The importance of the corporate secretarial role, particularly as the gatekeeper for good governance, is now recognised globally, but there is an increasing demand in emerging and transition economies for practical guidance on how this role should be best carried out. CSj talks to Carina Wessels, President, Corporate Secretaries International Association (CSIA), and Philip Armstrong, Head of the Global Corporate Governance Forum (GCGF), about the joint CSIA/ GCGF ‘Corporate Secretaries Toolkit’ which is designed as a globally relevant tool for training corporate secretaries and a reference work on the corporate secretarial role.
Thanks for giving us this interview, can we talk first about the genesis of the Toolkit?
Philip Armstrong: ‘There is an increasing demand in emerging and transition economies for a better understanding of the practical role of the corporate secretary. We at the International Finance Corporation (IFC) and the Global Corporate Governance Forum (GCGF) issue tools of best practice, though I prefer to use the term ‘good’ rather than ‘best’ practice, and the CSIA was the natural partner for this project given that it represents the profession of corporate secretaries.’
Was this demand for guidance on the role of the corporate secretary coming through the CSIA or the GCGF?
Philip Armstrong: ‘Through the IFC. We do a lot of work in challenging environments outside the countries where established corporate secretarial national bodies operate, and we identified this as an area lacking professional guidance. We had already been working in this area – we had established the ‘Corporate Secretaries Club’ in Kazakhstan, for example, but we wanted to put something together that was more professional, coordinated and cohesive with some measure of global utility.’
Am I right in thinking that the Toolkit is primarily designed for training purposes – can it also be used as a reference manual?
Philip Armstrong: ‘It is designed primarily as a training tool, but it is also something that a corporate secretary who has been subject to this training can take away and utilise. People often want to take something away after they have been trained and have a reference for what they have been taught.’
How was the Toolkit put together – was it developed by a joint GCGF/ CSIA team?
Carina Wessels: ‘Yes, it was a joint team. We had a pilot launch in South Africa last year where we went through the ‘experiential learning cycle’ with the authors on the IFC side to see how the Toolkit will work in practice and to see how it can be rolled out.’
Market conditions vary hugely in the different jurisdictions where corporate secretaries work – was this a major challenge for the team developing the Toolkit in terms of making it applicable to different jurisdictions?
Carina Wessels: ‘If you take a principles-based approach, it’s much easier to make it applicable in a wide variety of countries, and there are many best practice recommendations which are not jurisdictionally based. A piece of legislation may say that a corporate secretary needs to induct the board of directors, but it won’t tell you how you need to do that successfully. But it doesn’t only have to be based on generic principles, the Toolkit can be “customised” to make it more applicable to a specific country.’
Philip Armstrong: ‘I think the important thing is the ability to adapt it – it’s really designed to provide a structured basis like a structured curriculum that trainers can use. It comprises 26 modules of seven hours each, and each module can be sliced and diced, adapted and modified, in a way that is best suited to a particular environment. If we take the example Carina gave of the requirement for director induction, any laws and requirements around that would then need to be built from where the Toolkit is being delivered.
We have another tool called ‘Board Leadership Training Resources’ (BLTR), which is a very comprehensive tool for director training. This Toolkit was built as a supplement and, by agreement from the CSIA, corporate secretaries who get access to the Toolkit also get access to the BLTR – certainly, some aspects of the BLTR will be useful if you are using the Toolkit.’
While we’re on the topic of the diversity of corporate secretarial roles globally, could I ask you about another CSIA project – the initiative to survey and benchmark corporate secretary roles around the world?
Carina Wessels: ‘Absolutely, yes. We will be looking at the reporting lines, the scope and breadth of responsibilities and the background to corporate secretaries’ roles. We have previously done a salary benchmark and we found it difficult to get data from across the globe, but the idea is to get a better sense of the acceptance of the role and the general profile of the corporate secretary in different countries.
How far has that progressed?
Carina Wessels: ‘We have set 2015 as the target for this survey.’
What do you think links the profession globally? Is there something you can point to as defining what a corporate secretary does?
Carina Wessels: ‘Legislative responsibility differs quite a bit from country to country, although there are certain core issues which are the same for countries around the globe – board support and so forth. Corporate governance is definitely one of the core areas and that’s why, if you focus on a principles-based approach, it’s so much easier to make it a global solution and put something non-jurisdictional on the table.
But what I also find interesting is that one starts seeing a lot more similarities these days in the legislation of different countries. Just looking at the new Companies Ordinance in Hong Kong for example, there are a lot of similarities between what has been introduced in Hong Kong and the legislation in South Africa. Countrywise they are far apart, but there are a lot of principles around areas such as the increased duties and responsibilities of directors, which are similar.’
Do you think corporate governance standards will converge globally in the same way that, say, accounting standards have converged?
Philip Armstrong: ‘I think the general principles of corporate governance largely articulated by the OECD principles are really the benchmark. It doesn’t matter if you are in Vietnam or Lithuania or in a jurisdiction where corporate governance is well established like in South Africa, the principles have a very similar foundation. It’s more the execution that is different and that’s a factor of the legal system and the business traditions. If you look at a market like Vietnam, which has just come out of a socialist economy to a market economy in the last 20 years, they see corporate governance principles as a benchmark, but their legal system is just not aligned, so there are a lot of adjustments that have to be made.’
But some principles, surely, continue to be disputed? One of the principles that was included in the ‘CSIA Governance Principles for Corporate Secretaries’, launched in October last year, was stakeholder inclusiveness, but there are jurisdictions which still hold on to a shareholder focus.’
Philip Armstrong: ‘In the less advanced economies, where corporate governance is still a reasonably novel concept, you find that stakeholder inclusiveness has not really found its way into the governance debate. This is primarily because people are still trying to establish a proper functioning independent board, etc. It’s definitely not something that people are disregarding, but it hasn’t quite caught up with the governance discussion. Where corporate governance standards are much more established, such as in South Africa and the UK – where it is now in the UK law – I think it is a different conversation. The only market that stands out as an exception is probably the US.’
Which seems to be holding on to a shareholder focus?
Philip Armstrong: ‘Yes. Personally speaking, I find the US a grave concern in terms of governance and I’m prepared to be quoted on that. The trends and aspects that you see in the US are quite troubling in many ways as it is in some ways, at least in my personal view, an outlier when looking at advances in corporate governance and related issues elsewhere in the world.’
What impact do you think these trends are having on the corporate secretary? For example, is the trend towards principles-based corporate governance regulation having an impact on the perception of the role?
Carina Wessels: ‘Absolutely. I think in most areas the corporate secretary is seen as the gatekeeper for good governance and has been central to the governance debate. Much more than in the past, corporate secretaries need to understand what business sustainability is, they need to understand stewardship and the role of the board and the role of management, and how they assist them in that respect. Definitely the focus is much more on the skills and experience and the ability of the corporate secretary to guide the business from a governance perspective in general.’
Do you think the role will go further in that direction and corporate secretaries will become corporate governance specialists – might they even lose other aspects of the role, such as administrative board support?
Carina Wessels: ‘I don’t think so. I personally think that the board support and administrative functions are as important as the more strategic governance issues and we need to add value to all those areas to be a successful corporate secretary. You can’t just focus on the more strategic governance issues, you need to have the other basics in place as well to ensure that the company in general is governed well.’
Philip Armstrong: ‘I think the best illustration for the question you are asking, and to support Carina’s answer as well, is the demand we found for the Toolkit. That is as explicit as you can get. The role of corporate secretaries and their profile has really been elevated and the demand for the Toolkit has become almost an essential need rather than just a good idea.’
Carina Wessels and Philip Armstrong were interviewed by Kieran Colvert, Editor, CSj. The Corporate Secretaries Toolkit was launched in Hong Kong on 16 April 2014 at the Foreign Correspondents’ Club. Look out for part two of this interview in next month’s CSj.
Since the interview, Philip Armstrong has become Senior Advisor: Corporate Governance at the International Finance Corporation (IFC), part of the World Bank Group, based in Washington DC. The Global Corporate Governance Forum has now been absorbed into IFC’s Corporate Governance Group.
Philip Armstrong Philip
Armstrong heads the Global Corporate Governance Forum, based in Washington DC, US. Philip is a widely acknowledged expert on corporate governance and was closely involved with the internationally acclaimed King Reports on corporate governance in South Africa. He was instrumental in producing the Commonwealth Guidelines on corporate governance and served as an expert resource on corporate governance for the NEPAD initiative in Africa. He has received a number of awards internationally including an honorary doctorate in business administration from the Oxford Brookes University in the UK in recognition of his contributions to corporate governance.
Carina Wessels is the President of the Corporate Secretaries International Association (CSIA) and a fellow and immediate past president of Chartered Secretaries Southern Africa (CSSA). She holds LLB and LLM degrees, a Certificate in Advanced Labour Law and a PMD (Programme for Management Development). She is an admitted advocate of the High Court of South Africa. Carina spent nine years with De Beers in various operational and head office positions, including human resources, business improvement and corporate secretariat, as well as a period with Investec as corporate secretariat legal adviser. She has been employed as the Group Company Secretary of Exxaro Resources Ltd (Exxaro) since June 2011 and serves on Exxaro’s executive committee. Carina is a co-author of the CSSA board exam level Corporate Administration textbook, and a past part-time lecturer in the subject, a reviewer of the Corporate Secretaryship textbook, a past CSSA examiner and moderator and a regular speaker at corporate governance and company secretariat seminars.
More information is available online at: www.csiaorg.com and www.ifc.org.