THE ROLE OF THE COMPANY SECRETARY IN ZIMBABWE
The Term ‘Company Secretary’
The role, duties, and functions of a company secretary are not provided for in the Companies Act [Chapter 24:03]. Internationally the role of the company secretary is influenced by the nature of the industry, for example, aviation, automotive, construction, finance, mining, retail.
The Australian Courts have recognised that:
The expression ‘company secretary’ is not a term of art. The responsibilities of company secretaries can vary from company to company, within companies, and over time. They have tended gradually to wax over many decades…1
Section 169 (2) of the Companies Act [Chapter 24:02] states that every company shall have at least one secretary ordinarily resident in Zimbabwe. It therefore goes without saying that companies and other business entities such as listed companies and or unlisted companies, holding companies, subsidiary companies, and even companies formed to be special purpose vehicles, joint venture companies, whether a company is formed as a result of a merger or acquisition, or even a small to medium enterprises, all business entities are required by law to have at least one secretary ordinarily resident in Zimbabwe.
Historical Overview of the Role of the Company Secretary
One hundred years ago, a company secretary would have found his powers were few.2
The importance of the company secretary has evolved since the early days of company law, when a company secretary was a mere lowly clerk.
In Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd  2 QB 711 (CA) Denning MR said –
‘A company secretary is a much more important person nowadays than he was… He is an officer of the company with extensive duties and responsibilities. This appears not only in the modern Companies Acts, but also by the role which he plays in the day-to-day business of companies. He is no longer a mere clerk. He regularly… enters into contracts on [the company’s] behalf which come within the day-to-day running of the company’s business. So much so that he may be regarded and held out as having authority to do such things on behalf of the company. He is certainly entitled to sign contracts connected with the administrative side of a company’s affairs, such as employing staff, and ordering cars, and so forth. All such matters now come within the ostensible authority of a company’s secretary.’
How important is the role of Company Secretary?
A company secretary is accountable for a combination of administration duties and plays a significant advisory role to the board and senior management.3 Today, then, it can be said that the role of the secretary is that of one of the principal officers of the company or an integral part of the organisational structure of the company.
The company secretary has a key role to play in ensuring that board procedures are both followed and regularly reviewed. The chairman and the board will look to the company secretary for guidance on what their responsibilities are under the rules and regulations to which they are subject and on how these responsibilities should be discharged. All directors should have access to the advice and services of the company secretary and should recognise that the chairman is entitled to strong support from the company secretary in ensuring the effective functioning of the board.4
Whether a company was incorporated as a consortium, a joint venture or a special purpose vehicle, nowadays, the capital markets require two fundamental confidence-building measures for financial participation of investors, these are (a) transparency and (b) board independence.5
What is expected of a Company Secretary?
A company secretary is expected to be loyal as he owes a fiduciary duty toward the company.
In addition to the aforesaid, a company secretary is also expected to have communication skills, analytical skills, and a good organizational awareness.6
The purpose perhaps is because a corporate secretary acts as the ‘collective conscience of the company’.7
The exact nature of the duties of the company secretary depend of the terms of engagement, which to some extent, are determined by the type and nature of the company.
Not everyone is conversant with accounting, law or corporate governance. Likewise, it is not everyone, including most company secretaries who are aware of the meaning of terms such as capitalisation, share allotment, capital reduction or the basic and most company term ‘share capital.
It is the duty of the company secretary to maintain the company seal of the company and also to aid the company. This includes the maintenance of statutory registers and minute books, the transfer of shares and debentures, divided payment records, evidence of title, the preparation and filing of annual returns and annual general meeting documentation within prescribed timelines.
It is also the responsibility of the company secretary to maintain the documentation of past and current directors of the company as well as the preparation and filing of statutory forms relating to the company changes, for instances the changes of directors (retired / resigned or deceased) as well as the changes in the registered address, name or objectives of the company.
As the chief administrative officer, a company secretary is expected to assist the Chairman of the Board with the board etiquette which involves time-management as well as due diligence prior to any meetings vis-à-vis potential conflicts of interest in the business to be considered at the meeting and discussing these potential conflicts of interest with the Chairman prior to the meeting.
A well-organized and effective company secretary is one who ensures that notices of all shareholder meetings, board meetings, board committee meetings, and annual general meetings are timeously served on the relevant persons.
A diligent company secretary ensures that the accommodation and room bookings for the venue of the meetings are timeously done and communicated to the relevant persons and that the minutes of all such meetings are recorded and that the directors are advised as to their duties and powers under the Companies Act [Chapter 24:03].
Limitations of a Company Secretary’s Authority
The company secretary has implied authority to carry out administrative functions as the ‘chief administrative officer’ of the company and this tends to extend to commercial activities when express authority is given.
However, case law established the limits to the scope of the company secretary’s authority. For example, in the case of Club Flotilla (Pacific Palms) Ltd v Isherwood (1987) 12 ACLR 387 it was held that the company secretary cannot commence litigation in the company.
In Tummon Investments Pty Ltd (In Liquidation) (1993) AA ACSR 637 it was determined that a company secretary could not borrow money on behalf of the company.
The services provided by a company secretary can enhance the effectiveness of the company. It is thus prudent for persons contemplating the incorporation of companies and other business entities in Zimbabwe to ensure that they have good secretarial service providers to assist them in the administration of the company.
2. Bourne on Company Law at page 302
3. Hardman, B (2009) Corporate Governance and the Company Secretary, 4th Edition.
4. [Report of the Committee on the Financial Aspects of Corporate Governance – the Cadbury Report – December 1992, para 4.25]
5. J. Lee: The Corporate Governance Officer As A Transformed Role of the Company Secretary. An International Comparison. South Carolina Journal of International Law and Business (2017)
6. Peij S, Bezemer, P.J & Maassen G (2015) Role Ambiguity, and Conflicts: A Study of Company Secretaries and Two-Tier Boards in The Netherlands. Corporate Ownership & Control 12, (3), 114-123
7. McNulty T & Stewart A (2015) – Developing The Governance Space: A Study of The Role and Potential of the Company Secretary In And Around the Board of Directors, Organizational Studies, 36, pages 513 – 535Next Step