The need for a Regulated Person to review and assess their corporate governance arrangements through a “periodic self-assessment, or external assessment, of the board’s effectiveness” is a Jersey regulatory requirement.
Whilst many will confidently say they undertake annual board effectiveness reviews, it’s surprising just how many don’t consider a review of the effectiveness of the company secretariat function to be an integral part of that process. And no – being aware of a backlog of minutes and agreeing to resource up (whether temporarily or on a permanent basis) does not constitute such review!
A backlog of minutes is however a potential indication of increased demands or expectations being placed on the company secretary and often for the wrong reasons. Additional resource will likely provide immediate relief but won’t necessarily address the root of the issue.
Our experience shows the root cause is often one of two key matters:
· Overly complex governance structures -
It’s not uncommon for a company to have multiple subsidiaries and committees but are they all needed. Multiple subsidiaries frequently result from mergers and acquisitions, many become dormant or duplicative of other subsidiaries. That new Board committee may have seemed necessary at the time but has your Board gone committee crazy?
When was the last time the Board took stock of its subsidiaries and formal committees to validate their requirements and ensure there is no duplication of efforts? Obsolete subsidiaries and/or duplicative Board committees contribute to overly complex governance structures and use much more company secretarial resource than you might realise.
· Gaps in governance frameworks-
Gaps range from a lack of clearly defined roles, responsibilities and processes being documented through to lack of accountability and ownership. There can be ambiguity between the roles, responsibilities, and reporting requirements of management versus the Board in particular. Clarifying these in a document will likely see a reduction in the size of board packs, time spent inboard meetings and overall streamlining of corporate governance tasks of the company secretary.
It is also worth considering how much time is taken up by your Company Secretary chasing the same individuals for receipt of board papers every quarter for example? Why does responsibility forholding ‘repeat offenders’ to account fall to the company secretary and is that clearly documented/what is documented?
Companies who identify and address the root issues often benefit from both:
· A strengthened corporate governance framework and
· Creation of capacity of the company secretary allowing greater focus on more value add/strategic governance topics.
Incorporating the effectiveness of the company secretariat function into your annual board effectiveness review can play a crucial role in improving overall board effectiveness and the success of your corporate governance arrangements.