A director and secretary hold integral roles within a company, and when appointed, both have a burden of responsibility to maintain the smooth-running of a business. Once you’ve completed your company formation, you must know all of your company’s members, including their assigned roles and responsibilities — in particular, a director and secretary.

The Definition of a Company Director

A limited company chooses a company director to manage its daily business activities and finances, ensuring every legal filing requirement is met. A director and a secretary (more on a secretary below) are required to operate with integrity, and abide by the law to make verdicts that better the company as well its members (shareholders). A director can bind the company into valid contracts with third-parties (buyers, lenders, suppliers etc) and act as trustees for a company (but not the individual stockholders).

This is how the Business Directory defines a director:

“An appointed or elected member of the board of directors of a company, who with other directors, has the responsibility for determining and implementing the   company’s policy. A company director does not have to be a stockholder (shareholder) or an employee of the firm, and may only hold the office of director. Directors act on the basis of resolutions made at directors’ meetings, and derive their powers from the corporate legislation and from the corporate legislation and the company’s articles of association.”

With good judgement and experience, a company director should endeavour to make a company successful by promoting and achieving its business goals.

Now here’s a look at the roles of both a director and secretary (see “secretary” section further below):

The Roles of a Company Director

Company directors act as a collective “board of directors”, albeit the board may delegate certain powers to a board committee or an individual company director.

The roles and responsibilities of a company director are set out in the Companies Act 2006, the articles of association, and any service contract that may be in effect between a director and the business.

According to the Companies Act 2006, company directors must:

1. Act Within Designated Powers

A company director must adhere to the company’s constitution and comply with the company’s policy and delegated tasks — this includes the articles of association and wider constitutional issues, such as shareholder/joint venture agreements.

2. Promote the Company’s Success

Although each company’s success is relative, it’s agreeable that a company director will need to actively exercise the dissemination of the company’s values and success to garner longevity and company scalability. In this respect, the legislation states that a director must have regard to, but not limited to, the following:

• The possible consequences of any decision in the long term.
• The interests of the company’s employees.
• The implementation of the company’s business relationships with suppliers, customers and others.
• The company’s impact on environmental and community operations.
• The commitment of ensuring the company maintains a reputation for high standards of business conduct.
• The obligation to act fairly and justly between company members.

3. Carry Out Independent Judgement

A company director must use independent judgement, bearing the responsibility and accountability of making independent decisions. However, the company’s constitution/agreement must still be obeyed.

4. Consistently Exercise Reasonable Skill, Care, and Diligence

A company director is expected to observe the same skill, care, and diligence to the same standards as any other reasonably diligent employee with:

• the general knowledge, skill, and experience that may reasonably be expected of a person carrying out the same functions in relation to the company.
• the general knowledge, skill and experience that possessed by the company director.

Note: A director’s actual understanding and abilities may not be enough if more could reasonably be expected of someone in his or her position, therefore a sense of recognising and adapting to the reality of individual knowledge base is key.

5. Avoid Conflict of Interest

A company director must avoid a situation in which there is/may be a company related conflict of interest — particularly in relation to the exploitation of property, information or opportunity, regardless of whether it would serve to benefit the company.

6. Reject Benefits from Third Parties

A company director must not accept third party benefits. However, no infringement will be recognised if the acceptance cannot be regarded as something likely to cause conflict.

7. Declare Interests in Proposed/Existing Transactions/Arrangements with the Company

A company director has to declare the extent of any interest, transaction, or arrangement with the company (directly or indirectly) to the rest of the company directors.

No infringement will be recognised if:

• A conflict of interest is not likely to occur due to reasonable analysis to determine such a conclusion of the transaction.
• An interest has not been declared because a company director is unaware that they possess the interest, or that the other directors are aware of the interest.

Now let’s conclude the definition and roles of both a director and a secretary with the all-important information associated with a company secretary.

The Definition of a Company Secretary

A company secretary is an officer (individual) who is appointed by a company’s directors to take on the responsibility for ensuring that the company’s legal obligations comply with the corporate legislation.  The Business Directory states:

“A company secretary is not automatically an employee of the firm and, if employed with executive responsibilities, not be its director shareholder. If a firm has only two directors, one may act as its secretary; but a sole director may not.”

The Roles of a Company Secretary

According to the July 2018 UK Corporate Governance Code:

“All directors should have access to the advice of the company secretary, who is responsible for advising the board on all governance matters. Both the appointment and removal of the company secretary should be a matter for the whole board.”

While the roles of a company secretary are not explicitly specified in the Companies Act, they usually have to exercise the following duties:

1. Maintain the Company’s Statutory Books

This includes the register of former and current directors and secretaries, as well as a register of all shareholders and shareholdings (past and present). Secretaries must also maintain the registers of any charges on the company’s assets and also a register of the debenture holders. Additionally, secretaries need to maintain the minutes of general and board meetings.

2. File Annual Returns at Companies House

Other documents which need to be filed by the secretary include the directors’ and auditors’ reports (unless the company is exempt), and financial statements (including details of the company’s assets and liabilities).

3. Arrange Meetings

A company secretary must arrange meetings of directors and shareholders. This includes:

competent and thorough notices of meetings, preparation and compilation of the agenda, dissemination of relevant papers and recording minutes to document the business transacted at the meetings (as well as any decisions taken).

4. Inform Companies House

A secretary must inform Companies House of any significant changes in the company’s structure or management, such as the appointment or resignation of directors.

5. Establish and Maintain the Company’s Registered Office Address

A company secretary must maintain the company’s registered office address as the prime address for any formal communication. They must ensure that the company’s business stationary displays its name, registered number, country of registration and registered address. These details must also be displayed on the company website, emails, order forms and invoices.

6. Ensure the Security of the Company’s Legal Documents

These include: the certificate of incorporation and memorandum and articles of association.

A company secretary must also monitor and decide on the company’s policy for filing and retaining such important documents.

7. Advise Directors on Their Duties

A secretary must advise company directors about their duties and ensure that they comply with corporate legislation and the company’s articles of association.

8. Perform Administrative Duties

Additional administrative duties must be competently carried out by a company secretary, including:

• Dealing with insurance matters
• Working on the company’s pension scheme
• Administration of share schemes
• Working on PAYE and the payroll
• VAT registration matters
• Managing the company’s premises and facilities
• Managing the office
• Ensuring full compliance with data protection and health and safety requirements
• Recognising and exercising intellectual property matters

In a public company, the secretary holds additional responsibility of ensuring there is full compliance with the requirements of the Stock Exchange, the management of the company’s registrars, and compliance with the UK Corporate Governance Code.

Remember…

The difference between a company director and secretary is that a company secretary is an appointment by the company directors. A secretary assists with duties that could increase the company’s efficiency. Almost all the directors’ duties can be assigned to a company’s secretary. However, legal liability for these duties eventually falls upon the directors.

It’s worth noting that a company can have multiple directors (and shareholders) during company set-up and any time thereafter.

If you want to find out more about a company director and secretary, including their roles and responsibilities, contact our professional and experienced company formations team now for fast, friendly, and comprehensive advice