OTHER COMPANY OFFICERS

THE COMPANY SECRETARY

 Every public company must have a company secretary, who is one of the officers of a company
and may be a director.

 Private companies are not required to have a secretary.

 APPOINTMENT OF A COMPANY SECRETARY

To be appointed as a company secretary to a plc, the directors must ensure that the candidate
should be qualified by virtue of:

 Employment as a plc's secretary for three out of the five years preceding appointment
 Membership of one of a list of qualifying bodies: the ACCA, CIMA, ICAEW, ICAS, ICAI or CIPFA
 Qualification as a solicitor, barrister or advocate within the UK
 Employment in a position or membership of a professional body that, in the opinion of the
directors, appears to qualify that person to act as company secretary
 SOLE DIRECTOR

 A sole director of a private company cannot also be the company secretary, but a company can
have two or more joint secretaries.

 A corporation can fulfil the role of company secretary.

 A register of secretaries must be kept.

 DUTIES OF A COMPANY SECRETARY

 The specific duties of each company secretary are determined by the directors of the company.

 As a company officer, the company secretary is responsible for ensuring that the company
complies with its statutory obligations.
 DUTIES OF A COMPANY SECRETARY

In particular, this means:

1. Establishing and maintaining the company's statutory registers

2. Filing accurate returns with the Registrar on time
3. Organising and minuting company and board meetings
4. Ensuring that accounting records meet statutory requirements
 DUTIES OF A COMPANY SECRETARY

1. Ensuring that annual accounts are prepared and filed in accordance with statutory
requirements
2. Monitoring statutory requirements of the company
3. Signing company documents as may be required by law
 DUTIES OF A COMPANY SECRETARY

 Under UK Corporate Governance guidelines the company secretary should:

1. Ensure good information flows within the board and its committees
2. Facilitate induction of board members and assist with professional development
3. Advise the chairman and the board on all governance issues
POWERS AND AUTHORITY OF A COMPANY SECRETARY

The powers of the company secretary have historically been very

limited.

However, the common law increasingly recognises that they may be

able to act as agents to exercise apparent or ostensible authority,
therefore, they may enter the company into contracts connected
with the administrative side of the company.
 PANORAMA DEVELOPMENTS (GUILDFORD) LTD V
FIDELIS FURNISHING FABRICS LTD 1971
The facts: B, the secretary of a company, ordered cars from a car hire firm, representing that they
were required to meet the company's customers at London Airport. Instead he used the cars for his
own purposes. The bill was not paid, so the car hire firm claimed payment from B's company.

Decision: B's company was liable, for he had apparent authority to make contracts such as the
present one, which were concerned with the administrative side of its business. The decision
recognises the general nature of a company secretary's duties.
 THE COMPANY AUDITOR

 Every company (apart from certain small companies) must appoint appropriately qualified
auditors.

 An audit is a check on the stewardship of the directors.

 Under the Companies Act 2006 (TSO, 2006) every company (except a dormant private company
and certain small companies) must appoint auditors for each financial year.
 APPOINTMENT

 The first auditors may be appointed by the directors, to hold office until the first general meeting
at which their appointment is considered.

 Subsequent auditors may not take office until the previous auditor has ceased to hold office.

 They will hold office until the end of the next financial period (private companies) or the next
accounts meeting (public companies) unless reappointed.
 APPOINTMENT OF AUDITORS

Members • Usually appoint an auditor in general meeting by ordinary resolution.

• Auditors hold office from 28 days after the meeting in which the accounts are laid
until the end of the corresponding period the next year. This is the case even if the
auditors are appointed at the meeting where the accounts are laid.
• May appoint in general meeting to fill a casual vacancy.

Directors • Appoint the first-ever auditors. They hold office until the end of the first meeting at
which the accounts are considered.
• May appoint to fill a casual vacancy.

Secretary of State • May appoint auditors if members fail to.

• Company must notify Secretary of State within 28 days of the general meeting
where the accounts were laid.
 ELIGIBILITY AS AUDITOR

Membership of a recognised supervisory body is the main prerequisite for eligibility as an auditor. An
audit firm may be either a body corporate, a partnership or a sole practitioner.

A person holds an 'appropriate qualification' if they:

a) Have satisfied existing criteria for appointment as an auditor
b) Hold a recognised qualification obtained in the UK
c) Hold an approved overseas qualification
 INELIGIBILITY AS AUDITOR

Under the Companies Act 2006, a person may be ineligible on the grounds of 'lack of independence’.
A person is ineligible for appointment as a company auditor if they are:

 An officer or employee of the company being audited

 A partner or employee of such a person
 A partnership in which such a person is a partner
 Ineligible by virtue of the above for appointment as auditor of any parent or subsidiary
undertaking where there exists a connection of any description as may be specified in regulations
laid down by Secretary of State
 EFFECT OF LACK OF INDEPENDENCE OR INELIGIBILITY

The legislation does not disqualify the following from being an auditor of a limited company:
1. A shareholder of the company
2. A debtor or creditor of the company
3. A close relative of an officer or employee of the company
 REAPPOINTING AN AUDITOR OF A PRIVATE COMPANY

 The rules on appointment make reference to a meeting where the accounts are laid.

 This is not always relevant for private companies as under the Act they are not required to hold an
AGM or lay the accounts before the members.
 REAPPOINTING AN AUDITOR OF A PRIVATE COMPANY

 Therefore auditors of private companies are deemed automatically reappointed unless one of
the following circumstances apply.
 The auditor was appointed by the directors (most likely when the first auditor was appointed).
 The articles require formal reappointment.
 Members holding 5% of the voting rights serve notice that the auditor should not be reappointed.
 A resolution (written or otherwise) has been passed that prevents reappointment.
 The directors have resolved that auditors should not be appointed for the forthcoming year as
the company is likely to be exempt from audit.
 AUDITOR REMUNERATION

 Whoever appoints the auditors has power to fix their remuneration for the period of their
appointment.
 It is usual when the auditors are appointed by the general meeting to leave it to the directors to
fix their remuneration (by agreement at a later stage).
 The auditors' remuneration must be disclosed in a note to the accounts.
 EXEMPTION FROM AUDIT

Certain companies are exempt from audit, provided the following conditions are fulfilled.

 A company is exempt from the annual audit requirement in a financial year if it meets the criteria
for being a small company (two from, turnover being less than £10.2 million, balance sheet total
not more than £5.1 million and having 50 or fewer employees)

 The exemptions do not apply to public companies, banking or insurance companies or those
subject to a statute-based regulatory regime.
 EXEMPTION FROM AUDIT

 The company is a non-commercial, non-profit-making public sector body, which is subject to audit
by a public sector auditor.

 Members holding 10% or more of the capital of any company can veto the exemption.

 Dormant companies which qualify for exemption from an audit as a dormant company.
 DUTIES OF AUDITORS

The statutory duty of auditors is to report to the members whether the accounts give a true and fair
view and have been properly prepared in accordance with the Companies Act.
They must also:
1. State whether or not the directors' report is consistent with the accounts.
2. For quoted companies, report to the members on the auditable part of the directors'
remuneration report including whether or not it has been properly prepared in accordance with
the Act.
3. Be signed by the auditor, stating their name, and date. Where the auditor is a firm, the senior
auditor must sign in their own name for, and on behalf, of the auditor.
 DUTIES OF AUDITORS

To fulfil their statutory duties, the auditors must carry out such investigations as are necessary to
form an opinion as to whether:
1. Proper accounting records have been kept and proper returns adequate for the audit have
been received from branches.
2. The accounts are in agreement with the accounting records.
3. The information in the directors' remuneration report is consistent with the accounts.
 RIGHTS OF AUDITORS
Access to records A right of access at all times to the books, accounts and
vouchers of the company.
Information and explanations A right to require from the company's officers, employees
or any other relevant person, such information and
explanations as they think necessary for the performance
of their duties as auditors.
Attendance at/notices of general meetings A right to attend any general meetings of the company
and to receive all notices of and communications relating
to such meetings which any member of the company is
entitled to receive.
Right to speak at general meetings A right to be heard at general meetings which they attend
on any part of the business that concerns them as
auditors.
Rights in relation to written resolutions A right to receive a copy of any written resolution
proposed.
 AUDITORS' LIABILITY

 Under the Companies Act any agreement between an auditor and a company that seeks to
indemnify the auditor for their own negligence, default, or breach of duty or trust is void.

 However, an agreement can be made which limits the auditor's liability to the company.

 Such liability limitation agreements can only stand for one financial year and must therefore be
replaced annually.
 TERMINATION OF AUDITORS' APPOINTMENT

 Departure of auditors from office can occur in the following ways.

 Auditors may resign their appointment by giving notice in writing to the company delivered to
the registered office.
 Auditors may decline reappointment.
TERMINATION OF AUDITORS' APPOINTMENT

Auditors may be removed from office before the expiry of their appointment by
the passing of an ordinary resolution in general meeting. Special notice is
required and members and auditors must be notified. Private companies cannot
remove an auditor by written resolution; a meeting must be held.

Auditors do not have to be reappointed when their term of office expires,

although in most cases they are. Special notice must be given of any resolution
to appoint auditors who were not appointed on the last occasion of the
resolution, and the members and auditor must be notified.
 RESIGNATION OF AUDITORS

However auditors leave office they must either:

 State There Are No Circumstances Which Should Be Brought To Members' And Creditors'
Attention
 List Those Circumstances.

Auditors Who Are Resigning Can Also:

 Circulate A Statement About Their Resignation To Members
 Requisition A General Meeting
 Speak At A General Meeting.
 PROCEDURES FOR RESIGNATION OF AUDITORS
Statement of circumstances • Auditors must deposit a statement at the registered
office with their resignation stating:
• For quoted companies – the circumstances around
their departure.
• For non-quoted public companies and all private
companies – there are no circumstances that the
auditor believes should be brought to the attention
of the members or creditors.
• If there are such circumstances the statement
should describe them.
• Statements should also be submitted to the
appropriate audit authority.
Company action • The company must send notice of the resignation to
the Registrar.
• The company must send a copy of the statement of
circumstances to every person entitled to receive a
copy of the accounts
 PROCEDURES FOR RESIGNATION OF AUDITORS

Auditor rights If the auditors have deposited a statement of

circumstances, they may:
• Circulate a statement of reasonable length to the
members.
• Requisition a general meeting to explain their
reasons.
• Attend and speak at any meeting where
appointment of successors is to be discussed.
 REMOVAL OF THE AUDITOR FROM OFFICE
Auditor representations If a resolution is proposed either to:
• Remove the auditors before their term of office expires
• Change the auditors when their term of office is complete, the auditors have
the right to make representations of reasonable length to the company
Company action The company must:
• Notify members in the notice of the meeting of the representations
• Send a copy of the representations in the notice
• If it is not sent out, the auditors can require it is read at the meeting
Attendance at meeting Auditors removed before expiry of their office may:
• Attend the meeting at which their office would have expired
• Attend any meeting at which the appointment of their successors is
discussed
Statement of If auditors are removed at a general meeting they must:
circumstances • Make a statement of circumstances for members and creditors