This week we chatted with Sharon Ah Lin, a chartered company secretary working at Rogers and Company Limited, a diversified holding listed on the Official List (i.e. the Main Board) of The Stock Exchange of Mauritius Ltd.
Sharon has over 13 years' experience within company secretarial and board practices and has extensive experience of corporate transactions including IPO and M&A. Sharon holds a BA Honours Business Law and International Business (UK) as well as an ACIS (Associate) with ICSA (UK).
What are the key risks you are seeing in work undertaken by company secretaries, and how do you suggest they are mitigated?
There has been a recent spate of regulatory and legislative changes, all impacting governance strategies and practices. As the governance custodians, the company secretary operates at the centre of this change and is required to ensure that the right people within the organisation are kept abreast of developments and that they are approved by the board.
Having to assimilate both the volume of information and its implications in a short time span is challenging. Not least, because as at the same time company secretaries are also required to run a tight ship with regard to their other duties; whether attending board and shareholders meetings, devising compliance checklists and timelines for important projects (for example, an IPO), or supervising the smooth progress of major corporate transactions and conducting due diligence.
Failing to understand the implications of regulatory or legislative developments or ensure their effective implementation across the organisation could dent the reputation of the organisation or cause a material impact on the business. A single innocent oversight can have serious consequences.
In such high-pressure circumstances, company secretaries should take a step back. Take stock of the situation with calm eyes, get a helicopter view of the totality of the organisation’s governance requirements, reassess priorities and make adjustments accordingly.
Utilise the resources you have – a vital one will be your team. For instance, junior or assistant company secretaries could be called upon to take on more responsibilities in complex projects. This will not only allow them to acquire first-hand experience and help build a robust company secretarial team. It is also proactive succession planning. Alternatively, some of the legal work could be judiciously outsourced. These measures will then help company secretaries to focus on the broader strategic issues and complex problem-solving matters, and help them stay on top of the shifting governance landscape.
Do you think that board members fully understand the company secretary’s role?
The role of the company secretary has evolved considerably over the last 10 - 15 years. The role was initially viewed as being an administrator, before becoming the custodians of compliance and latterly the drivers of corporate governance.
Generally speaking, I would say there are varying levels of understanding among board members about the role.
Although, more broadly, there is a growing recognition of the importance of the role of the company secretary, sadly there are still some directors who misunderstand its purpose. They perceive the company secretary as being purely an administrator or a minute taker. In so doing, they risk ignoring an invaluable resource and failing to obtain the best possible guidance.
On the other hand, more and more directors appreciate the contribution brought by the company secretary. By working together to build better boards and successfully carry out complex projects, they understand that there are lot of things that happen behind the scenes and that it is the company secretary who ‘oils the wheels’.
There are also some directors who grasp that the company secretary can be equally commercially minded and adds value by providing pragmatic guidance that enables the business strategy of the organisation.
Finally, you do have a few directors with a strong interest in governance. The depth and breadth of their knowledge can be overwhelming and intriguing at the same time. People like them keep the company secretary on their toes and make the governance journey beautiful.
How do you think emerging technologies such as AI and blockchain will impact the role of governance professionals in the future?
Change is constant and inevitable. With recent technological innovation, some aspects of the company’s secretary role have already evolved. The Entity management, access and management of compliance data and maintenance of statutory registers are done electronically on company secretarial software, while filing of statutory documents and accounts are done online. Alongside this, meetings are managed online, with a soft board pack available to all directors, wherever they might be.
These tasks are currently carried out by the compliance staff, allowing the company secretary to scale creative efforts, focus on more strategic work and solve complex problems.
However, with emerging technologies such as AI and blockchain, the role of the company secretary is expected to change even further.
AI in particular could have a huge impact and I think the company secretary will one day work alongside a robot aid. Let’s call the robot Alfie!
Alfie would undertake the aforementioned administrative tasks and relieve the company secretary from the burden of tracking regulatory change management and capturing new obligations. Additionally, Alfie would provide support in terms of safeguarding corporate memory - i.e. the history of corporate transactions, significant changes (including rationale) to the way the board has operated and the organisation’s strategy.
However, there are of course some caveats. There will be areas where Alfie could encounter some difficulty. As is, Alfie would be taking verbatim minutes. In the event you have a board meeting which lasts 3 - 5 hours, you should then expect a lengthy transcript with over-wordy sections and some irrelevant content; for example, a director asking which page of a report we are on. Conversely, a good company secretary is able to listen to multiple voices, capture arguments and tone, summarise accurately and record the decisions taken.
Or, for example, if you had a group of directors who decided to proceed with a walk-out, how would Alfie handle this situation? Would it be able to capture that we might be inquorate at this stage of meeting and how would it support the Chairman?
Emotional and situational intelligences are two things that are at the heart of the company secretary’s role and that AI such as Alfie would likely lack.
There’s a lot of talk around diversity (also beyond gender) in the boardroom. What are your thoughts on this?
Progress has been very slow to increase gender diversity in the boardroom. Efforts to address other areas of diversity, in terms of ethnicity, disability and social background, have proved even harder.
With investors sharpening their focus on various aspects of board oversight, such as ESG, cybersecurity and diversity, they have come to appreciate that diverse boards are a way to mitigate against groupthink and legal risk.
Some would push diversity of thought which is without a doubt more important than the ticking of any ‘diversity box’, but there is more to it. For example, generational diversity.
Although we work with colleagues of different ages in the workplace, Millennials and Generation Z are not adequately (if at all) represented on the board. They are the future and having them in the boardroom can be extremely beneficial, so this is a gap which needs to be looked into.
These generations are driving changes in lifestyle trends and are impacting businesses. This is particularly evident in the Fintech industry, which moves very rapidly, and environmental and sustainable markets. Their digital mindset, knowledge and understanding of technology, such cybersecurity and AI, and concerns about value creation and environmental issues, would help the board and companies make that shift to digital transformation, find a new generation of customers and ultimately enhance the corporate culture.
As companies look towards the future, it would be useful for boards to find the right balance between experience and substance. Let’s balance for the better!
You can follow Sharon on Linkedin.