The Company Secretary
The purpose of the setting up of a Malta company may range from cross border trade to a holding company. This diversification calls for a sound set up backed with responsible corporate officers. The Companies Act, Chapter 386 of the laws of Malta, provides for the corporate officers, and their respective roles which in turn enable the proper functioning of a Malta company. Many times the role of the company secretary is overlooked at, and treated as merely an administrative officer of the company. Erstwhile to the enactment of the Companies Act, there was no obligation upon a company incorporated under the laws of Malta to appoint a company secretary albeit this role being recognised in commercial practice prior to 1995. Upon the enactment of Chapter 386 of the laws of Malta, the office of a company secretary became acknowledged in written law and set as a main officer of every company.
Article 138 of the Companies Act, lists down who may qualify for the post of a company secretary. As a rule of thumb, the company secretary must be an individual, however in the case of an investment company with variable share capital and/or fixed share capital, the company secretary may be a body corporate. There is no provision in the Companies Act that sets an obligation that the company secretary is a Maltese resident, however, it is advisable given the office’s duties and responsibilities.
It is worth noting that a company cannot appoint its sole director as the company secretary nor can a company have as its sole director a body corporate whose sole director is the company secretary of the company. An exception to this general rule is set for private exempt companies where a sole director may hold the office of a company secretary during his directorship.
The first company secretary is appointed by the shareholders in the first Memorandum and Articles of Association of the company. The company secretary may be removed by the directors of the company by virtue of a board resolution. If the latter resolve to remove the company secretary from office, a new company secretary has to be appointed within fourteen days from the date the previous secretary has been dismissed. In case of a prolonged vacancy, the board of directors may authorise one of its members to undertake the duties of a company secretary ad interim.
The following individuals are disqualified from being nominated as a company secretary in Malta: individuals who have been convicted of a crime affecting the public trust, theft or fraud; individuals, who have been interdicted, incapacitated; undischarged bankrupts; minors who are not emancipated or else who are subject to a disqualification order.
The Companies Act puts the requirement for a company secretary to have the requisite knowledge and experience for the carrying out of the functions of such post, having said that, the Companies Act does not set a requirement to be in possession of an academic or professional qualification in order to hold the post of a secretary. Nevertheless appointing a professional as a company secretary, adds value to the corporate structure.
In accordance with the Companies Act, a company may have more than one company secretary; however this does not occur frequently due to the fact that each company secretary has to fulfil all the requisites imposed on them under Maltese law. This implies that in case of two company secretaries, the two are joint signatories on any obligation set out on such a role.
In the First Schedule of the Companies Act, the legislator sets a number of duties assigned to a company secretary. These include:
- Ensuring that proper notice of the meeting and agenda are circulated within the notice period (as specified in the articles of association);
- Ensuring that proxy forms and/or appointment of alternative director forms, if required, are sent to be received in original by the company or any other person up to forty-eight hours (or as stipulated in the Memorandum and Articles of Association) before the meeting for the appointment to be effective and to be tabled at the meeting;
- Informing the chairman (of a meeting) whether a quorum for the meeting is present and ensures that the meeting proceeds in accordance with the agenda of the meeting;
- Taking minutes of proceedings of the board and any general or extraordinary meetings held, which are then kept in the company’s minute book; and
- Recording any resolutions put to vote.
Moreover, the company secretary shall take care of, inter alia, any amendments to the Memorandum and Articles of Association, any changes amongst the officers and persons who are vested with representation. Usually, a company secretary would be the person to file the annual return of the company and also the one recording any changes effected in the register of directors and members. It is worth noting that anything required to be done by a company under the provisions of the Companies Act shall also be deemed as required to be done by the officers of the company. Therefore, the responsibilities of the company secretary may emanate from the Companies Act as per the board’s and company’s exigencies. Furthermore, the responsibilities of a company secretary do not only emanate from the Companies Act but they may also be delegated by the company itself.
The company secretary plays a leading role in good governance by providing support beyond scheduling meetings, managing the agenda and ensuring the presentation of information in advance of meetings in addition to pursuing and managing follow up action points on matters arising. Thus, the responsibility for good corporate governance also falls largely within the remit of the company secretary. The responsibility of the company secretary is to ensure good governance throughout the livelihood of the company, from inception up to the winding-up of the company. At this stage it is worth noting that upon winding up, a liquidator is appointed and all the powers of the corporate officers, including that of the secretary shall cease.
As an officer of a company, a company secretary may potentially be faced with liability in the course of exercising his appointment. The Companies Act states that any provision being in the Memorandum and Articles of Association of the company or in any contract exempting an officer of the company from personal liability arising from negligence, default or breach of duty shall be void. Having said that, a company may indemnify any of its officers against any personal liability when defending proceedings in which judgement is given in their favour or else in which they are acquitted.
Regardless of the title of the office, the role of a company secretary is not merely of a secretarial nature. Despite the fact that the company secretary does not take part in the management of the company, nowadays the role of the secretary is associated to that of a special advisor to the board.
Indeed, the great number of duties outlined above as incumbent upon a company secretary is indicative of how vital the role and position of a secretary is.