Governance and Company Secretarial Practice

Major changes in the development of business enterprise within England can be traced back to the 11th Century (see appendix 1). Medieval England underwent a transformation from a largely agricultural base with ancillary trades (carpentry, farrier), to a semi-industrialised nation in the late 18th Century, with the formation of industrial enterprises. The first type of legislative business regulation and 'governance' was provided by the Guilds in the 12th and 13th Century. Guilds regulated the local market, looking after the rights of individual members and ensuring fair trade and protecting the public by regulating standards.

Great 'merchants' emerged in the 16th and 17th Century whose role was that of trader, manufacturer and banker. These 'providers of capital', often employed a 'steward' to watch over their stocks and possessions, who later became linked to future professional occupations (accountancy/secretarial practice). Trade and commerce expanded rapidly resulting in the formation of joint trade ventures and Chartered companies. The industrial revolution in the 18th Century created industrial entrepreneurs, who were often the owners and the financiers of enterprises.

The need for governance became more evident with the development of unincorporated companies defined by Tricker (1984) as "co-partnerships, in which some members ran the venture, with others as financial or sleeping partners". There was little legal protection for unincorporated companies, because company law was in very early stages of evolution. The first major development in company law was introduced in the early 19th Century, which recognised a need for stricter regulation and governance.

Thus, the role of the company secretary was identified as being vital, by those responsible for legislation in a developing society. The Emergence of the Company Secretary In 1732, Wooley notes the existence of the secretary. "The secretary is present at the Court of Assistants to take short minutes of the transcript of the Committee. Upon… loose sheets, by order of the sub-committee of Accountants… ". Whilst the 'company secretary' had not yet appeared in legislation, the nature of the duties of the secretary were documented.

For example, the 'Notes from the Committee Meeting of Hudson Bay Company' (1737) explain that the "secretary was instructed to purchase i?? 1,000 of East India Stock". The role of the company secretary has evolved with the development of business enterprise, company law and corporate governance. The Board of Trade, set up in 1825, was responsible for incorporating companies through issuing 'chartered status', which allowed a company to sue and be sued. Tricker (1984) chronicles the development of the company secretary from 1844.

With the introduction of the Joint-Stock Companies Act, all unincorporated companies were required to be registered and regulated. This Act also required the company directors to "conduct and manage the affairs of the company" (Act, 1844). For the first time the appointment of a secretary appeared in legislation. The Act included the appointment of the secretary, clerks and servants. Other responsibilities are included in appendix 2 The 1844 Act forms the basis of current company law, regarding regulation, registration and formation of companies.

The duties of the company secretary are closely linked with these three areas of company law, to ensure effective company regulation and ultimately, to protect the rights of the company stakeholders. The role of the company secretary augmented in 1855 when limited liability became official, and the 1862 Consolidating Act laid down the regulations for forming a company with or without limited liability (see appendix 2). The memorandum and articles of association for Barclays and Co Ltd, 1896, refer to duties of the company secretary as 'authorising documents tendered for registration, organising the sale and registration of shares'.

These particular memorandum and articles are based on the Companies Acts 1862-1890. The Chartered Institute of Secretaries, a Professional Association, was set up in 1891. The 1907 Limited Partnership Act introduced the concept of a 'private company', which was a company that did not require capital from public funds. These private companies did not need the strict disclosure requirements of a public company, such as, The 1929 Companies Act (Section 380) defined a company as "a company formed and registered under that Act, or as an existing company".

The 'existing company' is defined as "a company formed and registered under the Joint Stock Companies Act, the Companies Act 1962 or the Companies (Consolidation) Act 1907. It further defines the 'Joint Stock Companies Act' as "the Joint Stock Companies Act 1856, and certain other acts before 1862 but the expression does not include the Joint Stock Companies Act 1844, under which Act companies were first empowered to become incorporated, although without limited liability" (Chartered Institute of Secretaries, 1946). The Companies Act 1947/8 legalised the appointment of the secretary in all companies.

The Institute of Chartered Secretaries and Administrators (ICSA) states that "The requirement for all companies to appoint a company secretary has been contained in Company Law since 1947… " (ICSA, 2002). It was not until the Companies Act of 1980 that a distinction was made between public limited companies (Plc) and private (Ltd) companies. A Plc is a company "… that alone can issue its shares and debentures to the public" (de Freitas, 1996). A private company is one that cannot invite public subscription of its shares.

Private organisations, at this time, were further categorised into small, medium and large companies with limited requirements for smaller companies to file detailed records and accounts. With the introduction of the Plc, the role of the company secretary became of paramount importance. Company secretaries employed by Plc's were required by law to be professionally qualified and have the requisite knowledge and experience. A person who is not qualified, can only be appointed if they have held the post of secretary of a Plc for at least three years out of the last five years.