Local Government Lawyer Insight February 2018 LocalGovernmentLawyer The role of a Company Secretary (CoSec) or company secretarial services in a local government trading environment is a relatively recent, demand led service being provided by Legal Services. In this article, I will highlight key issues that I encountered when acting in such roles for local authorities. By way of further abbreviation, when referring to a CoSec; I also mean the dual function of a legal advisor or counsel to the Board of Directors of a company. Do you really need a Company Secretary? An experienced company secretary should be valued like the person positioned on a ship or sailing boat acting as the monitor for signs of impending trouble. For most of the journey, you will not hear anything from these individuals. When you do hear from them, this informs the captain to navigate the vessel into safer waters thereby avoiding potential disasters. Likewise, the CoSec role is strategically positioned on the board to help to identify and facilitate the safest navigation of the pathways that the company or the local authority as shareholder may be undertaking. However, it is not uncommon to find that the appointment of a CoSec was an afterthought to a local authority business plan in establishing a new company. The assumption, it seems, is that an in-house local authority lawyer could deliver these services by adding this onto their existing duties without any additional training or resources. When establishing a private company, local authorities are sometimes advised that there is no legal requirement for limited companies to appoint a company secretary. Whilst this advice is legally sound, it may not always be appropriate for the circumstances and it may just explain the absence of the appointment of a CoSec upon establishing a company or the low priority given to this function when resourcing a new company. Bear in mind that the ultimate statutory responsibility for compliance of the Companies Act 2006 (CA), regardless of a CoSec appointment, lies with the directors. The directors for a local authority company are typically drawn from senior management or members of the council and/or outside appointments of Non-Executive Directors who usually hold a portfolio of other companies. These directors would not usually be best placed to undertake the duties of the Company Secretary. It is, therefore, in the interests of the directors to ensure that there is a sufficiently competent and experienced CoSec appointment, who will ensure that the director duties are being properly fulfilled. Companies’ legislation pre-dating the CA, required all private companies to be structured in the same grandiose style as a public listed company (PLC) on the London Stock Exchange. All such companies were required to hold annual general meetings for shareholders and to appoint a company secretary. The introduction of the CA discarded these mandatory requirements as it was intended to facilitate the vast majority of companies in England and Wales that are ‘one man bands’ with sole directors. A local authority company will usually be well resourced, have more than three directors and be set up in a complex legal and governance framework. Such a company would clearly be in need of a company secretary. Arguably, this need is even greater now as Companies House continues to simplify its online processes 14 As commercialisation grows, Azhar Ghose outlines the increasing importance of the Company Secretary role within local authorities and offers some tips on how it can be performed. The Company Secretary in local government