TEN years ago this month, the requirement for a private limited company to have a company secretary was removed from statute, making the appointment an optional one.

When the Companies Act 2006 was being introduced, many wondered whether such a move would result in an increase in breaches of legislation, with less focus on ensuring adherence to statute governing company activities.

It was certainly seen as a bad idea to leave companies without a dedicated officer to guide the chairman and advise the board on their statutory and governance obligations. After all, without a company secretary, someone still has to be responsible for these obligations, irrespective of the size and function of the company.

In 2018, one might see the removal of the requirement to have a company secretary as being at odds with the many legislative requirements placed on companies (and LLPs) since that change was introduced – The Companies Act 2006, The Small Business, Enterprise and Employment Act 2015 and the various EU Anti-Money Laundering directives aimed at greater transparency being the main ones – given that many of these new requirements and obligations naturally fall to the company secretary or their team.

It is clear that those companies who have retained a company secretary to support their boards of directors are, quite rightly, focussed on governance issues and ensuring that their board meet the high standards of the Governance Code (for listed companies) and the Stewardship Code (for private companies).

The main concern facing company secretaries is the potential dilution of their role in delivering effective governance for their companies and boards. After all, if the position isn’t required, the view of many is that the responsibilities attached to that role can’t be that important. Nothing could be further from the truth.

The duties and responsibilities held by any former company secretary in organisations who have chosen not to have a company secretary in situ, become the responsibilities of the board of directors. It is here where many compliance issues begin to appear, as directors take responsibility for company secretarial matters alongside their own statutory and fiduciary responsibilities.

The relaxing of filing obligations with Companies House (the replacement of the annual return with the confirmation statement comes to mind) may also result in the company secretary role being seen to be of less strategic importance to companies and their boards than is in fact the case.

The focus on good governance and compliance is not likely to dissipate in the coming years, rather it is more likely to intensify as industry battles to meet the ever-increasing volume of regulation set out by Government.

Without a dedicated governance professional taking the helm and managing the governance affairs of companies, there is a real danger that companies will fail to meet their obligations and their directors will face personal sanctions as a consequence.

Gary Gray is Head of Company Secretarial Services with Burness Paull LLP and a Fellow of the Institute of Chartered Secretaries and Administrators