate secretary matters, performing the role for almost 10 years. 

Defining the corporate secretary 

In the traditional, narrow sense of the term, a corporate secretary is usually appointed by the board of directors to serve as the organiser and record-keeper of both the board’s and shareholders’ meetings. 

It’s a glorified clerk or facilitator in a purely administrative position. But this apparently unexciting role has expanded to include various aspects of corporate governance, ensuring an accurate follow-up,  especially in listed companies. This task calls for understanding matters such as tax, accounting and regulatory compliance. 

The increasing watch and expectations of society on the role of businesses as societal actors are also strengthening the role of the corporate secretary.  

The corporate secretary, though, has to respect a key, unskippable rule: not to take part in the board’s debates, but be a driver to make them more efficient. 

Are organisations appointing a corporate secretary?

In Luxembourg, the company law does not refer directly to this role. Because there is no obligation to appoint a corporate secretary, no legal definition of the role exists yet. 

Corporate secretary is recommended for governance purposes. In Luxembourg, some fund prospectuses refer to the corporate secretary—for instance, in the case of regulated funds—because investors may be entities based in the UK or in the US where corporate secretaries are more common. 

When the corporate secretary is external to the organisation, they exercise their role through a service agreement. When they are part of the organisation, they are usually a senior employee. 

To illustrate better this matter, let’s have a look at our western neighbour. While the Belgian Companies and Associations Code does not mention the corporate secretary, the Belgian Code on Corporate Governance for listed companies does state that the board should appoint one. This person needs to have the necessary skills and knowledge of corporate governance matters and must be in charge of preparing the company’s corporate governance documents.

For non-listed companies, the Corporate Governance Code indicates that the appointment of a secretary is advisable in the case of large companies. 

The corporate secretary’s three key functions

Three roles are played by corporate secretaries, which explains their growing importance.  

The first one is administrative support—convening, logistics, agenda, board packs—prior to any  board meeting. The second is comfort, namely, the knowledge of the rules and both internal and external constraints to assist the board in any decision making process. The third one is protection, which translates into documenting and following up the actions to be undertaken. By combining these three roles, the corporate secretary contributes to the substance of the organisation, compliance and efficiency. 

Moreover, the circles frequented by the corporate secretary—shareholder meetings, board and board committee meetings—also give this guardian of governance a sort of moral authority and access to information that can be used across internal networks. 

“Simplicity is the ultimate sophistication”, the great Leonardo Da Vinci said. Five words encompass one great challenge in financial services: producing content that audiences consume because it’s palatable without being simplistic.

Frameworks, regulation, compliance matters, procedures, aren’t subjects one can find, at first sight, interesting. However, as long as there is an audience willing to trade time for attention, then there is an interest and the motivation to create content that satisfies it.

If the content is a currency, the one with the best interest rate will prevail over the others.

What are the qualifications required to be a corporate secretary?

Some countries differentiate corporate secretaries dealing with varied aspects of the business from the ones who primarily focus on legal matters. 

Whichever the case, a corporate secretary should be a multi-purpose professional, adaptable and with good communication skills because they play a bridging role among different stakeholders. In general, any lawyer or economist could be an efficient corporate secretary. The corporate secretary is a senior in-house role, and the person who holds it must have a long track record, extensive networks, and intimate company knowledge.  

Midway between a lawyer and an economist, current qualifications don’t fully cover the business requirements for this complex role. In Luxembourg, ILA has defined a certification process for corporate secretaries which definitely cope with businesses’ needs. 

The choice between an economic profile or a legal-focused one for a corporate secretary will strongly depend on the sector of activity, the regulatory environment and the organisation’s expectations. For example, the laws and regulations applying to listed companies are numerous and complicated, and specific issues requiring immediate attention arise commonly in board meetings. In this case, a legal background would probably be more adequate.

Insourcing or outsourcing the corporate secretary function

The decision on betting on an in-house corporate secretary or outsource the role is driven by different factors, resources, sector of activity and company culture.

Outsourcing the corporate secretary’s role has clear advantages. Among them, one can cite 1) independence to the organisation, limiting the risk of collusion; 2) expertise, because the professional is specifically trained for this purpose and 3) experience acquired with several clients, and variable implication as per organisations’ needs. Nevertheless, being an outsider can limit the interactivity with some levels of the organisation as well as access to information, although digitalisation is strongly reducing these limitations.

An in-house corporate secretary is more recommendable for operational, industrial or listed financial companies because of the level of intimacy that’s normally required in these cases, and the significant workload.

Future legislation on corporate secretary,  would it be helpful?

The creation of a legal framework for the corporate secretary function as it exists for lawyers, independent auditors or chartered accountants may be an opportunity. This would back up the usefulness of the function and ensure quality services (through certification).

In addition to this, the insertion of the role in the company law would be interesting as well. By legally framing the scope of the corporate secretary’s role, it gives them the option to act according to the law for specific actions such as registrations or certifications.  

On the other hand, one may consider that the corporate governance codes and the companies’ by-laws provide sufficient guidance on the position of the corporate secretary, and that specific legislation on the subject may not be required. 

What we think

The corporate secretary is the most suitable person to make corporate governance a reality because they are natural privileged intermediaries between decision makers and management. They do not bring only specific answers to organisations’ challenges but governance to face them more efficiently. It is time to recognise the added value of this function that often remains in the shadow.

The Corporate Secretary holds a highly sensitive position in the company, and utmost attention should be given to the selection of the holder. All the same, the paucity of legislation on the subject offers flexibility in organising the job to fit a company’s requirements.

You can find the full interview here!