Is the traditional In-House Company Secretarial role at a crossroads?
In 2008, the government removed the mandatory requirement for private companies to appoint a Company Secretary. Yet, the role of the Company Secretary is as important as ever. Several high-profile business failures have promoted the status of Corporate Governance and so an effective Company Secretary must step forward to ensure that organisations are properly managed and run. As a result, we are now in the age where the Group Company Secretary is expected to be a trusted advisor to The Board and at the forefront of corporate governance; not just a high-level administrative officer.
So, with this in mind, is the Company Secretarial function still best structured on an in-house basis or should it be outsourced? What is the most appropriate format for your organisation?
This will depend on various factors such as the jurisdiction in which the company operates in, the size of the organisation and the sector in question. These elements will bring different challenges and give rise to different approaches. Here’s a look at some of the compelling reasons to keep the role in-house:
Knowledge of the Business
Given that the Company Secretarial function does in many ways act as the focal point between the various business areas such as legal, tax, accountancy, treasury and reports directly to The Board, an in-depth knowledge of the business is highly beneficial. This knowledge may be more readily achieved by someone with greater exposure to the day-to-day functioning of the organisation.
Confidentiality and Access
Given that the Company Secretary works so closely with The Board and is privy to highly sensitive information the in-house role may therefore still be more appropriate.
One of the main items of feedback I hear from those working in professional services is not having as much influence and involvement in the decision-making process compared to those working in-house. If you are working in-house, you may just be a short walk away from your key decision makers in the business and the Company Secretarial function may add greater value.
On the other hand, in an age of increasing regulatory and legislative bureaucracy, perhaps it is more appropriate to engage specialists on an ‘as and when required’ basis? Here’s a look at some of the reasons:
Cost and Efficiency Savings
It is certainly true that the benefits of employing someone on a full-time permanent basis in-house may not justify the costs. Whilst there is the annual cycle of work that needs to be carried out; the volume of work varies greatly from day-to-day and there may be several quiet periods without the need for full-time support.
Company Secretarial tasks can vary between the more simplistic, standardised tasks such as filing of confirmation statements and company formation to highly specialised technical work, such as carrying out share buybacks or implementing governance framework reviews. Both ends of the spectrum can be usefully outsourced. As such, if this work is always kept in-house, it may well get done, but it may not get done as quickly and be done by someone who is a specialist in the field.
Competitive Pricing and Best Practice
What can certainly be said about an outsourced service is there is a greater commercial need to carry out any work on a best practice basis. This may not be the case in-house where legacy processes and systems may not have the relevant incentive to change. Further, with an increasing supply of company secretarial services across accountancy firms, law practices, company secretarial providers and company formation agencies, there is a commercial pressure to keep pricing competitive.
‘One-stop shop’ corporate services providers
There are an increasing number of corporate services providers–large and small–that can take on a range of functions across legal, company secretarial, payroll, HR and more. In addition, increasingly, the line seems to be blurred between accounting and legal services in light of a number of high-profile acquisitions. The benefit of this from a business perspective is that a whole gamut of service can be handled ‘under one roof’ – potentially enabling economies of scale and cost-savings to be achieved.
In conclusion, I think it is important to constantly evaluate how your team is structured. You may feel that certain work is best outsourced to free up valuable time and cost in your business instead of relying on your In-house team, who may not be specialists. You may be a small firm that will struggle to employ an in-house team from the outset and instead pick and choose which areas of support you require. You may take the view that the role of the Company Secretary is such a focal point that having an in-house team – at least to some extent, is required.
So, what are your thoughts on this; how appropriate is it to outsource your Company Secretarial work? What are the challenges associated with working in-house or in an outsourced capacity? How do you think the role of the Company Secretary will evolve?
About the author:
Mark Chambers is an ACIS qualified Chartered Company Secretary with experience gained in both private practice, along with a range of FTSE listed organisations. Now, he recruits exclusively for Company Secretaries into both in-house and professional services-based roles.
Please get in touch if you’d like to discuss how I can help:
Telephone: 0207 649 9298
Please also check out the Cosec page on our website: https://www.g2legal.co.uk/company-secretarial