The profession of corporate secretary is as old as is the corporatisation of organisations. With the turn of fresh chapter of corporate governance in Pakistan in 2002, it has assumed wider scope and more importance particularly in case of listed companies regulated by apex as well as frontline regulators.
The code of corporate governance issued by SECP provides for appointment of whole-time corporate secretary under section 204A of Companies Ordinance 1984 possessing qualifications spelt out in rule 14B of Companies Rules 1985 as have also been set out in the listing regulations of all the three stock exchanges in Pakistan. A compliance statement to this effect is required to be published in annual reports of the companies.
Before the formulation of the code, the role of corporate secretary was that of a drafter of minutes of the board and shareholders meetings and keeping the record thereof. In the newly emerged scenario of corporate governance, the corporate secretary also plays the role of facilitating the board and directors nomination committee to ensure effectiveness of the board in the selection and election of directors, in appraisal of the CEO as well as the board.
He advises the board on best practices of corporate governance and acts as a compliance officer of all the applicable corporate laws, rules and regulations. The code requires that after the annual general meeting he should furnish a secretarial compliance certificate as part of the annual return which should state that the secretarial and corporate formalities have been completed by the company during the period under report.
The mandatory provision inserted in companies ordinance 1984 about appointment of appropriately qualified and whole-time corporate secretary was felt due to this redefined role of corporate secretary which SECP, vide circular 15/2003, rightly hoped would work as a driving force for good corporate governance.
The code, while realising the special functions and responsibilities of corporate secretary, has provided that his appointment as well as terms and conditions and also his removal are to be approved by the board and not an executive head of HR or even the CEO.
This ensures that in the discharge of his duties he should function independent of the influence of executive management who he interacts on behalf of the board as regards the implementation of board's decisions. The best practices of corporate governance demands that no officer of a company holding an executive position in the hierarchy should be given corporate secretary's assignment as an additional responsibility.
This obviates any conflict of interest that may possibly arise between his handling corporate affairs and administrative affairs simultaneously and also allows him to give focused attention to the resolution of issues relating to corporate governance in terms of accountability, fairness, transparency and responsibility from the perspectives of shareholders, directors, auditors and regulators. It will be quite fair and in resonance with the code if corporate secretary is assigned the additional responsibility of secretaryship of board's mandatory committee viz audit committee and non-mandatory committees like directors nomination committee, and HR committee etc.
While expounding on the code, the SECP has clarified that corporate secretary may be given additional assignment if considered appropriate. Some listed companies including PIA and PSO consider that corporate secretary when performing the additional functions of the secretary of committees of executive management bridges the board and executive management and adds value to such committees by bringing the constituencies of board and executive management committees on the same page on crucial and strategic corporate issues.