We sat down with Sara Johns, former Partner at Ogier, the renowned global legal firm, and asked her a few questions on how the role of Company Secretaries has evolved over time and how technology fits into it.
Over recent years, how have changing regulatory environments impacted the work effort required in company secretarial functions (e.g. GDPR)?
In the last few years, we have seen many regulatory changes that have had a huge impact on the company secretarial role. In Jersey, these have included not only changes to our local employment and discrimination laws, but also overseas developments that have impacted companies in the island such as FATCA, CRS, the UK trusts and PSC registers, and of course GDPR.
Company secretaries have played an increasingly pivotal role in keeping up with these regulatory changes and the co sec function has evolved accordingly. Internal recordkeeping and administration remain an important part of the job, but company secretaries need to be increasingly outward-looking, monitoring developments in corporate governance and regulation that affect the company and advising boards on compliance issues.
GDPR is a good example of this. It is a regulatory change that has generated a vast amount of interest and a vast amount of information, and it represents a real shift in the way data is protected and individuals' rights are enforced. Companies worldwide have been affected by GDPR because of its extra-territorial reach in protecting the data of EU citizens, and Jersey has also introduced its own legislation to ensure the island has an equivalent data protection regime. Getting to grips with these reforms and understanding their impact has been a huge challenge for a lot of companies, and company secretaries have often been at the forefront of this learning and development exercise.
All of this takes time, so naturally the work effort required from company secretaries has increased exponentially in recent years.
What are the key risks you are seeing in work undertaken by company secretaries, and how do you suggest they are mitigated?
More and more regulation requires genuine engagement across an organisation to ensure compliance. A data breach by a single junior employee, for example, can now have massive strategic and reputational implications for a business.
Company secretaries occupy a unique position in a company, as they effectively sit between the executive and the board. They have privileged access to the directors and often act as a bridge between them, the management and the staff. As a conduit of information and influence, the company secretary can reach personnel at all levels, all of whom need to be aware of the regulations impacting the company and sufficiently engaged to ensure compliance.
As such, a key risk for any company is the company secretary failing to disseminate this information and exercise this influence effectively to support the implementation of changes right across the business.
Following on from this, the pace at which the regulatory landscape continues to evolve and the sheer volume of information that needs to be assimilated are two other factors that represent real risks for those charged with ensuring companies stay ahead of the curve. An important part of the company secretary's role is to support the board in identifying and preparing for the challenges and opportunities that lie ahead; if a key governance issue arises that is not appropriately addressed, this could have a material impact on the business.
So a company secretary who focusses on the minutiae but fails to take account of the bigger picture is also a big risk for any company.
In terms of mitigating these risks, it is vital that every company secretary recognises the importance of these aspects of their role and adjusts their priorities accordingly. Relying on carefully chosen external advisors to provide succinct, reliable and up to date information on upcoming issues that may affect the company can also help a lot.
Do you see the role of the company secretary changing, focussing more broadly on strategy and corporate communications, rather than just internal administration? If so, will the role require a different set of skills?
Ultimately, the strategic direction of the company is the responsibility of the board, but the company secretary is certainly a key contributor to the formulation and implementation of that strategy for the reasons we have discussed. A company secretary who is experienced in delivering good corporate governance is also well used to assessing risk, and so again can often contribute invaluable advice to the board from this perspective.
In terms of communication, the need to ensure wide engagement throughout an organisation in areas such as data protection means that good internal communication is more important now than ever. Whilst the company secretary will not necessarily take the lead in preparing general written communications to staff, he or she will certainly be an important voice in terms of helping to convey and endorse key messages at all levels of the business. The company secretary will also be expected to be central to developing and enforcing the internal policies and procedures needed to ensure compliance with applicable regulatory requirements.
From an outward-facing perspective, the company secretary will be in the front line in terms of managing external corporate communications, including stock exchange announcements, letters and notices to shareholders and dealings with regulators. The way in which these external communications are handled can make or break a company, so the importance of this aspect of the company secretary's role should never be underestimated: his or her ability to communicate and engage effectively with stakeholders at all levels both inside and outside the organisation is absolutely paramount.
As the world embraces innovative technology, do you feel that company secretarial functions are being served sufficiently?
If changes in regulation represent one of the biggest challenges to company secretaries, innovative technology arguably represents the biggest opportunity. A lot of businesses are now seeking to differentiate themselves in terms of their delivery, aiming to deliver products and services better, faster, cheaper. The strategic use of technology to support this objective is placing increasing numbers of companies at a distinct advantage over their competitors.
Company secretaries have already benefitted from technological advances to some extent. For years, suppliers have been productising low risk services and corporate governance toolkits abound on search engines. But that is just the beginning. Artificial intelligence solutions are already used by banks and others in the financial services industry to handle transactional compliance, screening for indicators of fraud, money laundering, insider dealing and the like. As these AI solutions start to become mainstream and are developed to support other high volume functions, the role of the company secretary looks set to move still further away from its administrative roots.
With increased automation of administrative tasks, do you think that this enables the role of a company secretary to become more effective?
Inevitably, the role of the company secretary, like so many others, will change as more and more automation is introduced into our business processes. As that happens, the skill set needed to perform the role will change too. Emphasis will still be placed on the strategic and communication skills we have talked about, but ironically company secretaries will also need to be increasingly tech savvy in terms of procurement (picking the right tools) and implementation (using them to best effect). Those company secretaries able to bring this extra skill to the table are likely to play an even more important role in the companies of the future.