There are a number of roles that need to be fulfilled when setting up a company in Australia. Some of these are necessary from a management perspective and others from a legal perspective. But for a startup business it is often confusing as to which roles are important and company secretary is one of them. Let’s start with an explanation of Resident Director role who is required for an Australian company to see how a company secretary fits into the picture.
Duties of Resident Director
For any overseas company looking to set up a business in Australia, it is a necessary and a regulatory requirement to have a local Australian resident appointed as a director of the company at all times. A proprietary company (Pty) must have at least one director, while a public company must have a minimum of three directors, at least two of whom must ordinarily reside in Australia.
The importance of the company secretary’s role has increased over the years. Although it isn’t mandatory for most businesses, you do need to understand that if you don’t have one, the roles and responsibilities that a company secretary would normally perform will lay with the Directors of the company.
So, what is a Company Secretary?
Main responsibilities of a company secretary is to ensure that the company complies with all the applicable statutory and regulatory requirements. Even when you are starting out it is good practice to ensure that you have sound Corporate Governance practices in place. For instance, if you fail to keep proper records or fail to notify the Australian Securities and Investment Commission (ASIC) of certain changes this can constitute as a breach of the Corporations Act 2001 (Cth) and you can end up with a hefty fine from ASIC.
Company secretaries will generally take care of a wide range of administrative tasks such as taking minutes at board meetings, notifying ASIC when a director resigns, updating the register of members if and when a shareholder sells his or her shares and keeping accurate records. So while you don’t need to appoint an official company secretary (particularly in the beginning) you do need to ensure that someone is taking on these responsibilities.
When is a Company Secretary most relevant?
- When you have a group of shareholders
- When you are a listed entity - its a necessity
- When you are looking to put in place sound governance
- Not for profit
Who is allowed to be a Company Secretary?
If you are ready to appoint one, then you need to know who is allowed to be a company secretary. Firstly they must be a natural person over the age of 18 years and must ‘normally’ reside in Australia. They need to be appointed by the directors of the company, who will also determine the conditions and remuneration for the role. Because there are legal responsibilities attached to the role, the person appointed must give their signed consent to being the company secretary and this signed consent must be kept by the company. (You also need to advise ASIC of the appointment of a company secretary within 28 days of the appointment).
Whilst it can be anyone, normally an experienced Company Secretary who has knowledge of the Corporation Act and the risks associated with being a Company Secretary would take on this role. However, for public companies, the experience and qualifications of each company secretary must be disclosed in the annual report.
Depending on the size and resources of a company, the company secretary can be considered the chief governance specialist within an organisation, and it is a role which is increasingly relied upon by the board to provide advice and implement good governance practices. This chief governance specialist role is a more proactive role than in previous times.
Most likely a person outside your business would be your first port of call. So, if you don’t have a suitable person within your business to fulfil these duties you can also outsource this role. The Azure Group provide secretarial services as one of our Corporate Governance offerings. Find out more about company secretary and our other corporate governance services here.