Public companies must have a suitably qualified company secretary; however, it is currently optional for private companies to appoint one. This being said, private companies may be obliged to appoint a company secretary if it is outlined within their Articles of Association. Even if the company is not required by law or the company's Articles to appoint a company secretary they may still opt to do so due to the responsibilities that often fall to the company secretary.
The role of the company secretary is flexible in that their responsibilities can be tailored to the requirements of the company. In general the basis of the company secretary’s role is to ensure all of the company documents are up to date and that the firm is complying with the requirements outlined in relevant legislation and guidance, such as the Companies Act 2006 or the UK Corporate Governance Code.
Additional responsibilities of the company secretary vary depending upon the size of the business. For example, within a smaller company the role of the company secretary is likely to be purely administrative, for example filing documents with Companies House and maintaining the company’s registers. However, within a larger corporation the company secretary is likely to carry out a more complex role, organising meetings, advising directors about their legal obligations and communicating with shareholders.
Some of the typical tasks of a company secretary include:
- Statutory filing requirements, for example the annual return
- Maintaining the company register
- Arranging general meetings and board meetings
- Taking minutes at meetings
- Communicating with shareholders
- Ensuring the company name appears in the required locations and that the correct company details are displayed on stationery and correspondence
- Carrying out share transfers and issuing share certificates
- Maintaining a record of group structures within the firm
Within smaller firms, a company secretary may also undertake additional administrative duties, such as payroll, data protection compliance or health and safety. Advisory responsibilities such as legal compliance and corporate governance are more likely to apply to secretaries of large companies, in particular quoted Public Limited Companies.
Directors are responsible for any mistakes made by the company including with regards to their company secretarial responsibilities. Therefore if directors do choose to appoint a company secretary they should be sufficiently knowledgeable to act in the role. It is common for directors to appoint a firm of professional advisers to act as their company secretary, meaning that they are safe in the knowledge that all company compliance matters are dealt with correctly. If you require any assistance with regards to company secretarial matters, please contact our specialist company secretarial team.
What are share classes and how can they differ?
The Companies Act 2006 describes a share simply as a share held in the company. Shares in a company have a ‘presumption of equality’, whereby each of the shares is presumed to have the same rights and liabilities as every other share. However, different share classes arise when the rights and liabilities of shareholders vary. Shares with the same rights and liabilities are considered to be within a ‘share class’. Most companies, particularly small private limited companies tend to only have one share class which is made up of ‘ordinary shares’. Ordinary shares confer the same voting rights and distribution of the company’s wealth to each of the shareholders holding ordinary shares.
Any further share classes will have varied rights and a different name. The names of the share classes can be purely descriptive or can have a legal implication. For example preference shares describe the fact that shareholders within that share class hold some preference over shareholders in another class, for example with relation to dividend distribution. Conversely redeemable shares not only describe the type of shares, but also legally describes the right for the shares to be redeemed at the option of the company or shareholder. It is therefore important to ensure that the name of the share class does not cause any legal confusion.
Three ways that shares are regularly varied by companies include:
- By nominal value – For example a company may have a share class of ordinary £1 shares and another of ordinary £0.01 shares.
- Dividend participation – For example preference shares could have preferential rights to a dividend over the ordinary shares within a company.
- Voting rights – In some cases one class of share may have no voting rights, meaning that all of the voting is decided by a different share class.
Ultimately the rights of shares can be varied in any way the company chooses and there is no limit to the number of share classes that a company has. However the rights attached to the shares should be laid out in the Articles of Association of the company and/or the resolution facilitating the creation of the share class. It is important to ensure that new share classes are correctly implemented to avoid issues with validity later on in the company’s life. If you need any help with deciding on or implementing your share classes please contact a member of our company secretarial team.