How will the Companies Act 2014 impact on the role of Company SecretaryTuesday, 26 May 2015
The Companies Act 2014 (the Act) will enter into force on 1 June 2015 and will introduce many significant reforms into Irish company law, including in the sphere of corporate governance. A number of those changes will impact on the duties and obligations of directors and company secretaries of Irish companies. The principal changes relating to the role of company secretary are outlined below. If you are interested in further information on key changes affecting directors, please click here to read our posts on key changes to directors' duties and the new directors' compliance statement regime.
In contrast to the UK where, since April 2008, private companies are no longer required to have a company secretary (though may choose to do so), the Act retains the requirement for every Irish company to appoint a company secretary and reaffirms the role and duties of the company secretary, although some changes to the relevant law are introduced.
The key points to note in relation to the role of company secretary from 1 June on are:
- Every Irish company must have a company secretary (or joint company secretaries). It continues to be the case that the directors appoint (and can remove) the company secretary.
- The company secretary can be an individual or corporate entity but, if an individual, must be at least 18 years and cannot be an undischarged bankrupt.
- The company secretary can be one of the company directors unless the company is an LTD with a sole director in which case the company secretary and sole director must be different.
- A new requirement is that, when consenting to act, a company secretary will be required to sign a declaration acknowledging his legal duties and obligations.
- The statutory duties of a company secretary have not changed significantly under the Act and continue to be owed to the company alone. They include filing the annual return and annexures and other required public filings and maintaining the company's statutory books and registers. The role also usually involves arranging directors’ and shareholders’ meetings.
- The Act removes the previous requirement for a company secretary to ensure the company's compliance with company law, thus acknowledging that the role is essentially advisory and administrative and the company secretary generally lacks the authority to enforce compliance.
- Instead, a new duty is now imposed on directors of all Irish companies to ensure that the company secretary has the skills and resources necessary to discharge his or her statutory, legal and other duties delegated by the board. In the case of PLCs, the company secretary must meet more stringent qualification and experience requirements as set out in the Act.
- A company secretary is obliged to exercise due care, skill and diligence in exercising his or her duties and can be held liable to the company for loss arising from negligence.
If you require further advice or guidance on the implications for you of the changes in relation to company secretaries, directors' duties or other corporate governance matters under the Act or would like advice in relation to any other aspect of the Act, please contact one of our Corporate Partners.
We will continue to post our series of topical e-bulletins on our website and LinkedIn page during the lead-in to and following commencement of the Act, which will assist companies and directors in navigating the new company law regime and assessing its practical impact.
For further e-bulletins on the Companies Act, 2014, including preparing for commencement of the Act, please click here to read our related publications.
Alternatively, please monitor our Companies Act website for new updates and insights.