By Caroline Scott, Marketing Manager, CGISA
In today’s complex corporate landscape, the role of the company secretary extends far beyond administrative duties and compliance tasks. As the custodian of corporate governance, the company secretary is uniquely positioned to champion ethical conduct and accountability within an organisation.
The role of the company secretary in promoting good governance
A company secretary is a key advisor to the board on governance matters. They ensure that the organisation adheres to regulatory requirements, best practices, and ethical standards. Their influence in shaping the corporate governance framework includes:
- Educating the board: Company secretaries provide training and guidance on governance best practices, ensuring that directors understand their fiduciary responsibilities.
- Ensuring compliance: They oversee adherence to corporate laws, regulations, and ethical guidelines, ensuring that governance policies align with legal frameworks.
- Encouraging ethical leadership: They play a key role in embedding a culture of integrity by advocating ethical decision-making at all levels.
- Managing stakeholder engagement: They act as a bridge between the board, shareholders, regulators, and other stakeholders, ensuring that governance principles are upheld.
Helping boards to complement governance principles
Boards may sometimes resist governance improvements due to entrenched interests, a lack of awareness, or concerns over increased scrutiny. Company secretaries can navigate this resistance by:
- Presenting a strong business case: Demonstrating how good governance leads to better risk management, improved investor confidence, and long-term sustainability.
- Leveraging external benchmarks: Using case studies, regulatory trends, and governance failures in other organisations to illustrate the risks of non-compliance.
- Building alliances: Gaining support from independent directors, auditors, or regulators to reinforce governance principles.
- Utilising soft influence: Through consistent advocacy, well-crafted board papers, and private discussions, company secretaries can subtly shift boardroom culture toward better governance.
What to do when witnessing unethical or illegal activities
If a company secretary becomes aware of unethical or illegal activities within the board, they have a professional and legal duty to act. Steps to take include:
- Documenting concerns: Keeping detailed, factual records of observed misconduct, including dates, discussions, and decisions.
- Engaging the chairperson or senior independent director: Raising concerns privately with the chairperson or an independent director to address issues internally.
- Consulting legal and compliance teams: Seeking advice from legal counsel or the company’s compliance officers on the best course of action.
- Using whistleblowing mechanisms: If internal efforts fail, utilise formal whistleblowing channels, such as ethics hotlines or regulatory bodies.
- Escalating to regulators: If the company continues to engage in illegal activities, report it to relevant authorities such as corporate regulators, auditors, or financial oversight bodies.
- Considering resignation: In extreme cases, where the company remains unresponsive to ethical concerns, stepping down may be necessary to maintain professional integrity. Being caught up in a scandal can be career-ending.
The company secretary is not merely a procedural officer but a guardian of corporate integrity. By standing firm in the face of resistance and taking decisive action against unethical conduct, they play a crucial role in ensuring that corporate governance remains a driving force for sustainable success. In a world where accountability is increasingly under scrutiny, the company secretary must be the voice of integrity, even when it is uncomfortable or challenging to do so.
