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Reporting lines

Analysis of how the governance lead should report, and to whom

The role of the governance lead

In a limited company, the company secretary is a key member of the executive team appointed by the board as an officer of a company with specific responsibility to the entity as a whole for its sound corporate governance and for the guidance of the board in its responsible and effective execution of its tasks. Boards have a right to expect the company secretary to give impartial advice and to act in the best interests of the company.

However, it is incumbent upon boards to ensure that the company secretary is in a position to do so, for example by ensuring that he or she is not subject to undue influence of one or more of the directors. If the board fails to protect the integrity of the company secretary’s position, one of the important built-in internal controls available to the organisation is likely to be seriously undermined. The establishment of appropriate reporting lines for the company secretary will normally be a crucial factor in establishing that protection. It will also be important for non-executive directors to have access to the advice and services of the company secretary and for them to support the company secretary in his or her role.

It is neither practical nor desirable in terms of line management for the company secretary to report on a day-to-day basis to all the directors. However, it is important not to lose sight of the ultimate line of authority when establishing these reporting lines. The company secretary is responsible to the board of directors collectively rather than to any individual director. The UK Corporate Governance Code reinforces this by stating:

Both the appointment and removal of the company secretary should be a matter for the board as a whole.

Reporting guidelines

The following guidelines on reporting lines for the company secretary are considered to be the most conducive to the proper performance of the role. They are based on established practice in most large companies, but they may be used in organisations of all sizes and adapted accordingly where the governance lead is not a formal company secretary. Departures from these guidelines will reduce the ability of the postholder to perform their core duties in accordance with the standards which boards of directors should expect.

  1. The company secretary is responsible to the board and should be accountable to the board through the chair on all matters relating to corporate governance and his/her duties as an officer of the company (core duties).
  2. As the person elected by the directors to act as their leader, the chair is the person to whom the company secretary should report with respect to responsibilities which concern the whole
  3. If, in addition to the core duties mentioned above, the company secretary has other executive or administrative duties, he/she should report to the chief executive or such other director to whom responsibility for that matter has been delegated by the
  4. The company secretary should not report to a director (except the chair) on any matter unless responsibility for that matter has been delegated to that director by the

A director who is authorised unilaterally to fix the company secretary’s remuneration and benefits could gain undue influence. It is therefore recommended (particularly where the company secretary reports to the chair on all matters) that decisions on remuneration and benefits should be taken (or at least noted) by the board as a whole or the relevant committee thereof.