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What is a company secretary and what is their role in liquidation?
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Understanding the role of a company secretary during insolvency
When a company enters a formal insolvency process such as liquidation, the secretary of that company is required to cooperate fully with the liquidator and provide any documentation as requested. The company secretary may also be called upon to assist in the preparation of the Statement of Affairs. As with directors, company secretaries may be held personally liable for financial losses incurred by the company or its creditors if evidence of wrongful trading or misfeasance is discovered.
What is a company secretary expected to do if the company becomes insolvent?
A company secretary is an officer of the company, who takes on specific responsibilities and duties. Unlike in a public company, there’s no longer an obligation for a private limited company to appoint a company secretary unless it’s specifically requested in the articles of association.
Many private companies do appoint a company secretary, however, to ensure the full completion of the company’s administrative and legal duties, and as an adviser on corporate governance.
Company secretaries take on some of the directors’ responsibilities day-to-day, but the directors remain legally responsible for the company overall. Disqualified directors, un-discharged bankrupts, and the company’s auditor, aren’t able to become a company secretary.
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What does a company secretary do?
The company secretary is responsible for ensuring compliance with the Companies Act, 2006, and carries out a number of administrative tasks, including:
- Filing statutory documents and financial statements at Companies House. These include confirmation statements, tax returns and company accounts.
- Ensuring the company’s register and other records are up-to-date
- Establishing the company’s registered office
- Safeguarding essential documents such as the memorandum and articles of association, and the certificate of incorporation
- Arranging board meetings, and ensuring that minutes are taken
- Advising HMRC and Companies House of any changes
- Overseeing the payroll function
A company secretary has responsibilities under the Companies Act, 2006, and could be penalised in certain instances, such as failing to file the company’s accounts or confirmation statement.
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A company secretary’s role in liquidation
- When a business enters liquidation, the company secretary is likely to assist in the preparation of the Statement of Affairs. This essentially informs creditors of the reasons why the company has entered insolvency. It includes details of all assets, liabilities and debts, provides information on any fixed or floating charges held by creditors, and includes a list of all trade creditors, suppliers, and employees.
- As an officer of the company they’re also required to provide any information requested by the liquidator, and must cooperate fully during the liquidation process. The office-holder is likely to require financial and administrative documentation including leases, contracts, insurance policies, and employee-related information, and the company secretary may be instrumental in providing this paperwork.
- A company secretary can held accountable for any breaches of the Companies Act, and in the same way as directors, may be held personally liable for financial losses incurred by the company or its creditors due to negligence.
If you need any further information on the role of company secretary, or are concerned about your own company’s financial situation, call one of our licensed insolvency practitioners.
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