As a company lawyer, one of the crucial widespread errors I see is failure to implement even fundamental company governance practices. This may result in astoundingly unhealthy locations in sure circumstances. However even when it doesn’t, it’s typically pricey to reconstruct previous company actions. And that value may be defrayed comparatively simply. A method to do this is by having – and utilizing – a company secretary.
Startups and entrepreneurs will not be acquainted with company secretaries or what they do. So let’s take a better look.
A company secretary is totally different from an administrative assistant, receptionist, or related positions. They’re company officers like CEOs or treasurers. In California, companies must have a secretary and LLCs or different entity sorts usually can have one. Right here’s what a company secretary does:
- Retains a e-book of minutes of stockholder and director conferences. This can be a key facet of company governance as minutes are a report of what was mentioned and determined in conferences. As I’m certain our litigators will agree, one of many key issues in partnership disputes is a failure to doc company actions. Good minute-keeping will clarify company choice making and is the cornerstone of company governance.
- Manages the corporate’s stockholder ledger, capitalization desk, org chart, and extra. These paperwork present who owns an entity, how a lot they personal, and their tackle for notices. This appears easy and fundamental, however it’s not. I’ve needed to symbolize shoppers in reconstructing years’ price of inventory issuances right into a cognizable ledger, and it’s not enjoyable or low-cost! Moreover, if an organization doesn’t have a listing of its stockholders’ addresses, giving required notices shall be not possible, impractical, and/or costly.
- Give discover of company conferences. Company bylaws, LLC working agreements, or different governing paperwork repair particular time tables and procedures for offering discover of conferences to stockholders, administrators, members, and many others. Failing to comply with these can result in drastic outcomes. A superb company secretary can keep away from many of those pitfalls.
- Preserve different company data. I needn’t clarify in additional element why that is obligatory for good company governance.
What about small companies that don’t have sufficient operations to justify a company secretary? Company bylaws will typically enable one particular person to carry a number of officer positions, so the issue may be prevented. If an individual is appointed secretary and might’t make a gathering, the board, officers, or in similar circumstances even the secretary can appoint an appearing or assistant secretary to carry out regular features in the course of the assembly. There might even be third events who can present company secretary providers on an hourly or non permanent foundation.
What about LLCs or different non-corporation enterprise entities? Although they aren’t companies, they will nonetheless usually appoint officers to serve on the whims of their managers or managing members (within the case of an LLC), companions (within the case of a partnership), or different managing individuals. Non-corporation entities needn’t adhere to the most of the similar formalities you’d see in an organization, however that doesn’t imply they shouldn’t crib from companies when useful. And having a company secretary actually does assist.
So in sum, a company secretary is totally obligatory for good company governance. Keep tuned to the Canna Law Blog for extra info on hashish company governance subjects.