Is a Company Secretary an Employee?

If you’re setting up a new limited company, or perhaps restructuring, this article will help clarify whether a company secretary is classed as an employee, as well as what their legal position is. If you have any further questions, please don’t hesitate to contact us.

In most businesses, the company secretary is an employee. However, it is not a strict requirement for a company secretary to be classed as an employee. The appointment and employment status of a company secretary will largely depend on the needs and preferences of the company involved.

Before you decide whether your company secretary will be employed or not, here’s a quick overview of their roles and responsibilities. Lower down the page we detail their legal responsibilities too. 

What does a company secretary do?

A company secretary is an officer within a company who is responsible for ensuring the business complies with UK legal and regulatory requirements. The role can vary depending on the size and nature of the organization, but their core responsibilities typically include the following:

• Legal compliance: Ensuring that that the company operates in compliance with all UK law and regulations. They will need to keep track of changes in legislation and advise the board of directors on any implications.
• Corporate governance: Assisting in establishing and maintaining good corporate governance practices. They ensure that board meetings and general meetings are properly organised, and they provide guidance on governance matters to the directors and shareholders.
• Board support: The company secretary acts as a key point of contact between the board of directors and the company’s management. They help facilitate communication and provide administrative support for board meetings, including preparing agendas, taking minutes, and maintaining accurate records.
• Statutory requirements: The company secretary ensures that the company complies with its statutory obligations. This includes filing required documents with the Companies House, such as annual returns and financial statements, and maintaining the company’s statutory registers.
• Shareholder relations: Managing communication with shareholders, including issuing notices for general meetings and handling shareholder inquiries. They also oversee the distribution of dividends and the issuance and transfer of shares.
• Record keeping: The company secretary is responsible for maintaining accurate and up-to-date records of the company, including registers of directors, shareholders, and charges. They ensure that these records are available for inspection by relevant parties when required.

Does a company secretary need to be an employee?

No, the company secretary does not have to be an employee. However, the status of a company secretary (for example if considered an employee) can vary depending on the size of the company, type, and your preference. Not all business will have a company secretary as an employee. 

In some cases, a company may choose to engage the services of an external consultancy or a chartered secretary for fulfilling the company secretarial needs. This means that the company secretary may not qualify as a traditional employee. 

Regardless of the employment status, the company secretary remains a key figure in the company’s governance framework, ensuring its ongoing success and compliance with relevant regulations.

If you do have a company secretary who is an employee, they will hold a senior position in an organisation and will often be a key managerial person. 

In public companies, it is common for the company secretary to be an employee. They are appointed by the board of directors and their responsibilities might include handling legal matters, financial reporting, and corporate governance. 

Furthermore, a company secretary might have additional roles, such as general counsel, depending on their qualifications and experience. In some cases, a company secretary who is also a lawyer may take on increased responsibilities in areas such as securities compliance, mergers and acquisitions, and employee relations.

On the other hand, private companies may have different requirements for their company secretary. In fact, company law no longer mandates that a private company must have a company secretary in place. 

However, if a private company chooses to appoint a company secretary, the individual may or may not be an employee. The role could be taken on by one of the existing directors, or even by an external professional who provides company secretarial services on a contractual basis.

Nonetheless, it is crucial for a company secretary, whether an employee or not, to carry out their duties diligently. These include managing the company’s statutory registers, ensuring timely submission of regulatory filings, and maintaining communication between the board and shareholders. In instances where the Company secretary is also an employee, any breaches of duty could result in employment-related consequences.

In summary, a company secretary can be an employee, but it is not a strict requirement. The appointment and employment status of a Company secretary largely depends on the needs and preferences of the public or private company involved.

Is it a legal requirement to have a company secretary?

No, it is not a legal requirement to have a company secretary. This wasn’t always the case though, and it’s only a ruling that has been in place since 2006. 

In the United Kingdom, the requirement for a company secretary depends on the type of company. According to the Companies Act 2006, public companies are legally required to appoint a company secretary, whereas private companies have no such legal obligation.

For public companies, the appointment of a company secretary is a legal requirement, and the person appointed must possess the necessary qualifications and experience to carry out their role effectively. This is because public companies have more complex corporate governance structures and greater regulatory requirements.

In contrast, private companies are not required by law to appoint a company secretary. However, many private companies still choose to do so voluntarily, as having someone dedicated to managing corporate governance can be beneficial for the organisation. In these cases, the company secretary may be an employee or an external professional, depending on the needs of the business.

Although a private company is not legally obliged to appoint a company secretary, it must still fulfil the duties that would typically be undertaken by one. This means that, in the absence of a company secretary, these responsibilities would need to be shared among the company directors or delegated to other employees.

What is the legal position of a company secretary?

A company secretary has several legal responsibilities and just like directors, company secretaries can be held personally liable for the financial losses of a company or its creditors. 

Company secretaries can also be tasked with taking on the responsibility for legal matters within the business. This could include being asked to advise directors on their duties and to make sure they are complying legislation.

Conclusion

In today’s corporate world, the role of a company secretary has evolved beyond just clerical and administrative tasks. They are now considered as vital players in an organisation’s structure, providing valuable advice to the board, and ensuring legal compliance. 

With the increasing importance of good corporate governance and transparency, the company secretary has become an integral member of the executive team. 

However, if you run a small business, there is no legal requirement for you to have a company secretary, and if you do, they don’t need to be an employee.