* For the purpose of this article, the terms directors and board are used generally to include any member of a governing body and/or committees of such governing bodies e.g. directors of company, board of trustees, council committee members etc.
To start off, it might be important to reflect on what the role of the company secretary has been over the years in order for us to gain an understanding and appreciation of the complexity that may be inherently involved in dealing with the subject of this article. Historically, company secretary’s role has been largely regarded as that of an administrator responsible for scheduling and arranging meetings; recording and capturing minutes of the meeting, highlighting the action points and resolutions; record keeping and the custodian of important company documents and performing some statutory compliance tasks. This has been evolving over the last couple decades and the contemporary role of the company secretary includes all the aspects relating to the traditional company secretary role, but with an added flavor of being a strategic partner of the board in the discharge of their duties.
The contemporary company secretary sits in a unique position with a vantage point especially if they are in-house, because they have unfiltered access to the board and they have intricate knowledge of the workings of the company. They are therefore able to engage and be the bridge between the management of the company and the board, especially the independent non-executive members. By the nature of their position, company secretaries are able to engage and support the board in the fulfilling of their role and they can easily see where there are challenges in the structure.
When Directors are not engaging board papers before the meeting.
Although it is a generally welcomed development that the contemporary company secretary is being appreciated and recognized on some boards, the reality is that in most cases many boards still perceive the company secretary in their traditional role and anything more than that could be interpreted as though the company secretary is overstepping their boundaries. You can then imagine, especially on boards upholding traditional view of the company secretary, when the company secretary recognizes that some member(s) of the board are attending meetings without having read the board meeting pack. This is something that is quite easy to see as a company secretary. Of course, this is assuming that board papers were circulated well ahead of time and that they are well written and not confusing to the readers (these are discussions for another day). What is one to do in such instances?
The easiest and probably the safest option is to engage with the chairperson of that board or committee on the non-preparedness of some member(s) when they come into meetings. This is often easier because if the chairperson is well-aware of their role & responsibility; and is as clued up as they ought to be, they will most likely pick up on the unpreparedness of such member(s) and would be glad to receive your counsel. But what happens when the chairperson is reluctant to engage with the member(s) concerned for fear of confrontation (especially when the member(s) concerned have very strong personalities) or the chairperson is simply not as bothered or too busy minding his/ her own business? Should that be the end of the road? Can a company secretary simply wash-off their hands and claim that they’ve done their part? I propose not. Let us consider some options.
I must caution here that one needs to be highly tactful and have an extremely strong EQ bandwidth because this could easily become a landmine and be perceived as though the company secretary is over-stepping their bounds, involving themselves with matters that do not concern them. It is in instances like these where you will hear sentiments such as “stick to minuting and stay in your lane”. With that said, let’s consider a few options:
- Establish trust and be respectful.
One of the most important arsenal in any company secretary’s quiver is establishment of trust with all members of the governing body. Coupled with that, is being respectful and communicate in a manner that illustrates that one is mindful of the power dynamic that exist between the company secretary and the members of the governing body they are serving. One should avoid engaging in ways or manner where they come across as being instructing to the board but should rather be advising for the common good.
2. Remind them of their fiduciary duties.
When you have earned their trust and confidence, respectfully remind the directors concerned of their fiduciary responsibilities and where possible, schedule a private meeting with them and find means to highlight the importance of preparing for meetings. There is no one-size-fits-all solution to these situations and each case must be dealt with on its own merit. What is important though is that the company secretary must highlight to them what their fiduciary responsibilities are and why it is important for them to actively prepare and engage in meetings.
3. Board evaluations and trainings.
One of the tools that can be used to address such challenges is board evaluations and board training sessions. The good thing about these is that they can be externally facilitated which creates a level of independence in dealing with and addressing issues. The disadvantage with evaluations is that they are often done once a year at best or once in a couple of years which may not address an urgent challenge at hand. In unfortunate circumstances, some boards do not even consider the importance of these evaluations and sometimes they are done as a tick-box exercise which will not yield any meaningful results. If the chairperson is amenable, one could consider adding a standing item to the agenda wherein the board will do a quick self-evaluation at the end of every meeting to determine if they were able to effectively discharge with the tasks of the meeting in an efficient and effective manner.
4. Pre-board meeting briefing sessions with members.
One of the tools that can be used, though it may prove to be more work for the company secretary is, having consulted with the board chair, to schedule time in the calendar where they make themselves available for any members to reach out to them to get clarity on any of the matters that are presented in the board papers. Once again, this could mean extra work for the company secretary but if one is to be relevant within their contemporary role, one might need to walk this extra mile.
What could be the impact of members not engaging with the board papers?
When directors show up at a meeting without having read the board papers, it often results in time being wasted because most of the material that is already included within the meeting pack will have to be repeated instead of members just spending time focusing on discussing the matters at hand (this obviously assumes that board papers are well-written and were circulated well on time – a conversation for another time). This results in meetings being unnecessarily long which also affects the decision-making process of the board.
Coming to meetings without reading the board papers will also rob the board of an opportunity to robustly engage on matters and benefit from the diverse views of the members serving on that board. Furthermore, it will often compromise the quality of the decisions that are made by that board. This could have dire consequences for the entity as this may even affect the viability and the sustainability of the organisation. The board is mandated to develop and monitor the implementation of the strategy by the management and when members of the board attend meetings without thoroughly preparing, they are not able to effectively monitor and engage on the performance of the entity not only against its set targets, but against the market and industry trends that will have a direct bearing on the ability for the organisation to stay in business.
These are some of the ways with which a company secretary, a contemporary company secretary, can explore as part of their value add towards the board especially when considering their evolving role into becoming corporate governance custodians.
If you happen to be dealing with any issue related to what we have discussed here and you need guidance or advise, or if you are just curious to engage more on this subject or any governance related matter, please do get in touch or schedule a chat for us to engage more.