IQS LOCAL VARIATIONS

ICSA PROFESSIONAL PROGRAMME PART 2

CORPORATE SECRETARYSHIP

Aim

A core responsibility of the Chartered Secretary is as the Company Secretary to the Board. The aim of the module is to specify and assess the essential knowledge and skills involved in taking overall responsibility for the corporate secretarial function in small, medium and large scale organizations.

The practice of corporate secretaryship in this module extends to both the strategic and functional contexts, in advising the Board, in leading teams in secretarial best practice, in ensuring compliance with law and regulation, and in establishing efficient internal communication of Board decisions and external reporting.

Learning outcomes

At the conclusion of this module, candidates will be able to:

  • understand the scope, role and functions of corporate secretaryship and apply them within the employing or client organisation.
  • understand the law and best practice in meetings, apply them in the secretaryship function, and ensure corporate compliance.
  • ensure effective communication and dissemination of information to and from the Board, both internally and externally, for the optimum benefit of the organisation and its needs.
  • be aware of the ongoing responsibilities of the Secretary as an independent professional practitioner within the organisation, and be responsible for continuing personnel development within the secretariat.
  • be aware of, and be responsible for continuing self development in corporate secretaryship as a professional practitioner.

Pre-requisite learning

Evidence of assessed pre-requisite knowledge and understanding in the following disciplines must be demonstrated through the Institute's examinations, or those of equivalent qualifications which have been approved as meeting the Institute's required curriculum and standards:

  • Corporate Law

Learning content

Everything in the Corporate Secretaryshipsyllabus happens in real practice - this may prove challenging for candidates who are not in practice; they should be prepared to put in extra effort when approaching this subject.

Many candidates will end up working in practice for public or private limited companies, or perhaps in private practice (e.g. for a firm of accountants, solicitors or professional registrars) doing day-to-day tasks as a Company Secretary or as an assistant to the Secretary. This is where Corporate Secretaryshipcomes in – the subject is designed to prepare candidates for their professional working career.

There are four core areas within the Corporate Secretaryshipsyllabus. These can be summarized as:

  • The Secretary, the Board, and the Members
  • Corporate Compliance
  • Law and practice of meetings
  • Shares, share capital and share registration

The Secretary, the Board, and the Members

Candidates will be able to gain an understanding of the importance of the role of the secretary and how the Secretary interrelates to others in the organisation, in particular with the Board. The role of Secretary is quite unusual as it can provide direct access the Board of large organisations at a relatively early stage of the candidates career – it is all the more important therefore that the Secretary is equipped with the professionalism that the Board will expect of him/her. This introductory part of the syllabus will therefore serve as a useful foundation to the rest of the subject.

The role of the secretary; functions and duties. Appointment and vacation of office. Relationship with chairman and directors. The secretary as advisor to the chairman and the board.

Dissemination of information and decisions. Appropriate methods (and regulations if applicable) of disseminating information and decisions to directors (e.g. notices, minutes and resolutions) will also be reviewed and these will form an essential tool for the professional Company Secretary.

Communications with shareholders and other stakeholders, including electronic communications. Candidates will need to realise that the increasing use of electronic communications will of course impact their responsibilities. Recent best practice and statutes therefore need to be considered when communicating with shareholders and reliance will be placed on the Secretary to provide advice on the best approach for each individual company.

Types of directors. Roles, duties, responsibilities and liabilities. Appointment, reappointment and rotation. Removal, retirement and disqualification.

It is important to understand the legal role and duties of a director so that the Company Secretary is best placed to provide appropriate advice.

Recognition must also be given to the different types and roles of a director (for example, executive directors, and non-executive directors). Recognition also needs to be given to the additional constitutional powers of the Chairman of the Board. The Secretary is also relied upon by the Board to provide advice on the appointment, re-election and vacation of office of Directors. The rules regarding these matters can be complex and are found both in statute and also in the individual company’s constitution (e.g. Memorandum & Articles) and so a thorough grasp of several matters is required in order to gain a full understanding of this topic area.

Corporate Compliance

Company formation, memorandum and articles of association. Filing of company returns. Offences under the Companies Act (Cap 50). Corporate governance overview. The annual report. Auditors: appointment and removal. Rights of the auditor. The SGX Listing Rules.

Retention of records and statutory registers. This part of the syllabus focuses on the creation of a legal entity and its ongoing compliance. The legal principles learnt in the Corporate Lawsubject will prove useful here as foundation knowledge; however, the main thrust of the section deals with practice and procedure.

The importance of the Memorandum & Articles for a company cannot be underestimated, as it is essentially the company’s own written constitution. The secretary will be expected to have a working knowledge of the Memorandum & Articles and to apply that knowledge in a practical way to a variety of situations.

There are also a host of statutory returns that need to be submitted to the Accounting and Corporate Regulatory Authority (ACRA) and the Secretary needs to have a working knowledge of which corporate events will trigger a filing requirement in addition to the ongoing periodic filing requirements. Most statutory returns have filing deadlines and stipulate the exact information which must be required and it is the Secretary’s duty to ensure that returns are both timely and accurate – the reputation of the company could depend upon it.

In addition to ensuring compliance with the Companies Act, the Secretary should also have a good understanding of possible offences under in order to prevent inadvertent breaches of the law. It should be noted that it is often the Directors of the company that are held responsible for non- compliance with the Companies Act and that they depend upon the Secretary to protect their interests and the reputation of the company to ensure the company remains compliant.

Best practice in corporate governance will only be covered in overview, as there is a separate Corporate Governancesyllabus.

The importance of the Annual Report in terms of its compliance with the Companies Act and also as a shareholder relations tool cannot be underestimated and the Secretary has a pivotal role to play. The Secretary takes responsibility for ensuring that the Annual Report is distributed to those who are entitled by law to receive it and also to other important interested parties. The Secretary also takes responsibility for drafting the Directors’ report, which for some companies still provides a useful “snapshot” of the year in review.

Some candidates will end up working in practice for listed companies and therefore need to be aware of the framework of regulations for listed companies and the general ongoing principles, Continuing Listing Requirements in the SGX Listing Manual. Listed companies must have a higher degree of regulation because of their ready ability to raise capital and have their shares traded on the stock market.

Shareholders, potential investors and other stakeholders therefore need to have a high degree of confidence that a listed company is properly run, not only in accordance with the Companies Act (Cap 50) and best practice, but also to the standards demanded by the SGX Listing Rulesfor listed companies and it is the Secretary’s duty to ensure that this is maintained.

The Secretary is also expected to safeguard, on behalf of the company, important documents such as minutes, Board papers, statutory registers and other agreements. Candidates therefore need to be aware of best practice regarding retention of records.

Law and practice of meetings

Board meetings: composition, roles, procedures (including frequency, notice, quorum, voting, agendas and papers). Role of the company secretary before, during and after board meetings. Delegation of authority and responsibility.

Committees: types and purposes; composition. Matters reserved for the Board. Executive discretion. Co-option.

General meetings: types (AGM, EGM). Class meetings. Regulations governing general meetings.

Composition; role of chairman. Notice periods, quorum, agenda and papers. Resolutions. Standing orders, rules of order, motions, amendment. Proxies. Attendance. Voting. Role of the company secretary before, during and after general meetings. Resolutions in writing. Minutes and minute books.

Secretaries need to be mindful of legal implications and best practice with regards to formal meetings of either the Board or shareholders. This part of the syllabus will prove particularly helpful to those candidates who are not in practice and so have not had the opportunity yet to experience such meetings first hand.

Again, the importance of the company’s Memorandum & Articles will be evident in this part of the syllabus; many of the internal rules regarding the regulation of formal meetings are contained within the company’s constitution and the Secretary will be expected to be an authority on the matter.

The Secretary is also expected to be familiar with the appropriate conduct and management of meetings and be able to advise on ways in which meetings are run so as to be compliant with the law, orderly and fair.

There are also many formal procedures during meetings and the Secretary must be able to “think on his/her feet” to provide appropriate advice – this is therefore a challenging area requiring a good working knowledge at all times.

An important part of the Secretary’s duties is the preparation of documents in advance of meetings and then the formal recording of actions of the meeting. Minutes are relied upon as a reference to what occurred in a meeting and it is therefore vital that the Secretary understands best practice in preparing minutes.

Shares, share capital and share registration

Regulation of the securities industry. Types of shares and loan capital. Markets and listing requirements.

Share capital: allotment of shares, purchase of own shares, treasury shares, alteration of share capital.

The company registrar’s function: principles and procedures in share and membership registration. Register of members, including software applications. Technology based applications. Allotment of shares. Share transfer: forms and registration procedures. Transmission of shares and registration of documents affecting title. Membership in companies limited by guarantee. Issues of share certificates; lost certificates. Indemnity, dividends and interest. Scrip dividends. Stamp Duty. Employee share schemes. New issues and takeovers. Redemption of shares. Rights issues. Capital events and the Registrar’s role in capital events.

The basic concept for this part of the syllabus is that the register of members is a statutory document which must be kept accurate, reflecting any changes that have been brought about through the transfer or transmission of shares, corporate capital events or changes in the personal circumstances of shareholders.

The Secretary takes responsibility for share registration within the company. Quite often, the company appoints a third party registrar to undertake share registration work but that third party is acting as an agent of the company. It follows, therefore, that the Secretary, whether handling share registration directly or via a third party must be fully conversant with all issues regarding share registration.

As noted above, listed companies have a higher degree of regulation and the Secretary must also be capable of handling the more complex requirements.

Share registration often involves direct contact with the company’s shareholders or their representatives in a number of instances which are not straightforward – for example what should the registrar do upon the death of a member, or upon a member’s bankruptcy/insolvency.

In addition to managing the share register, the Company Secretary is also often responsible for managing employee share schemes. These may take the form of all-employee share schemes or selective share option schemes known as “discretionary” schemes. The Secretary must not only be familiar with the different types of schemes and responsible for keeping abreast of developments, but also be able to provide advice to the Board on which type of scheme may be appropriate for their particular company.

Study Materials and Resources

Regulations

Companies Act (Cap 50)

Companies Act Subsidiary Legislations

Securities and Futures Act

The Stock Exchange Listing Manual

The Code on Takeovers and Mergers of Singapore

The Stamp Duty Act

Recommended Reading List

Company Secretarial Practice Manual, ICSA Publishing

Company Secretarial Practice, CCH Asia

Business Essentials, CCH Asia

Web Resources

Accounting & Corporate Regulatory Authority

Monetary Authority of Singapore

The Ministry of Finance

The Singapore Stock Exchange

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