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If you are a company secretary, then your role often involves working closely with the company directors. It’s important to distinguish the rights and responsibilities of a company secretary to ensure your actions are not in breach of the Corporations Act 2001.
A company secretary cannot take on a director’s responsibilities. Their own responsibilities, however, are still vital to a company’s existence. They play a key role in managing the finances of the company, taking notes in directors’ meetings and ensuring the company is compliant in financial areas.
In this article, we’ll discuss the key differences between a company secretary and director, and whether a company secretary can do things like sign a board resolution.
Who Can Be A Director?
Directors manage and oversee the operations of the company. According to the Corporations Act, a director must be someone who is 18 years old or over and must reside in Australia. If the company has multiple directors, at least one of them must ordinarily reside in Australia.
Directors are high-level members of the company, and as such, they are held to strict codes of conduct. These are known as directors’ duties.
A director can be voted out by the shareholders of the company if they are not adhering to what is expected of them.
Who Can Be A Company Secretary?
A company secretary is an officer of the company, and every public company must have one. As a company secretary is not a director, they cannot sign a board resolution.
The one exception to this is if a person simultaneously holds the title of a company director and the company secretary, in which case they will be permitted to sign a board resolution.
Ordinarily though, a company secretary does not possess the authority to sign a board resolution. However, their duties as dictated by the Corporations Act include being involved in board meetings in a different capacity.
For example, section 251A (1) of the Corporations Act states that the company secretary must keep the minutes of the directors meeting in books. A record of the meeting must be kept and signed within one month by the chairperson of that meeting or the chairperson of the next meeting.
Aside from their role in directors meetings, company secretaries are crucial in ensuring the company is compliant with the Australian Securities and Investments Commission (ASIC) regulations. Keep reading to find out more.
What Is A Board Resolution?
When the board of directors make a decision for the company, it’s considered a board resolution. Once a resolution has been voted on and passed, it will be signed by the presiding director. The matters that require approval of the board are generally set out in a company’s constitution or in its shareholders’ agreement.
Board resolutions are usually discussed and voted on at meetings. These meetings require a chair person to be appointed prior to the meeting as they will need to sign the minutes and the resolution.
There are two main types of resolutions:
- Ordinary resolutions
- Special resolutions
Ordinary Resolutions
Ordinary resolutions generally require approval of at least 50% of directors to be passed. They are usually required for important administrative matters such as signing contracts, issuing shares, electing directors, general meeting reports and auditing.
Special Resolutions
Special resolutions need approval of at least 75% of directors to be passed. These are usually required for critical decisions such as where the company wants to wind up its activities, alter its name or change its constitution.
Where Are Board Meetings Held?
The board meetings can be held anywhere (as long as the directors agree to it). Additionally, there is no need for meetings to be in person – they can be virtual!
Section 248D of the Corporations Act allows meetings to be held over the phone or through a video call. The provision states that all directors need to consent to the meeting being held virtually.
It is also imperative that directors come to a meeting, virtual or not, prepared to discuss the meeting’s agenda. In ASIC v MacDonald (2009) two directors failed to see a draft announcement prior to the meeting. According to the judgement delivered by the court, the inaction in doing so was a breach of section 180(1) of the Corporations Act.
Section 180(1) compels all company directors to be familiar with the materials relevant to the meeting. This provision has been created to ensure that directors meetings are not futile.
Once a director has had a chance to go over the materials, they will be able to bring a valid view point to the meeting rather than just deliberate. Thus, it’s part of a director’s duties to come prepared to board meetings.
What Are Your Other Duties As A Director?
A director’s duties are defined by the Corporations Act. To summarise, a director must:
- Act in good faith
- Conduct themselves with care and diligence
- Never use information they have obtained as a director improperly
- Only use their position for the good of the company
- Ensure that their intentions and interest are always clear to avoid conflict
If a director is found to have breached any of their duties, legal penalties such as fines and jail time can be imposed on them.
What Are A Company’s Secretary’s Obligations?
Much like a Director, a company secretary is responsible for acting in good faith and the best interest of the company.
The Corporations Act elaborates on the duties of company secretaries:
- The legislation states that every company must have a secretary
- Directors appoint the secretary whom must be at least 18 years of age
- If there are multiple secretaries then one must reside in australia. If there is only one, their primary residence must be Australia.
- Once they are appointed, they must notify ASIC they have become the company’s secretary
- The secretary is responsible for notifying ASIC of the companies changes to the name, address, identities of the companies directors and ensuring the company lodges their annual return
The Corporations Act 2001 defines the duties of company secretaries as the above, however the responsibilities of company secretaries in modern companies are usually far greater than what the Act suggests.
Need Help?
As ASIC is a key regulator body for companies, it is vital for a company to ensure they are up to date with their requirements.
At Sprintlaw, we offer a Company Secretary Service where one of our expert lawyers manages your ASIC obligations. This way, you can rest assured that your company doesn’t miss any ensuring your company doesn’t fall behind.
Key Takeaways
A company secretary cannot sign a board resolution if they are not also a director – that is a duty exclusively reserved for company directors. The secretaries of a company do, however, play a key role in the financial and compliance aspects of the business. Their role is of growing importance in today’s era of business.
Our expert lawyers can provide a Company Secretary Service for your business to ensure everything is taken care of. If you would like to find out more or have any questions, you can reach our team of legal consultants at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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