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While company secretaries are not mandatory for private limited companies, directors may choose to appoint one to assist with the director’s day-to-day operations. Public Limited Company (PLC), on the other hand, must have at least one secretary. Whether mandatory or optional, the appointment and removal of the company secretary must follow proper procedure for the company to comply with its legal obligations.
The Companies Act 2006 lays out the legal obligations of removing a company secretary, failure to which the company may be penalised. Read along to understand the legal requirements of appointing and terminating a company secretary.
Appointment of a company secretary
When appointing a company secretary, the company must ensure that it follows certain legal and procedural requirements. Limited companies may choose a secretary who may also act as the company director. However, if the company doesn’t hire a secretary, it must ensure that the responsibilities are carried out by the director. The Companies Act states the requirements for hiring a company secretary in a public limited company. They include;
- A suitable candidate has the knowledge and experience to discharge the functions of the secretary of the company.
- Has at least three years of the five years immediately preceding from appointment as secretary.
- A member of specified bodies, such as;
a) The Institute of Chartered Accountants in England and Wales;
b) The Institute of Chartered Accountants of Scotland;
c) The Association of Chartered Certified Accountants;
d) The Institute of Chartered Accountants in Ireland;
e) The Institute of Chartered Secretaries and Administrators;
f) The Chartered Institute of Management Accountants;
g) The Chartered Institute of Public Finance and Accountancy.
- A barrister, solicitor, or advocate admitted or called in any part of the UK.
Why remove a company secretary?
A company secretary may be removed for several reasons; however, the Companies Act 2006 lays out requirements for terminating them. Additionally, the company’s Article of Association also states how the company secretary can be removed and who has the right to terminate them.
For compliance with legal regulations, the company director must refer to the act and the articles of association. Some of the reasons why a company director may be removed include;
Misconduct
Every company has values, and if a company secretary goes against them, they may be terminated. Apart from company values, if the company secretary involves themselves in any illegal or unethical practices may be removed from their duties.
Incompetence
Once a company secretary is appointed, they have responsibilities that must be met. Once a secretary consistently fails to perform their duties, they may be removed from their post.
Breach of contract
A contract of employment is a legally binding contract between the employer and the employee. Once a company secretary violates the terms of their employment contract, they may be terminated.
Change in business needs
The company’s needs may change, especially when restructuring. This especially affects a private limited company, which does not require a company secretary. A public company must have at least one secretary.
What are the legal obligations to remove a company secretary?
When removing a company secretary, the director must follow the Companies Act 2006 procedures and regulations. According to the act, the secretary may be removed by the board of directors or by members through ordinary resolution. For a secretary to be removed through ordinary resolution, the members must hold a general meeting and comply with the articles of association.
Once the secretary is removed, the company must notify Companies House within 14 days; failure to the company may incur penalties or fines. The company must also update its statutory registers to reflect the removal of the secretary. The register of secretaries must specify the date and reason for removal. It must also specify the details of the newly appointed company secretary.
When a company decides to remove a company secretary, it must ensure a new secretary is appointed before the previous one is removed. This is because the company cannot be left without a secretary.
In conclusion, appointing and removing a secretary must comply with the Companies Act 2006. Additionally, the director should also check the company’s articles of association, which may outline the person in charge of removing a company secretary, such as company members.
Within 14 days of the company secretary’s removal, the company must inform Companies House. They must also update the statutory records of the company. To help keep company information updated in the public register, Icon Offices offers Confirmation Statements filing services. This ensures that all changes made in your company are updated in the Companies House register for transparency purposes.
To update your company changes, contact us at [email protected].
