Is a Company Secretary a Director?

Ever wondered about the difference between a company secretary and a director?

Or perhaps you’re curious if one person can wear both hats?

A company secretary is not a director. While both roles play important functions within a company, they have distinct responsibilities and legal standing.

A director is a person who has been appointed to manage and oversee a company’s affairs. They are responsible for making strategic decisions, ensuring compliance with legal requirements, and representing the company to the public.

A company secretary is an administrative role that involves handling various legal and administrative tasks. They are responsible for ensuring that the company complies with corporate governance regulations, maintaining accurate records, and providing support to the board of directors.

In this, we will delve deeper into the specific responsibilities of a company secretary and how they differ from those of a director.

What Does a Company Secretary Do?

A company secretary plays a pivotal role in the smooth running of a limited company. Their responsibilities are diverse, ranging from maintaining records of directors and shareholders to ensuring compliance with corporate legislation and the company’s articles of association.

They also play a crucial role in organising the company’s Annual General Meeting, ensuring that all necessary documents are circulated in a timely manner. This role requires a keen eye for detail and a deep understanding of the company’s operations.

While the role of a company secretary is not mandatory in a private limited company, their expertise can be invaluable in managing the administrative tasks and legal obligations of the company. Their duty to the company is to ensure that all operations are conducted within the legal framework, providing a sense of security and stability.

Who Can Be a Company Secretary?

Anyone can serve as a company secretary in a private limited company, provided they have the necessary knowledge and experience.

The company’s auditor or an ‘undischarged bankrupt’ (unless they have court permission) cannot be a company secretary.

In public companies, the company secretary must hold a professional qualification or membership to a governing body, such as an accountant or solicitor.

How to Appoint a Company Secretary

Appointing a company secretary is a decision that should be made with careful consideration. The person chosen for this role will have a significant impact on the smooth running of the company. The process of appointing a company secretary varies depending on the type of company.

For a private limited company, the directors have the responsibility to choose a suitable individual. This person should ideally have knowledge and experience relevant to the role. It’s important to note that while anyone can be a secretary in a private company, the company’s auditor or an ‘undischarged bankrupt’ cannot hold this position unless they have permission from the court.

In contrast, public companies require the company secretary to have a professional qualification or membership to a proper governing body, such as an accountant or solicitor. This ensures that the person in this role has the necessary skills and expertise to fulfil their duties to the company.

What Does a Company Director Do?

A company director holds a pivotal role, entrusted with the responsibility of managing the company’s affairs. They are duty-bound to make decisions that are in the best interest of the company, a fiduciary duty that extends beyond mere management.

Their responsibilities also encompass ensuring the company’s compliance with legal obligations. This includes meeting crucial deadlines such as the submission of the Company Tax Return and annual accounts.

Who Can Be a Company Director?

A person must be at least 16 years old to be a director of a company.

They should not be disqualified from holding a directorship.

There is no requirement for the director to reside in the UK, but the company must have a UK registered office address.

The director’s personal information, including their name and service address, will be publicly available on the Companies House register.

How to Appoint a Company Director

Appointing a company director is a significant process that requires careful consideration. The individual must be at least 16 years old and not disqualified from holding such a position. The appointment is usually made through a resolution of the board of directors, and the decision is then communicated to Companies House.

The details of the new director, including their full name, service address, and date of appointment, are submitted on Form AP03. This information is then added to the company’s statutory register and becomes part of the public record. It’s important to note that a director’s residential address should not be used if they wish to keep this information private.

The process of appointing a corporate director is similar, but it’s crucial to understand that a corporate director carries the same fiduciary duty and is equally liable to the company as a human director. Therefore, the decision to appoint a corporate director should be made with the same level of scrutiny and due diligence.

The Differences Between a Company Secretary and a Director

The roles of a company secretary and a director are often misunderstood. While they both play crucial roles in the company’s operations, their responsibilities and obligations differ significantly. Let’s delve into these differences:

Duties and Responsibilities

Director of a Company: The director holds a pivotal role in the company, making key decisions in the best interest of the company. They are responsible for ensuring the company complies with its legal obligations and meets crucial deadlines, such as submitting the Company Tax Return or annual accounts.

Company Secretary: The role of a company secretary can vary significantly. They are often responsible for providing advice and guidance about the company’s governance. Their duties may include keeping records about the company’s stakeholders, submitting reports and accounts, arranging the company’s Annual General Meeting, and working with directors to ensure compliance with corporate legislation and the company’s articles of association.

Legal Obligations and Liabilities

Legal Obligations: Both a director and a company secretary have legal obligations. However, the director’s duty to the company is more significant. They are responsible for ensuring the company complies with its legal obligations and doesn’t miss crucial deadlines, such as submitting the Company Tax Return or annual accounts.

Liabilities: In terms of liabilities, a director is more liable to the company than a company secretary. If a director fails to fulfil their fiduciary duty, they can be held accountable. On the other hand, a company secretary, although they can take on some of the directors’ responsibilities, the directors remain legally responsible for the company.

Public Record: Both roles are a matter of public record.It’s not mandatory to appoint a company secretary, but a director is a must. The appointment or removal of either role must be reported to Companies House via a confirmation statement, which is a statutory duty.

Can a Director Also Be a Company Secretary?

Legally, a director of a company has a fiduciary duty to the company, meaning they are obligated to act in the company’s best interests. This duty is a serious one, and if breached, the director could be held liable to the company.

A company secretary’s role is more administrative. They are responsible for ensuring that the company complies with legal requirements, such as maintaining public records and filing the confirmation statement.

While a director and a company secretary can fulfil the same role, this is not always advisable due to potential conflicts of interest. On one hand, it could streamline decision-making processes, as the director and company secretary are one and the same.

However, this could also lead to potential conflicts of interest. The director has a fiduciary duty to the company, and if they are also the company secretary, they may find themselves in situations where their duties as a director conflict with their responsibilities as a secretary.

The company secretary is often the one responsible for maintaining public records, such as the confirmation statement. If the director is also the secretary, they may be liable to the company for any errors or omissions in these records.

The Consequences of Not Fulfilling Duties

When a company secretary fails to fulfil their duties, they may face serious legal consequences. For instance, if their negligence or misconduct leads to financial loss for the company, they could be held liable. This means they may be required to compensate the company for the loss incurred.

In more severe cases, such as when the company enters liquidation, the company secretary could be pursued by a liquidator under certain sections of the Insolvency Act 1986. This is because the company secretary is considered an ‘officer’ of the company, and thus, they bear a certain level of responsibility for the company’s financial state.

However, it’s important to note that these duties and potential consequences are enforceable only by the company or a liquidator. The remedies available are primarily for the benefit of the company or its creditors in the event of insolvency.

If a director fails to uphold their statutory duties, they can be held personally accountable. This includes instances where a company secretary, appointed by the director, fails to meet their responsibilities. The director’s duty to the company is a fiduciary one, and any breach of this duty can make them liable to the company.

The director’s personal information, including their service address, is a matter of public record, available from Companies House. This transparency underscores the gravity of the director’s role and the potential repercussions of not fulfilling their duties.

How to Ensure Compliance with Duties and Responsibilities

Navigating the complex roles and responsibilities of a company secretary and a director can be challenging. There are a few best practices to ensure compliance with these duties, helping both roles to fulfil their obligations effectively.

Best Practices for Company Secretaries

• Understand the Role: A company secretary should have a clear understanding of their role and responsibilities. This includes being aware of the fiduciary duty they owe to the company and the extent of their authority.
• Maintain Accurate Records: It’s crucial for a company secretary to maintain accurate and up-to-date company records. This includes filing annual confirmation statements and making company records available for public inspection.
• Act Lawfully: A company secretary must always act lawfully and in the best interest of the company. They should avoid conflicts of interest and not make secret profits from their position.

Best Practices for Directors

• Understand the Role: A director of a company should have a clear understanding of their role and responsibilities. They should be aware that they are not just a figurehead, but have a fiduciary duty to the company.
• Stay Informed: Directors should stay informed about the company’s affairs. They should regularly review financial statements and other reports to ensure they are making informed decisions.
• Compliance is Key: Directors must ensure the company complies with all legal obligations. This includes submitting the Company Tax Return and annual accounts on time.
• Appointing a Secretary: If a director decides to appoint a company secretary, they should ensure the secretary is capable of fulfilling the same role. The director remains liable to the company for the secretary’s actions.
• Maintain Transparency: Directors should ensure their personal information is on public record as required by law. This includes providing a service address for the public register.

Wrapping Up: The Distinct Roles of a Company Secretary and a Director

The roles of a company secretary and a director are distinct yet interconnected, each carrying its own set of responsibilities and legal obligations. While a director is primarily responsible for steering the company towards its strategic goals, a company secretary ensures the smooth running of the company’s administrative and legal affairs. 

Regardless of the structure chosen, it’s essential to ensure compliance with duties and responsibilities to maintain the company’s integrity and avoid legal consequences. In the absence of a company secretary, the onus falls on the director to fulfil these duties.