Malcolm ZoppiSat Oct 21 2023

Understanding Duties Of A Company Secretary: Can a Company Secretary be Held Personally Liable?

As a company secretary, one of the most important aspects of the role is understanding the potential legal liabilities that come with the job. The question on many people’s minds is – Can a company secretary be held personally liable? The answer is not straightforward and depends on various factors. Company secretaries are responsible for […]

Can a company secretary be held personally liable?

As a company secretary, one of the most important aspects of the role is understanding the potential legal liabilities that come with the job. The question on many people’s minds is – Can a company secretary be held personally liable? The answer is not straightforward and depends on various factors.

Company secretaries are responsible for ensuring that their company complies with the Companies Act and other statutory requirements. This includes maintaining accurate records, notifying Companies House of any changes, and ensuring that the company accounts are sent to the relevant authorities within 14 days. Failure to fulfill these responsibilities can result in legal consequences and potential personal liability.

In this section, we will delve into the duties and responsibilities of a company secretary, the potential risks they face, and the legal implications of their actions. We will examine the circumstances in which a company secretary may be held personally responsible for breaches of duty and the potential liability they may have for the company’s debts.

Key Takeaways:

  • A company secretary may be held personally liable in certain circumstances
  • It is crucial for company secretaries to understand their legal responsibilities and obligations
  • Breaches of the Companies Act can result in legal consequences and potential personal liability for company secretaries
  • Company secretaries must act in the best interests of the company
  • Understanding potential legal liabilities can help company secretaries mitigate risk

The Responsibilities and Duties of a Company Secretary

The role of a company secretary is extensive, varied, and carries important legal duties. The company secretary is responsible for ensuring compliance with the Companies Act and a range of other administrative responsibilities, which are essential elements of a well-run company. The company secretary is usually appointed by the directors of a company, and their role is to ensure that the company adheres to high standards of corporate governance.

The responsibilities of a company secretary include maintaining accurate company records, ensuring that statutory documents are filed on time, arranging meetings of the board of directors, and ensuring that the minutes of those meetings are recorded accurately. The company secretary must act as a point of contact for shareholders and be responsible for sending out notices of meetings and other important communications.

The company secretary also acts as an advisor to the board of directors on matters of corporate governance and company law. They must ensure that the company is complying with all relevant legislation, and that the directors understand their legal duties and responsibilities.

Furthermore, the company secretary is responsible for ensuring that the company accounts are kept up to date and are sent to Companies House within 14 days of the annual general meeting. They must also ensure that any changes to the company’s share capital are recorded and notified to Companies House. In addition, the company secretary may be responsible for ensuring that the company complies with the UK Corporate Governance Code.

In summary, the company secretary’s obligations are important and far-reaching, and include administrative duties, ensuring compliance with the Companies Act, advising the board of directors, and maintaining accurate records. The company secretary must be a professional chartered secretary, and their role is an essential element of any well-run company.

Personal Liability of a Company Secretary

While company secretaries have legal responsibilities and duties, there are circumstances in which they may be held personally liable for their actions. Under the Companies Act, a secretary of a private limited company may be held personally responsible for breaches of duty or statutory offences committed in the course of their duties as an officer of the company.

In some cases, a company secretary may even be held personally responsible for debts owed by the company. If a company secretary fails to ensure that the company complies with the Companies Act, they may be liable to the company or its creditors.

It is important for company secretaries to be aware of their obligations and ensure that they act in accordance with the law. Failure to do so may result in breaches of the Companies Act, which can lead to personal liability.

Directors under the Companies Act have a duty to make officers personally responsible for breaches of the Act, and this responsibility is laid out in the Companies Act. This means that company secretaries may be held personally liable if they fail to fulfill their obligations.

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If a company secretary is personally liable for the company’s debts, they must notify Companies House within 14 days. It is crucial for company secretaries to understand the potential consequences of their actions and take steps to protect themselves from personal liability.

Conclusion

In conclusion, the role of a company secretary is one that carries significant legal responsibilities. While not every action can lead to personal liability, it is crucial to understand that certain failures or breaches of duty can have serious consequences. Therefore, it is the responsibility of the company secretary to ensure that the company complies with its legal duties and that all necessary actions are taken to avoid potential legal issues such as being held personally liable.

As a professional chartered secretary, the company secretary is responsible for ensuring that the directors of the company comply with the Companies Act, and that the company’s interests are protected. With the potential for the company secretary to be held personally liable for the company’s obligations, it is imperative that they carry out their duties responsibly and ensure that the company complies with its legal obligations.

The company secretary must ensure that accurate and timely records are kept, and that all necessary filings are made with Companies House within 14 days. The company accounts must be sent to all officers of the company, including the company secretary, who is responsible for ensuring their accuracy. Failure to comply with these requirements can make officers personally responsible and liable to the company or its creditors.

Furthermore, the company secretary may be held personally liable for breaches of the Companies Act or other statutory offences. It is, therefore, important to ensure compliance with the UK Corporate Governance Code and other relevant legislation, and that the company secretary’s appointment is made with due regard to their qualifications and experience.

It is crucial for company secretaries to understand and fulfill their legal obligations, to protect not only the company’s interests but also their own from potential legal consequences. By ensuring compliance with the Companies Act and acting in the best interests of the company, company secretaries can mitigate the risk of personal liability.

FAQ

Q: Can a company secretary be held personally liable?

A: Yes, a company secretary may be held personally liable for certain actions or breaches of duty.

Q: What are the responsibilities and duties of a company secretary?

A: The responsibilities of a company secretary include ensuring compliance with the Companies Act, maintaining company records, and acting in the best interests of the company.

Q: What is the personal liability of a company secretary?

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A: A company secretary may be held personally liable for breaches of the Companies Act, failure to fulfill legal obligations, and certain actions that result in the company’s debts.

Q: What should a company secretary do to avoid personal liability?

A: To avoid personal liability, a company secretary should fulfill their legal duties, ensure compliance with the Companies Act, and act in the best interests of the company.

Q: How can a company secretary protect themselves from personal liability?

A: Company secretaries can protect themselves by staying informed about their legal obligations, seeking professional advice when necessary, and maintaining accurate company records.

Q: What happens if a company secretary fails to fulfill their legal obligations?

A: If a company secretary fails to fulfill their legal obligations, they may face legal consequences, including potential personal liability for their actions or breaches of duty.

Q: Can the company or its creditors hold a company secretary liable for debts owed?

A: Yes, a company secretary can be held personally responsible for the company’s debts in certain circumstances, such as if they have acted negligently or breached their duties.

Q: How should a company secretary handle their appointment and notify Companies House?

A: A company secretary should ensure that their appointment is properly recorded and notify Companies House within the required timeframe as laid out in the Companies Act.

Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.

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Whether you require specialised knowledge for your business or personal affairs, Gaffney Zoppi can support you.