What’s In a Name: Why Company Secretaries Still Need Their Profile Raised…

6th June 2024

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Over the last few years, we’ve seen an increase in the combined role of general counsel (GC) and company secretary. In some instances, the company secretary is made to report to the GC. Thereby removing the company secretary’s direct access to the Chair and the chief executive or as a member of the executive team. In some extreme cases, we’ve also seen the existing company secretary being made redundant, so that the GC can cover both legal and governance roles.

While the general counsel has served the legal aspects of the corporate world very well, corporate governance professionals have been let down. Partly by the outmoded term company secretary and a distinct lack of awareness of the importance of the cosec role as opposed to the GC role. While the industry’s official body has rebranded as the CGIUKI to move away from the ‘secretary’ term, disappointingly it seems to have done little to  raise the profile of the roles covered by cosecs  in industry. There is still widespread misunderstanding of the benefits of the role and how we, as governance champions, can add value to organisations in different sectors.

Worryingly, there  also appears to be widespread subliminal belief that with a GC in position, who really needs the cosec? After all, whatever the Cosec can do the GC can do and dare I say they may be the feeling that the GC could perform the role better given legal training and experience that tends to be better regarded than governance experience.

The move to combine both roles, appears to knock back the gains most cosecs have made in commanding recognition and respect for the role they play in companies. As a small boutique company offering mainly governance and company secretarial support to organisations, we see it all the time. Where a lot of companies still have little or no recognition for the importance of the cosec role and what the cosec can do to ensure that an organisation is properly governed and managed ethically.

But why is this important?

Governance complexity

In the complex landscape of corporate governance, the roles of general counsel and company secretaries are often confused. While both are crucial for ensuring legal compliance, there are compelling arguments for companies to rely more heavily on specialist company secretaries rather than general counsel for governance matters.

Firstly, it is essential to delineate the roles of these two positions. The general counsel primarily focuses on legal matters. Providing legal advice and representation to companies on various issues such as contracts, litigation, and other legal matters. Typically, these roles are urgent and very task-focused.

By contrast, the company secretary’s role encompasses a far broader spectrum of responsibilities related to governance. Including ensuring compliance with corporate regulations, facilitating communication between the board and  various stakeholders, and overseeing board processes and governance, but more importantly being able to offer practical solutions that are compliant. Additionally, a good governance professional will be able to help steer the moral compass of the organisation.

The cosec role is much more strategic and long-term. Where both roles are combined, in our opinion, the governance tends to take a back seat and not given the importance and focus it deserves.

Conflicts of interest

Indeed, one reason why companies should prioritise company secretaries for governance is the inherent conflict of interest that may arise when the general counsel does assume governance responsibilities. The general counsel is often deeply involved in the company’s day-to-day operations and may find it challenging to maintain objectivity when overseeing governance processes.

As an example, if a governance issue arises that implicates the actions of senior executives or the board itself, the general counsel may face conflicting loyalties between protecting the company’s interests and upholding governance standards.

Secondly, company secretaries bring a unique skill set and expertise based on qualifications and experience specifically tailored to governance. Unlike general counsel, whose training and experience are primarily rooted in legal practice, an experienced company secretary will have in-depth knowledge that equips them to navigate the intricacies of governance regulations. Allowing them to implement best practices, and provide strategic guidance to all stakeholders.

This can also be problematic if a business puts a general counsel in charge of governance, with a company secretary reporting into them, creating a mismatch of skills and priorities.

Governance integrity

Company secretaries act as guardians of corporate integrity and ethics. Serving as independent overseers of governance processes. Their impartiality and autonomy enables them to raise red flags about potential governance risks, safeguarding the interests of shareholders and stakeholders. In contrast, the general counsel’s close ties to management may create barriers to speaking truth to power and holding decision-makers accountable for their actions.

And then there is the name.

The term company secretary is confusing at best, misleading at worst. Historically, the term originated from administrative duties but has become inadequate in conveying the breadth and significance of the role in modern corporate governance.

The title’s lack of specificity, compounded by its ambiguity, gives the impression of a clerical or administrative position rather than a strategic and influential role in governance. (How often do company secretaries have to explain what they do in professional and personal surroundings?).

Credibility and authority

This misconception can undermine their authority and credibility, particularly when interfacing with senior executives, board members, and external stakeholders, and may contribute to a perception of the role as subordinate to other executive positions within the organisation. This hierarchical framing can diminish the influence and autonomy of governance professionals. Limiting their ability to effectively challenge management decisions, advocate for governance best practice, or drive meaningful change.

This was further undermined when the Companies Act 2006 made it no longer mandatory for businesses to have a company secretary if they were not a public limited company. It may have been an unintended consequence, but it diminished the role and made governance seem somehow optional.

To address these issues, some organisations have been forward-thinking and have begun to adopt alternative titles such as chief governance officer, head of governance, or corporate governance advisor to reflect more accurately the strategic importance of the role and to signal its elevation within the organisational hierarchy.

Such titles convey a sense of leadership, expertise, and responsibility in keeping with the role’s significance in shaping corporate strategy, promoting ethical conduct, and safeguarding the interests of stakeholders.

“But a name change – welcome as it is – is only part of the story. Company secretaries need not just a rebrand but a reset,” Bridgehouse founder Ibi Eso said.

“As an industry, what is the strategy to promote the role not just within business but in education so that students understand the opportunities for what is still a relatively unknown career path? Perhaps we need a global initiative but one thing is certain, we need to leave the old-fashioned company secretary behind and create a new understanding of the vital role we play.”