One secretary 'can act for many firms'

One secretary 'can act for many firms'
The Singapore city skyline

A CAP on the number of firms that a company secretary can act for may not be necessary, say market players.

Much hinges on the quality of service offered, apart from the number of appointments the company secretary holds.

In an ongoing high-profile case involving former tour guide Yang Yin and a wealthy widow's assets, reports that Ms Lim Soh Sea - the company secretary of Mr Yang's company - also acts for more than 1,000 companies have raised questions over whether such a large number is appropriate.

But this number is not that unusual, market players say.

Many companies here often engage professional firms that provide corporate secretarial support services, instead of hiring a company secretary themselves.

A situation could thus ensue where the employee or director of the secretarial firm is on the books of a large number of firms. Regulations here say every company has to appoint a secretary within six months of its incorporation.

The company secretary handles administrative matters such as keeping records, taking down minutes and filing returns promptly. A check with the Accounting and Corporate Regulatory Authority (Acra) which regulates business entities said that it does not impose a cap on the number of companies a company secretary can act for.

"The Companies Act does not restrict or specify the number of companies that a company secretary can act for," said an Acra spokesman.

Other countries like Australia and New Zealand also do not have such rules, the spokesman added.

But market players say that there are safeguards in place to prevent abuse.

PwC Singapore, which provides secretarial services, said it does not have a limit for now.

"While we do not have a cap per se, we regularly review the chartered secretaries' portfolios to ensure that they can cope with the requirements of their clients, and that the quality of work is always maintained at a high standard," said Mr Melvin Poon, PwC Singapore's corporate support services leader.

Corporate lawyer Adrian Chan noted that the work of a company secretary is administrative in nature.

"I don't think a limit should be placed because it's not a good proxy for quality. If there is a strong team of people to support the company secretary, he can be just as competent, qualified and responsive in serving the clients."

Mr Robson Lee, a partner at law firm Shook Lin & Bok, said: "Theoretically, it may not be such an easy task monitoring 1,000 companies, but if he can do it, if there is no breach or default, who are we to question if he should not take on so many jobs?"

Corporate governance expert, Associate Professor Mak Yuen Teen of the National University of Singapore Business School pointed out that many companies that are formed could be paper companies that do not require much work on the part of the company secretary.

But if the firms are substantive companies, Prof Mak said it would be difficult to commit to so many.

"Even if those are paper companies, there's still the reputational risk that the company secretary has to bear if he spreads himself very thin in so many companies. The issue is whether the due diligence can still be carried out on his part."

Listed companies, however, face tougher standards.

For example, Acra said these include requiring the company secretary to be either a public accountant, a lawyer or a chartered secretary.

Any company secretary who fails to keep to prescribed deadlines for filing documents may also be debarred and prevented from taking on new appointments.

The experts say the onus is still on company directors, who have the fiduciary duty to act in the best interests of shareholders and the firm, to ensure company secretaries do their job and that things run smoothly.

feimok@sph.com.sg


This article was first published on Oct 23, 2014.
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