As effective, strong corporate governance continues to be essential for sustainable development, not only for individual companies, but also for the economy as a whole, the role of the company secretary has received increased attention in Tanzania, not least due to the flow of new laws, regulations and standards of best practices, but also the growth in the power and anticipations of shareholders.
Indeed, the Business Laws (Miscellaneous Amendments) Bill 2011 assented to by the President of Tanzania in June 2012 preserved the mandatory requirement for a company secretary in every company – public or private – as provided for in section 187 of the Companies Act No. 12 of 2002.
The role and functions of today’s company secretary have expanded from that of “minute-taker” to that of “strategic Board adviser” with explicit responsibility for, and influence on, corporate governance issues.
The Board of directors and, especially, the chairman, depend on the company secretary for support on many fronts. These include but are not limited to, performance of directors’ fiduciary duties; advising on legal, compliance and governance matters; assisting with obtaining the needed information from various stakeholders; and dealing with shareholder communications and engagement; as well as, interacting with proxy advisory firms.
There is no doubt that this expanded role of the modern day company secretary has apparently catapulted them into one of Tanzania’s foremost governance professionals within a company.
In the opinion of the Tanzanian Parliament, the preservation of this requirement shows the significance of the role of the company secretary and, veritably, section 187(2) of the Companies Act places on the directors of a public company the responsibility to ensure that the secretary has the “requisite knowledge and experience” to perform the duties of secretary of the company.
Although the Tanzanian Companies Act does not state expressly the duties of a company secretary, it imposes a number of obligations on officers of a company and penalties for non-compliance. As the main focus of directors is on the core business and operational side of the company, it can be easy for them to overlook their statutory obligations; so here also the role of the company secretary becomes critical.
It would seem that the role of the company secretary is, by and large, administrative. Typically, the company secretary makes sure that the company complies with statutory or regulatory requirements contained in the Companies Act, such as, maintaining the register of members and minute books, making the requisite filings (e.g. annual returns, audited financial statements and certain statutory forms with respect to creation, modification or satisfaction of charges; and changes in directorships, situation of registered office, share capital, etc) with the Business Registration and Licensing Agency (BRELA).
In reality, however, the role of the company secretary has evolved into much more than simply ensuring compliance with the obligations imposed directly on the officers of the company by virtue of the Companies Act.
It is worth noting that today’s company secretary has assumed the responsibility for developing and executing robust systems to promote and sustain effective, strong corporate governance. Interestingly, the Tanzanian Capital Markets and Securities (Corporate Governance) Guidelines, 2002, take cognizance of this.
The Guidelines have helped the continuing efforts of companies in further building Board effectiveness and also embedded the company secretary in those efforts. Whilst these Guidelines apply to Dar es Salaam Stock Exchange (DSE) listed companies, they are recognised as standards of best practices in corporate governance and should be followed by other companies where appropriate.
In this era of ongoing, rapid changes in Tanzania’s business, legal and regulatory environment, Board chairmen and directors agree that they need specialist knowledge and skills in this field and they are turning to company secretaries to offer this expertise.
Apart from the responsibilities referenced above, the modern day company secretary can help the Board and the senior management team to clearly document strong corporate governance policies, procedures and practices; ensure the information needs of the Board are met in a timely manner; assist with company disclosures; and ensure the efficient implementation and protection of shareholder rights and the interests of the company.
Owing to calls from certain quarters for a culture of increased transparency and high quality corporate governance reporting, the company secretary is also responsible for preparing the governance section of the company’s annual report and ensuring that all reports are made available to shareholders.
Likewise, economic developments of recent years have led to an increasing concern amongst company stakeholders — especially in the banking and financial services sector that’s regulated by the Bank of Tanzania — about the conduct of company affairs.
So, it is very important that standards of best practice are adhered to always, and show evidence of the same. The setting of higher standards for this sector can also be seen from the introduction of the “fit and proper persons” standard for individuals authorised to discharge controlled functions on behalf of banks and financial institutions in Tanzania.
With the introduction of such standards, the responsibility for monitoring compliance is now being placed on the company secretary. The company secretary's role also extends to keeping the Board reasonably informed of all new and proposed laws and changes thereto, and how such laws are likely to affect the company.
But just as no single corporate governance framework fits all companies, the scope of the company secretary’s role and duties will differ depending on the type of company – whether it is public or private – and yet again depending on the industry sector.
Regardless of the type of company, however, the role has evolved into much more than merely ensuring statutory and regulatory compliance, to become a critically strategic one where the legal, compliance and governance knowledge and skills of the company secretary can have a very real and direct impact on the effectiveness of the Board and the company. Today’s company secretary must be commercially-minded in order to engender trust from the Board, shareholders and the executive management team.