To answer this question, it is necessary to have a good understanding of the roles and the duties of a Company Secretary.
The Company Secretary is by Law an officer of the Company. When acting as an agent of the Company, he owes a duty to act in good faith in the best interest of the Company and to avoid conflicts of interest at all times. In addition to his statutory functions as set out in the Companies and Allied Matters Act (CAMA), the Company Secretary has a duty to assist both the Board and Management in implementing the applicable Code of Corporate Governance and developing good corporate governance practices.
Indeed, in recognition of the significant role of the Company Secretary, the SEC Code of Corporate Governance provides that the Company Secretary should be appointed through a rigorous selection process that is applicable for appointment of new Directors.
The significance of setting proper reporting lines between the Company Secretary and the Board is to facilitate the effective performance of his duties in an efficient and effective manner. Both Section 296 of CAMA and Section 8.5 of the SEC Code make the appointment and removal of the Company Secretary a matter for the Board of Directors as a whole. Such collective responsibility of the Directors helps to reduce the possibility of any individual Director gaining undue influence over the Company Secretary, whilst preserving his independence and integrity. It is however not practicable to expect the Company Secretary to report to all the Directors on a daily basis. Section 8.3 of the SEC Code provides that the Company Secretary shall report directly to the CEO/MD, but also have a direct channel of communication to the Chairman. Section 4.5 of the Code requires that the roles of Chairman and Chief Executive Officer must be separate and held by different individuals. The rationale for such division is to avoid overconcentration of power and authority in one individual.
Accordingly, to enable the Company Secretary perform effectively, it is expedient to establish dual reporting lines wherein the Company Secretary will report to the Chairman directly on matters which concern the Board, and to the CEO, on matters which relate to Management. These matters are not always so clear-cut and it is advisable to have a Charter that clearly delineates the matters in respect of which the Company Secretary shall report to the Board (represented by the Chairman) and those in respect of which he shall report to the CEO. However, to increase the operational efficiency of line management, t h e responsibility for certain matters are sometimes delegated to an Executive Director other than the CEO. In such cases and in respect of those matters, the CS should report to that Executive Director.
As the role of the Company Secretary becomes wider in scope and more complex in nature, it is appropriate and also necessary under certain circumstances for dual or even multiple reporting lines to be established between the Company Secretary and the Board for the good, effective and smooth performance of his duties and also in the best interests of the Company.