The Capital Markets Authority (CMA) will be seeking stakeholder input on how many listed companies a company secretary can serve at the same time, the regulator said in a recent report.
- This follows an increased trend of Company Secretaries serving multiple organizations concurrently, which CMA says dilutes the quality of their work.
- The Company Secretary’s role includes offering procedural and regulatory guidance, facilitating effective communication between firms and shareholders, coordinating governance audits and maintaining essential records such as the conflict-of-interest register.
- Additionally, the Company Secretary is tasked with supporting board evaluations, managing the issuer’s seal and ensuring the timely preparation of board and committee minutes.
“While their expertise is invaluable, the potential for overcommitment raises concerns about their ability to provide dedicated and effective service. Juggling responsibilities across various entities may lead to delays in fulfilling critical duties, a diminished focus on company specific needs and ultimately, a reduction in the quality of governance support provided to Boards,” CMA notes in the 7th edition of State of Corporate Governance Practices Report.
The report also raises concern on compliance with the professional organizations among the company secretaries in contravention of the governance code. The code requires that the Board be assisted by a suitably qualified and competent company secretary who is in good standing with the Institute of Certified Secretaries (ICS).
In this year’s report, the regulator also raises concerns about board composition and appointment of non-executive directors in a number of listed companies. It says recent trend of seconding employees and executive directors to the board compromises independence and erodes its capacity to exercise independent oversight.
“This practice raises significant concerns about compliance with Regulation 2 of POLD Regulations, 2023, which explicitly defines a Non-Executive Director as a board member who is not an Executive Director or an employee of a related entity,” CMA notes.
