A global profession
Who are your global peers? This seemingly simple question is not as easy to answer as you might imagine. Corporate secretaries around the world don’t always carry the same job title or carry out the same duties. This month, CSj looks at the many faces of the global corporate secretarial profession.
The launch of the Corporate Secretaries International Association (CSIA) in March 2010 was a defining moment for the global profession. This is not only because the organisation gives corporate secretaries a much higher international profile through its lobbying activities, but because the organisation is the first truly global association of corporate secretaries.
Before the CSIA launch, the nearest thing to a global association for corporate secretaries was the Institute of Chartered Secretaries and Administrators (ICSA) based in London. The ICSA Chartered Secretarial professional bodies comprise those in Hong Kong, Australia, New Zealand, Canada, Malaysia, Singapore, South Africa, and Zimbabwe. Outside the ICSA, there are a number of other national corporate secretarial professional bodies (including those in the US, India, Kenya, Nigeria, Indonesia, Mongolia, and Sri Lanka), but before March 2010 they worked independently at a national level.
The launch of the CSIA changed all of that. The 16 member bodies represent approximately 100,000 corporate secretaries and governance professionals around the world. The CSIA is currently lobbying the World Trade Organisation to create a new sector classification of ‘corporate governance, compliance and secretarial advisory’ (CGCSA) to give due recognition to the profession at an international level.
‘The CGCSA sector is a major global industry but it is not officially recognised by any international or inter-government organisation. Without a WTO classification we are excluded from preferential trade agreements such as CEPA [the Hong Kong Closer Economic Partnership Arrangement],’ says Phillip Baldwin, HKICS Chief Executive.
So, now that the global profession has its international voice, and may soon have its own classification in the WTO, corporate secretaries can feel part of one, big, international family, right? Well, while there is a growing sense of affiliation with the global profession, most corporate secretaries around the world are not that well informed about their international peers. Most company secretaries in Hong Kong, for example, may be reasonably familiar with the work of their peers in the mainland or in the ICSA jurisdictions, but would they readily recognise a fellow corporate secretary going under a completely different job title working in an unfamiliar jurisdiction?
This month, CSj gives you some help identifying, and identifying with, your global peers. This cover story casts some light on the similarities and differences in the corporate secretarial role globally, and on the following pages (12–18) the first interview in our new ‘Peer to Peer’ series investigates the life and work of corporate secretaries in Russia.
Tracking down your global peers
The job title
Internationally, it doesn’t make much sense to attempt to identify a corporate secretary from his or her job title. This works in jurisdictions that use the term ‘secretary’ (for example, ‘chartered’ or ‘company’ secretary in the ICSA jurisdictions, ‘corporate’ secretary in the US, or ‘board secretary’ in mainland China), but elsewhere, particularly where no corporate secretarial professional body exists, the person performing the corporate secretarial function could be working under almost any title – deputy general manager, senior compliance consultant, regulatory compliance officer – or the role might have been delegated to an existing officer of the company such as the treasurer, chief counsel or chief financial officer. No sense relying too much, then, on the job title.
The job description
The job description, should, of course be a dead giveaway. There is no mistaking the corporate secretarial function – board support and advisory, regulatory compliance, preparing and holding general meetings, etc. However, readers of this journal will know very well that there can be a diversity, even in professionalised jurisdictions such as Hong Kong, in the corporate secretary’s duties from company to company. This is one aspect of the job which many corporate secretaries say they appreciate most, it is less narrowly defined than, say, the sister professions of law and accounting. The corporate secretarial role will depend on the skill sets of the person taking on this role, and on size and structure of the company itself. Different aspects of the role are sometimes delegated to different departments within companies, for example investor relations may be the responsibility of the company secretary where companies do not have a separate department for this function.
The governance role
Despite all this diversity, however, there has been a surprisingly uniform global convergence around one key aspect of the corporate secretarial role – corporate governance. While board members have the ultimate responsibility for maintaining good corporate governance, they increasingly rely on the services of corporate secretaries to advise them on matters of business ethics and corporate governance.
This has been increasingly recognised by governments and regulators around the world. The UK Combined Code on Corporate Governance gives explicit recognition to the governance advisory role of the corporate secretary. Principal A.5 of the code, for example, states that the corporate secretary ‘should be responsible for advising the board through the chairman on all governance matters.’
Similarly, the recent revisions to Hong Kong’s corporate governance code have centralised the company secretary’s role in maintaining governance standards. In April this year a new section on corporate secretaries (Section F) was added to the code with a principle describing the role and its responsibilities, including inter alia, ‘advising the board on governance matters’.
Upholding corporate governance standards has become the highest profile aspect of the corporate secretarial role. It has also become a unifying theme running through the many different aspects of the corporate secretarial role, such as their many board support functions, regulatory compliance, communication with regulators and shareholders, induction of directors, investor relations, etc.
‘The role is constantly evolving,’ says Phillip Baldwin. ‘As governance comes into focus more governance professionals such as corporate secretaries have broadened, and will continue to broaden, their horizons and influence. At present, we have what I call “fragmented governance”. We need a focal point – a person in the organisation who takes the lead governance role, like a CFO does for accounting issues. We believe that person should be the professional corporate secretary.’
Should then, corporate secretaries take on the role of corporate governance officer? In some jurisdictions this is already a reality. In the US, for example, the concept of a ‘chief governance officer’ started to take hold after the corporate scandals of Enron and Worldcom. Today, in many US listed companies, the corporate secretary is also the company’s governance officer.
HKICS President Edith Shih points out, however, that corporate governance is not the only thing corporate secretaries do. ‘It seems that there is a focus now on corporate governance as being the only work that company secretaries do, which is not the case,’ she says. She believes it is important to bear in mind that the role is, as Phillip Baldwin says, ‘constantly evolving’. While corporate governance has caught the limelight because of the financial crisis, at a future date another aspect of the corporate secretarial role might come to the fore.
Unity in diversity
The diversity in the corporate secretarial role at the international level is not, of course, unique to this profession. While the last few decades have seen a dramatic convergence of codes of corporate governance, financial reporting standards, securities legislation and auditing standards, the forces of global convergence can be overstated. As governance expert Bob Tricker pointed out in his article in this journal (see ‘The cultural dependence of corporate governance’, CSj, November 2011, pages 14–19), ‘A global convergence of corporate governance systems at any greater depth would need a convergence of cultures and that seems a long way away.’
The nature and status of the corporate secretarial role is mainly dependent on the cultural, political and economic context of the local jurisdiction. Consider, for example, the following:
Does a professional body of corporate secretaries exist?
As mentioned at the beginning of this article, readers of this journal will be very familiar with those jurisdictions with local professional bodies, particularly those within the ICSA, but there are many others where no such body exists. Indeed, this month’s ‘Peer to Peer’ interview (see pages 12–18) takes a look at how corporate secretaries in Russia are building their own professional community in the absence of dedicated professional body.
Does the jurisdiction require all companies to have a corporate secretary?
Currently this is the case in Hong Kong and, spectacularly, in India where even subsidiaries have to have separate corporate secretaries, but it is not the norm internationally. Indeed, the trend towards business facilitation and deregulation in company law reform globally has seen even jurisdictions like the UK (which formerly had this requirement) deregulate the corporate secretarial requirement – in the UK having a company secretary is now only a mandatory requirement for listed companies.
Do corporate secretaries have to be qualified?
Once again, while this is the case for listed companies in Hong Kong, this should not lead us to believe that the requirement for qualified corporate secretaries is commonplace. In many other jurisdictions, even major jurisdictions like the US for example, there are no specific requirements in either legislation or regulation for corporate secretaries to be qualified.
The further you look, then, the bigger the differences between jurisdictions internationally. Does the jurisdiction follow the civil or common law? How effective is the local legislative, regulatory and corporate governance regimes? What is the predominant ownership structure of companies? Is a two-tier or unitary board structure the norm? All these factors will have a major influence on the nature and status of the corporate secretarial role locally.
CSIA believes that this diversity is not a problem for the global profession. In the context of the current geopolitical trend towards a multipolar world in which developing nations are gaining a more equal footing when it comes to world affairs, the CSIA is not looking to homogenise the profession. Many of the CSIA projects currently underway, for example, are designed to bring about a better understanding of the differences and similarities among its member jurisdictions. Under the ‘International benchmarking survey on responsibilities of the company secretary’, for example, each country within CSIA is doing its own research on the roles and responsibilities of its members. This will be collated to produce the first ever global survey of corporate secretaryship.
Former CSIA president (and former HKICS president) April Chan, believes the diversity among CSIA members is a source of strength. ‘I think the diversity of CSIA members is one of the great strengths of the organisation,’ she says, ‘it brings many different perspectives to the issues the global profession faces’. April points out that the organisation has been able to pull together on projects despite the fact that expectations and agendas are not always the same among the various CSIA members.
She cites the current ‘toolkit’ project – the development of a corporate secretarial toolkit for use in multiple jurisdictions – as an example. April presided over the discussions of CSIA Council regarding the content of the toolkit. Developing jurisdictions within the CSIA wanted the toolkit to cover the basics of what corporate secretaries do, whereas developed jurisdictions, where this information is already widely available, were keen to focus the toolkit on higher level functions such as governance advice to the board. The upshot will be that the toolkit will give guidance on both the corporate secretarial basics and the higher-level aspects of the role.
‘The more we communicate, the more we learn,’ says Phillip Baldwin, who chaired the steering group which brought the CSIA into being and was its first president. He stresses that the profession can reach a consensus on the issues of relevance to the profession internationally. ‘Good corporate governance principles are universal – how they are applied varies considerably,’ he says.
This conviction is behind another CSIA project, perhaps its most ambitious to date, which aims to identify a set of ‘universal’ corporate governance principles and give guidance on how they can be implemented at the local level in member jurisdictions. The international Corporate Governance Conference, jointly organised by the CSIA and the Shanghai Stock Exchange in September 2011, launched this project. Principles raised by the conference were: transparency, accountability to stakeholders, stewardship, integrity, separation of governance and management, and corporate social responsibility. while there is a growing sense of affiliation with the global profession, most corporate secretaries around the world are not that well informed about their international peers
This edition of CSj launches our new ‘Peer to Peer’ series of interviews. See the interview with Alexander Kamensky, Corporate Secretary of one of the largest power companies in Russia, on the following pages.
SIDEBAR: ICSA/ ecoDa board support survey
While the CSIA’s ‘International benchmarking survey on responsibilities of the corporate secretary’ will be the first global survey of corporate secretaryship, a previous survey jointly carried out by the Institute of Chartered Secretaries and Administrators (ICSA) and the European Confederation of Directors’ Associations (ecoDa) gave valuable insights into the nature of the corporate secretarial role in Europe.
The ICSA/ecoDa board support survey, conducted between June and September 2009, shed some light on the status and work of ‘board support officers’ – corporate secretaries in all but name – in a number of EU jurisdictions, including the UK, Ireland, Malta, Finland, France, Slovenia, Austria, Belgium, Luxembourg, the Netherlands and Spain.
It found that board support roles in Europe, where they exist, are relatively high-level. This is an important finding since the provider of corporate governance advice to the board clearly needs to have a status sufficient to give that advice the influence it needs. However, the caveat ‘where it exists’ is not to be underestimated. Board support roles in Europe are not always carried out by dedicated personnel within companies. Some EU countries have never had a legal or compliance requirement for a board support role, and in many cases the role is carried out by other executive functions – such as the compliance officer, head of legal or finance director.