Since 6 April 2008 private companies are no
longer required to have a Company Secretary.
Copyright 2006 - 2010 Taylors Solicitors
So what will happen to Company Secretaries?
Providing a Company’s Articles for Association do no expressly
require a Company Secretary the existing secretary can simply resign
their office and notification given to Companies House and the
Company Book be written up accordingly.
What if the Companies Articles of Association provide that we
need a Company Secretary in our Company?
If the expressed provisions of the Companies Articles of Association
stipulate that a Company Secretary is needed as many of them do then
the Company keeps their Company Secretary as before. If however, a
company wants to benefit from the change in the Companies Act 2006
then the Shareholders needs to pass a resolution to amend the
Articles of Association by deleting the references to the need to
have a Company Secretary.
What other items are consequential upon this change?
A Company had currently either to enter into agreement by signing
documents or in the case of documents which need to be executed as a
Deed to fix a common seal of the Company or have the signatures of
two directors or one director and the Company Secretary for the
Deeds to be validly executed. A Company is now able to execute
documents as Deeds by the signature of a single director providing
he or she signs in the presence of a witness.
So is my Company Secretary redundant?
If you can take advantage of the change in the law you do not need
an officer of the Company who has the responsibilities of Company
Secretary. It is very likely however, that a private company will
employ a full time Company Secretary whose responsibilities extend
beyond those that had previously been required pursuant to the
Articles or pursuant to the earlier Companies Acts. Those duties are
probably are of a financial or administrative nature, many financial
directors of Companies are also Company Secretary. It is only the
“office” that has disappeared not the job. It may however, be worth
re-considering the title of an appointee who has previously held the
title of Company Secretary, so as to avoid any conclusion with the
So if my Company’s Articles require a Company Secretary would it be
sensible for me to change them and so do away with the need to have
a Company Secretary?
That depends. Whilst the ability for documents to be signed by only
one single director creates more flexibility and less formality it
is not always a good thing. The old rule about signing documents
requiring either two Directors or a Director and a Secretary at
least meant that the Company Secretary (who as I say is often the
Financial Director as well) having some means of restraining
maverick Directors from signing contracts without the other board
members having sight of them. Whilst a number of public companies
and large private companies have well documented internal procedures
setting out levels of delegated authority, ie, a level of contract
spend a Director can enter into without board approval, this is less
common with private companies.
Please note that Public Limited Companies are still required to have
a Company Secretary but Private Companies who do away with the
officer of Company Secretary may have to think about implementing
stricter internal procedures over signing, perhaps making sure that
any contacts for over a certain level of spend need prior board
We can certainly advise you on implementation of relevant procedures
should you wish to consider them.
What other changes are there?
The main ones concern AGM’s and accounts. The procedure most
previously honoured in the breach was that of private companies
failing to hold Annual General Meetings. You will all be pleased to
know that they are no longer required. Private companies also no
longer have a need to lay their accounts and reports before the
Company in a general meeting. [But note that the period for filing
the annual accounts is reduced from 10 months to 9 months calculated
from the end of the relevant account reference period].
I have read that Companies have now to publicly publish their Annual
Reports and Accounts on their website. Does that apply to me?
It only applies to quoted companies and not private companies.
By way of postscript watch out for the engagement letters you are
receiving from your Auditors for accounting period post 6 April
2008. Auditors will be seeking to agree liability limitation
agreements with you so as to limit the Auditors liability to your
Company for their negligence, default or breach of duty of trust in
relation to the audit of your Company’s Accounts. The agreements can
only be entered into for one financial year at a time. Any such
agreement needs to be disclosed in the accounts to which the
limitation relates. Please be vigilant for these letters as in our
experience the levels of liability that Auditors have been seeking
to agree with Companies are very low and often linked to a
multiplier of the fees that you pay.
If you are a small private company, the Auditors mistakes could
easily exceed a multiplier of say 4 times the audit fee agreed for
that year. Our advice is to shop around or negotiate a higher
limitation figure or consult Taylors to ask us to consider whether
the limit is reasonable. While auditors are permitted by the
Companies Act 2006 to limit their liability and enter into limited
liability agreements these agreements are still subject to the law
about enforceability of limitation, which is governed by the