LESSON 12:

The company secretary

1 Introduction
Company secretaries are particularly important prescribed officers. The perception many students
have regarding company secretaries is completely wrong. Company secretaries do not just type letters
and make tea! Company secretaries as the principal administrative officers in companies need to
be knowledgeable about all legislation applicable to companies. They must be informed to such an
extent that they can advise directors of their legal duties and those of the company. In this lesson, you
learn how a company secretary is appointed, what his or her duties and functions are, and how a
company secretary can be removed from office.

You will know that you understand this lesson when you are able to answer the following key
questions:
• What type of company must appoint a company secretary?
• Who is disqualified from appointment as a company secretary?
• What are the duties of a company secretary?
• How can a company secretary be removed?

2 Mandatory appointment of company secretary

Prescribed study material

The company secretary is the principal administrative officer of his or her company. Every public
company or state-owned enterprise must appoint a company secretary who is knowledgeable about,
or experienced in, the relevant laws. A private company, personal liability company or a non-profit
company may voluntarily appoint a company secretary.
The first company secretary of a public company or state-owned enterprise may be appointed by
• the incorporators of the company; or,
• within 40 business days after the incorporation of the company, by either the directors of the
company or an ordinary resolution of the company’s shareholders (section 86(3)).
Within 60 business days after a vacancy arises in the office of company secretary, the board must fill
the vacancy by appointing a person whom the directors consider having the requisite knowledge and
experience.
Every company secretary must be a permanent resident of the Republic and must remain so while
serving in that capacity.
3 Disqualification to serve as company secretary

Prescribed study material

A person who is disqualified in terms of section 69(8) to serve as a director of a company may not
be appointed as a company secretary.
A person is disqualified from being appointed as a company secretary if he or she:

• has been prohibited from being a director or has been declared to be delinquent by a court
order;
• is an unrehabilitated insolvent;
• is prohibited in terms of any public regulation from being a director of the company;
• has been removed from an office of trust on the grounds of misconduct involving dishonesty; or
• has been convicted, in the Republic or elsewhere, and imprisoned without the option of a fine, or
fined more than the prescribed amount, for theft, fraud, forgery, perjury, or an offence (i) involving
fraud, misrepresentation or dishonesty; (ii) in connection with the promotion, formation or
management of a company; or (iii) under the Companies Act or some other Acts listed in the
section.
Section 87 provides that a juristic person or partnership may be appointed to hold the office of
company secretary, provided that every employee of that juristic person, or partner and employee of
that partnership, as the case may be, satisfies the requirements contemplated in section 84(5), and at
least one employee of that juristic person, or one partner or employee of that partnership, as the case
may be, satisfies the requirements contemplated in section 86.

4 Duties of the company secretary

Prescribed study material

Section 33(3) of the Companies Act provides that every company must, in its annual return, designate
a director, employee or other person as the company’s compliance officer. Therefore, in the case of a
company having a company secretary, the company secretary will automatically be the compliance
officer. Section 88 of the Companies Act provides that a company secretary is accountable to the
company’s board.
The company secretary’s duties include, but are not restricted to,
• providing the directors of the company collectively and individually with guidance as to their
duties, responsibilities, and powers
• making the directors aware of any law relevant to or affecting the company
• reporting, to the company’s board, any failure on the part of the company or a director to comply
with the Companies Act
• ensuring that minutes of all shareholders’ meetings, board meetings and meetings of any
committees of the directors, or of the company’s audit committee, are properly recorded in
accordance with the Companies Act
• certifying, in the company’s annual financial statements, whether the company has filed required
returns and notices in terms of the Companies Act, and whether all such returns and notices
 appear to be true, correct and up to date
• ensuring that a copy of the company’s annual financial statements is sent, in accordance with
the Companies Act, to every person who is entitled to it
• carrying out the functions of a person designated in terms of section 33(3) (i.e., a person
responsible for filing the company’s annual return).

5 Resignation or removal of company secretary

Prescribed study material

In terms of section 89(1), a company secretary may resign from office by giving the company one
month’s written notice, or, with the approval of the board, less than one month’s written notice. If the
company secretary is removed from office by the company’s board, the company secretary may
require the company to include a statement in its annual financial statements relating to that
financial year setting out the company secretary’s contention as to the circumstances that resulted in
the removal.

6 Registration of company secretaries and auditors

Prescribed study material

In addition to the record of company secretaries and auditors that a company must keep, section 85
of the Companies Act also requires every company that appoints a company secretary or auditor to
file a notice of the appointment, or the termination of such an appointment, with the Registrar within
ten business days after the appointment or termination, as the case may be. Section 85(4) allows the
incorporators of a company to file a notice of the appointment of the company’s first company secretary
as part of the company’s Notice of Incorporation.

➔ Reflection

Company secretaries must ensure that they know the latest developments in the law relating to
companies. They are advisors to the directors and the chief administrative officer. Note the
requirements for the appointment, resignation, and rotation of auditors, as well as their rights and
restricted functions. The Auditing Profession Act regulates auditors’ conduct. A public company or
state-owned enterprise must appoint a company secretary. Secretaries and auditors must be
registered.
All these legislative principles would mean little if they are not enforced. In the following lesson,
we look at the different mechanisms provided for in the Companies Act to ensure effective
enforcement of its stipulations.