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Company Secretary – Role and Duties

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Malta Company Secretary – Role and Duties

It is obligatory in terms of the Companies Act, for every company, public or private, to have a company secretary, and the company secretary is considered to be an officer of the Company.

Appointment and removal of the company secretary

The first company secretary is effectively appointed by the subscribers to the memorandum of association. Some formalities must be adhered to in this regard – namely the furnishing of the passport or identity card of the company secretary. Barring an exception which applies to investment companies with variable share capital (“SICAVs”), the company secretary must be an individual. There are no nationality restrictions for the company secretary, even though, due to the very nature of the company secretary, it would be recommendable to have a Maltese resident, a service that be provided by the officers of Focus Business Services.

Subsequent company secretaries are appointed by the directors by board resolution and a notification form is to be submitted to the Registry of Companies. Unless otherwise specified in the Articles of Association, the board of directors is the organ, entrusted to regulating the functions of the company secretary, terms and conditions of employment etc;

Likewise, the board of directors can remove the company secretary at will, without the necessity of receiving prior notifications of the proposed removal or to make representations.

Company secretary must be a physical person

With only one exception, the company secretary must be a physical person. The only exception to this rule is afforded to investment company with variable share capital and an investment company with fixed share capital (“SICAVs”) whereby the company secretary may also be a body corporate.

Similarly to directors, the Companies Act does not require a company secretary to have any academic or professional qualification. It does however require the directors to take all reasonable steps to ensure that the company secretary is someone who appears to them to have the requisite knowledge and experience to discharge the functions of company secretary.

The company secretary must have a solid understanding of company law and administration, including the contents of the memorandum and articles of association of the company, and of the division of powers between the general meeting and the board of directors, etc;

Disqualifications 

Barring private exempt company, as a general rule, a company cannot have as its company secretary its sole director. Nor can a company have as its sole director a body corporate whose sole director is company secretary to the company.

Furthermore, the Companies Act prescribes a number of grounds in which a person shall be debarred from the role of company secretary, as follows:

  • If he is interdicted or incapacitated or is an undischarged bankrupt;

  • he has been convicted of any of the crimes affecting public trust or of theft or of fraud or of knowingly receiving property obtained by theft or fraud;

  • he is a minor who has not been emancipated; or

  • he is subject to a disqualification order made under the Companies Act.

Changes to be notified to Registrar of Companies

Change involving the company secretary – e.g. removal or resignation or new appointment must be notified to the Registrar of Companies for registration a return of such change. The return (on a form referred to as the Form “K”) shall specify the date of the change, together with the name, residence and identity card / passport number of any new company secretary and shall be sent by the company within fourteen days from the date of the change. By way of clarification, the submission of the aforesaid Form K after the aforesaid fourteen (14) days, shall not bring in the nullity of the Form K, but rather that a pecuniary fine shall be applied. The Form K may be signed by any company director or even by the new company, but not by the outgoing company secretary.

Multiple Appointments

The Companies Act prescribes that a company should have a minimum of one company secretary, however it is perfectly possible to have more than one. The reasons for multiple appointments apply a degree of flexibility that would otherwise not be possible with just one company secretary. It is also possible to assign different roles to more than one company secretary e.g. one reporting to the board of directors and one which carries out the filings with the Registry of Companies.

Irrespective of their role within the company however, each company secretary is liable and responsible to fulfill the duties set forth in the Companies Act. At Focus Business Services, we fully espouse this rationale of having multiple appointments – this allows us to give a seamless delivery of service, ensuring that at least one company secretary is always available to provide this role to the Company.

Casual Vacancy

As discussed earlier it is the directors who appoint the company secretary. It therefore follows, that if a casual vacancy arises, because the company secretary is unable to act due to ill-health etc; it follows that the role shall be undertaken by an officer or a company generally authorized by the directors.

Functions of the company secretary

The role of a company secretary are mostly administrative and he is not vested with the executive, decision-making powers that are vested in the directors Typically, the function of the company secretary is to ensure the proper upkeep of registers and the filing of returns and documentation with the Registrar.

The Companies Act prescribes the documents that are to be kept by the company including a register of members, a register of debentures, and the minute book and in practice it is the company secretary who takes internal responsibility for these registers and minutes.

The register of members

The register of members includes the following:-

  • the names and addresses of the members and a statement of the shares held by each member and of the amount paid or agreed to be considered as paid on the shares of each member;

  • the date at which each person was entered in the register as a member; and

  • the date at which any person ceased to be a member.

In the case of joint ownership of shares, then they are considered for the purposes of the Companies Act, as a single member, and there is an obligation of only including the name of one person in the register of member. Where shares are held in trust for the benefit of beneficiares, the register of members, shall specify the number of shares held by the trustee on its own account, if any, and the amount of shares held under trusts or each trust if more than one.

The role of the company secretary is also requested whenever a share transfer takes place. In this event, the company secretary shall, on the application of the transferor or of the transferee, enter in the register of members the name and address of the transferee. If the company has refused to register a transfer of shares, the company secretary, should serve notice to the transferee, of such refusal, within two (2) months from the date on which the transfer was filed.

The register of members is also used, whenever shares in a company are pledged, notice thereof is to be delivered by the pledgor or pledgee to the Registrar of Companies for registration within fourteen (14) days. The pledge is not effective, unless filing thereof is given to the Registrar of companies. Notice of the pledge must be recorded in the register of members. On the termination of the pledge, notice thereof must be served to the Registrar of companies, and a corresponding annotation made to the registry of members signaling the removal of the pledge.

The register of members shall, unless express provision to the contrary is made in the memorandum or articles of association of the company, be kept at the registered office of the company. This allows shareholders to inspect the register, although it is possible, by serving publication notice in a daily newspaper, to close the register of members for a period not exceeding thirty (30) days a year.

The register of debentures

The register of debentures should record the names and addresses of the registered holders and the particular of the debentures held by them. Similarly to the pledging of shares, if debentures issued by a company have been pledged, notice of the pledge should be delivered by the pledgor or the pledgee to the Registrar for registration within fourteen days from the granting of the pledge, and notice of such pledge should be included in register of debentures.

The similarity with the register of members persists, since, barring any express stipulation to the contrary in the memorandum and articles of association, the register of debentures must be kept at the registered office of the company. These register of debentures are open to inspection by the shareholders of the company.

Minutes books

The minute books of the Company is a very important document that should unless provided for in the memorandum and articles of association, be kept at the registered office of the Company. The minute book allows the resolutions of the two organs of the company – the board of directors and the general meeting to be open to inspection. The upkeep of the minute book is usually kept by the company secretary.

Returns and filings

The Companies Act requires that a myriad of returns and documents to be prepared and filed with the Registrar of Companies. The duty of filing are incumbent on all officers of the Company, albeit some forms, such as the Claim for extension of period allowed for laying accounts by the company – (Form U) – can only be executed by the directors. Other than these exceptions however, the filing of these forms and returns, is a duty which is typically delegated to the company secretary. The returns and filings can be summarised as follows:

  • Section 73 report – Issue of shares for a consideration other than in cash;

  • Transfer to company of non-cash assets in first two years;

  • Amendments to the memorandum or articles of association;

  • Increase in issued share capital;

  • Offering of shares on a pre-emptive basis;

  • Return of allotments;

  • Acquisition by company of its own shares;

  • Redemption of preference shares;

  • Delivery of notice of transfer or transmission of shares;

  • Pledging of securities;

  • Removal of director;

  • Vacancy in representation of the company;

  • Changes amongst officers and persons vested with representation;

  • Appointment of auditor;

  • Removal of auditor;

  • Resignation of auditor;

  • Statement by person ceasing to hold office as auditor;

  • Annual Return;

  • Auditors’ report;

  • Directors’ report;

  • Compromise or arrangement;

  • Notice upon the Company ceasing and/or becoming a single member company;

  • Notice of dissolution;

  • Draft terms of merger;

  • Draft terms of division;

For a full understanding of what this documentation entail, please refer to the page entitled – Company Returns and Filings

 Certification of documents

Apart from the carrying out of the following filings, a company secretary may be requested to certify resolutions, or updated versions of the Memorandum and Articles of Association. Likewise, minutes of meeting and extracts thereof may also need to be authenticated by the company secretary. This is typically required when the company is entering into commercial decisions e.g. acquisition of assets, immovable property and very often the opening of a bank account, whereby the sanctioning of this decision at board level, may be required.

Transfers on register of members

Whenever there is a transfer of shares or debentures in a company, it is correct corporate governance to ensure that the names of the transferee and the transferor are recorded in the register of members and debentures as the case may be. This is another duty that is typically delegated to the company secretary – who should ensure that the supporting documentation is complete and that such transfer has been sanctioned by the board of directors, as compliant with the terms and provisions of the articles of association.

If the transfer of shares is not effected, because of non-adherence to any provisions set forth in the articles of association, the company secretary, should within two (2) months from the date the transfer was lodge, serve notice to the transferee outlining such refusal.

The aforesaid provisions apply mutatis mutandis also in the case of a transmission of shares causa mortis (decease of the transferor). The transmission of shares causa mortis triggers succession issues, and the compatibility of pre-emption rights with mandatory rules on succession, such as reserved portion, which may apply. In case such mandatory rules override the pre-emption rights, or for any reason whatsoever, the transmission of shares cannot be registered, the company secretary must duly inform the heirs in title or such other persons onto whom the shares devolve, of such refusal within two months after the date on which the transmission is lodged.

Issue of share certificates 

The Companies Act prescribes that a company must, within two (2) months after the allotment of any of its shares or debentures and within two (2) months after the date on which a transfer of any such shares or debentures has been registered with the company, and within one (1) month from the date on which any such shares or debentures transmitted causa mortis have been registered in the name of the person entitled to be registered as the holder thereof, to deliver the certificates of all shares, debentures or debenture stock allotted, transferred or transmitted causa mortis to the persons entitled thereto, unless the conditions of issue of the shares or debentures otherwise provide.

As a rule of thumb, it is the company secretary who is entrusted to the execution of such share certificates, although very often, these certificates are counter-signed by the directors. The company secretary shall cause the persons receiving the share certificate to attest receipt thereof, by means of a bespoke declaration. The Companies Act does not prescribe the contents of the share certificate but to adequately fulfill its purpose, this should include, at least the following:

  • the name of the company;

  • the number and class of shares represented;

  • the distinguishing numbers of the shares represented;

  • the amount paid up in respect of each share and the name and address of the registered holder;

  • number of the share certificate itself

The share certificate is an attestation to the legal ownership of the shares, even the share transfer shall not be voided if no share certificate is actually provided. Pursuant to a transfer of shares, the company secretary should request the original share certificate in respect of the said shares to be returned for cancellation. Where such share certificates are lost or are not delivered, the company secretary should make a note that the original certificate has not been returned.

Company Secretary – Role and Duties during liquidation

Once a company has been into dissolution and a liquidator appointed, all the powers of the directors and of the company secretary shall cease, bar for some residual powers. One such residual power is the one prescribed by Article 297(1) of the Companies Act, whereby the company secretary may provide an affidavit that a meeting by the liquidator has been duly served. The role of the company secretary is indeed a marginal one, and it is safe to say, that pursuant to the dissolution of the company, the company secretary is divested, almost entirely, of all powers and duties.

Company Secretary – Role and Duties vis-à-vis auditors

Auditors must be allowed right of access to the company’s accounting records and books in order to fulfill their statutory roles and responsibilities. For the better doing of the aforesaid, Article 154(1) of the Companies Act states that all officers of the company (including the company secretary) must provide the auditors with such information and explanation as required for the performance of their duties as auditors. It follows that the auditors may request statutory books, such as minutes, register of members and debentures and other records as may be kept by the company secretary.

Implicitly, the company secretary may inspect the accounting records of the company (this is a power reserved to all officers in the Company, and this is in practice requirement for the filling of allotment forms.

Company investigations

Where the Registrar, either at the request of at least two hundred (200) members or of members holding at least one-tenth (1/10) of the issued share capital of a company, or at the request of the company or following a court order, appoints one or more inspectors to investigate the affairs of a company and to report thereon, all officers (including the company secretary must:

  • produce all accounts, accounting records and documents of or relating to the company which are in their custody or power, when required to do so

  • attend before the inspectors when required to do so; and

  • give the inspectors all assistance in connection with the investigation which they are reasonably able to give.

This provision, although admittedly rare, should be observed at all times. Any officer, in default of the aforesaid provisions, faces potentially far-reaching consequences, including penal consequences.

Provision of Documents to Registrar 

Although the role of the Registrar is often confined to the registry of companies, the Companies Act (Article 418) does grant some degree of investigative power to the registrar, who may request, any accounts, accounting records or documents to be furnished to him, and to provide the necessary explanations with regard to this documentation. The company secretary is, when presented with such a request, obliged to furnish the registrar with such documentation and explanation, with pecuniary fines reserved to the company secretary, or any other officer who fails to produce such information.

Duties of the company secretary towards the board and general meetings

Although the role of the company secretary is in some ways been deemed to be peripherial and ancillary, its role is undoubtedly pivotal when it comes to the duties owed to the board of directors and the general meeting. As discussed some of the duties are set forth in the Companies Act – whereas others may be delegated to him by the company or arise in the course of company secretarial practice.

Prior to meetings taking place, the role of the company secretary may be concisely summarised as follows:-

  • ensuring that notices and agendas are dispatched within the time-limits established by law or by the articles of association;

  • ensuring that circulation of all documentation to be discussed in accordance with the agenda set forth above; and

  • Complying with all the formalities on proxies that may be rendered necessary.

The company secretary should act in close liaison with the chairman of the board of directors with regard to the convening of board meetings, annual general meetings (to be held at least once every fifteen months) and extraordinary general meetings.

Convening of General Meetings

It is customary for the articles of association to contain provisions regulating the convening of general meetings – and this is a power usually allowed to the directors. When a quorum of directors is reached, any director or any two members of the company may convene an extraordinary general meeting in the same manner, as nearly as possible, as that in which meetings may be convened by the directors.

The convening of a general meeting by the directors is obligatory, on the requisition of a member or members of the company holding at the date of the deposit of the requisition not less than one-tenth (1/10) of such of the paid up share capital of the company as at the date of the deposit carried the right of voting at general meetings of the company, to forthwith proceed to duly to convene an extraordinary general meeting of the company.

If for some reason, the directors fail to convene such meeting within twenty-one (21) days from the date of the deposit of the requisition, then the requisitionist may convene a meeting in the same manner, as nearly as possible, as that in which meetings are to be convened by the directors.

Serving of notices

The serving of notices for the convening of a meeting is, barring the aforesaid, exceptions set forth in the Companies Act, a matter usually reserved to the company secretary. In issuing notices, the company secretary must indicate clearly whether the meeting is a board meeting / an annual general meeting or an extraordinary general meeting. This shall immediately determine to whom notice must be served (notices for the annual general meeting should apart from the shareholders, be extended to the board of directors and the auditor. In the case of a general meeting, where a resolution is proposed as an extraordinary resolution, the notice should specify the intention to propose the text of the resolution as an extraordinary resolution and the principal purpose thereof, including the text of the proposed extraordinary resolutions should also be circulated. This ensures that the members are duly informed and able to put questions prior to the resolution of the matter.

The notice should also include the date and time of the meeting and venue. An agenda, outlining the points for discussion should also be circulated (this allows the board of directors or the general meeting to evaluate whether their attendance is necessary, or whether they can appoint a proxy to represent their interests). It is also customary to include a generic point on the agenda e.g. any other matters, to include any other matters with the board of directors or the general meeting may deem fit for discussion. It is perfectly possible for the board of the general meeting to consider and resolve on any issue, even if no reference to it was made in the notice or agenda, without impinging on the validity of the meeting.

The notice of a meeting of the board of directors, should be sent to the directors, whereas in the case of a general meeting, notice should be served to all members entitled to attend the meeting, to all the directors and to the auditors of the company.

It is however possible, where the agenda touches on particular aspects of the company, to extend the invitation also to individuals, other than the aforesaid members e.g. chief executives, accountants, general managers etc; Where the board of directors requires legal counsel, the legal advisors of the company may also be summoned to attend meetings. It is however possible to limit the intervention and/or interjection of such person so invited to a specific point/s on the agenda – after which such person may be invited to leave, or the meeting shall be reconvened.

The obligation of the board or of the general meeting lies in serving due notice to each director and/or member as the case may be. Attendance to the actual meeting or representation by proxy is a matter for the directors and/or member to evaluate. In any case, the Companies Act, sets a minimum threshold of time – fourteen (14) days in which notice shall be deemed to have been adequately served to the members. It is possible to derogate from such threshold, by express provision in the articles of association (by prescribing a time period over or under the aforesaid fourteen (14) days).

The company secretary must ensure compliance with the aforesaid provisions and serve due notice. A meeting not duly convened shall not have the validity at law, and may be subject to impingement by members or board of directors who have not been served due notice. However, it is possible for directors to waive such notice, or agree to a shorter notice period.

It should be noted however that a meeting of the company shall, notwithstanding that it is called by a shorter notice, be deemed to have been duly convened if it is so agreed by all the members entitled to attend and vote at such meeting. In the case of meeting of the general meeting in which extraordinary resolutions are undertaken, it is possible to shorten, but not to waive the notice period altogether – and this is implicit in the aforesaid requirement that the text with the proposed change is circulated to the members.

Notice served to shareholders would typically be served by hand or by post to any agreed address. Typically, the articles of association would provide for assumptions of duly served notice e.g. in the case of notice sent by post, service of the notice is deemed to be effected by properly addressing, prepaying and posting a letter containing the notice, and to have been effected in the case of a notice of a meeting at the expiration of forty-eight hours after the letter containing the same is posted, and in any other case at the time at which the letter would be delivered in the ordinary course of post. Likewise, a positive report message generated by a facsimile would also be deemed to constitute sufficient notice. The same analogy may be drawn in the case of a delivery / read report generated by email.

Meetings of the board of directors, as subject to laxer rules, and it is indeed customary not to set a notice period in the case of board meetings. This is in part justified due to the fact that it is inherent in the role of directors to resolve business for the company, and therefore the convening of meetings is innate to the very office of directors. Furthermore, the role of directors may require deciding on particularly pressing matters, thereby it is important to allow directors to deploy swiftly, without letting a delay jeopardize the position of the company. In this case, oral notice may be sufficient to convene a meeting of the board of directors, even if it would be advisable to have some form of written, albeit informal notice, such as an email communication (this would dispel any challenges that not all directors have been duly served notice).

Notwithstanding this, it is possible that due to an oversight, negligence or carelessness, notice fails to be served to the person entitled to receive notice. It is customary to have a safety-net for this eventuality in the articles of association, whereby the non-receipt of notice of a meeting by, any person entitled to receive notice will not invalidate the proceedings at that meeting.

Proxies

It is possible that the person receiving the notice is unable to attend the meeting at the designated time and/or venue. This logistical problem, often encountered in the case of foreign directors or shareholders, may be easily circumvented through the use of proxies. The use of proxies is essential to guarantee operability of the company at all times, to the extent that the Companies Act provides that notwithstanding anything contained in the memorandum or articles of a company, any member entitled to attend and vote at a meeting of the company or at a meeting of any class of members of the company shall be entitled to appoint another person, whether a member or not, as his proxy to attend and vote instead of him.

When such instrument is used, the company secretary should ensure that the proxy is valid i.e – it relates to the meeting convened, has been duly signed by the person to whom the proxy was addressed, and clearly sets the powers being granted to the proxy. The proxy so appointed shall have the same right as the member to speak at the meeting and to demand a poll.

A proxy is essentially a mandate and the proxy is confined to the parameters of his mandate. Although, mandate may be oral or even implicit, in the case of proxies, the regulator has reasonably requested that such instrument be in writing. In order to ensure uniformity, it is also customary to attach a model proxy with the notice and to set a time-limit for the delivery of proxies (this allows the company secretary to verify the authenticity and veracity of the proxy with the person purporting to be granting it). It is also possible to set certain formalities to the proxy e.g. require the proxy to be witnessed by an independent party, or notarized or apostilled. The proxy may be a fellow director or a fellow shareholder, in which case, the formalities may be relaxed. However, it is always advisable for the company secretary to allow a reasonable time within which to verify the veracity of the notice, directly at source.

Annual General Meeting – Circulation of annual accounts

The main point of discussion at the annual general meeting is undoubtedly the laying of the annual accounts for the approval of the general meeting. To correct procedure, is for the directors to sign to the director’s report set forth in the annual accounts and promptly authorise the company secretary to furnish notice to the shareholders. The company secretary should ensure that not less than fourteen days before the date of the annual general meeting at which the annual accounts are to be laid, a copy of the accounts be sent to:-

  • every member of the company;

  • every holder of the company’s debentures; and

  • all other persons who are entitled to receive notice of general meetings.

Nevertheless, if copies of the annual accounts are sent less than fourteen (14) days before the date of the meeting, they shall still be deemed to have been duly sent if it is so agreed by all the members entitled to attend the meeting.

Circulation of documents

Similarly to the aforesaid, it is deemed to be good secretarial practice, for the company secretary to circulate documentation relating to the decisions to be resolved during a meeting of the board of directors. In this case, it would be advisable for the company secretary to seek the confirmation from the chairman as to the documentation to be circulated. This allows directors to make an informed and educated decision, pose questions and debate, prior to the actual resolution of the matter.

Attendance at meetings

The company secretary is generally required to attend all board and general meetings of the company. He may also be requested to attend the meetings of committees of directors, such as management committee meetings or finance committee meetings. The company secretary should be wary of the provisions in the article of association in the case of non-show by the designated chairman, or in the case of delays.

Furthermore, the company secretary should be well familiar with the provisions in the articles of association of the company governing the appointment of the chairman. The articles of association usually provide that the chairman of the board of directors is to be elected by the directors who may also determine the period for which he is to hold office. However, it is possible for a person to be appointed as chairman for that particular meeting (this is also possible in the case of no show by the designated chairman). In this case, the directors present tend to appoint one of them as chairman (this may be an important consideration, particularly if the chairman is allowed a second casting voting on certain matters). Although unorthodox, there is nothing strictly incorrect in the appointment of a chairman, who is not a director. It is also possible, in the case of companies with a structured share capital, divided into various classes, for the chairman to be appointed by the directors from a particular class of shares.

It is also common for the articles of association to have a specific provision whereby the chairman of the board of directors also presides as chairman of general meetings. The articles also generally provide that if there is no such chairman, or if he is not be present within fifteen minutes after the time appointed for the holding of the meeting, or if he is unwilling to act, the directors present are to elect one of their number to be chairman of the meeting.

The company secretary should liaise closely with the chairman to ensure that from a strict procedural perspective, the conduct of the proceedings comply to the rules set forth in the Memorandum and Articles of Association.

Quorum 

The company secretary should ensure that the quorum (for the board of directors and/or members is adhered to at all times) – otherwise business resolved would be in contravention to the memorandum and articles of association and therefore illegal. The quorum is usually set forth in the articles of association – in the case of board meetings, the quorum may be fixed by the directors and unless so fixed, the model articles of association, prescribes a minimum of two (2) directors. Obviously, the aforesaid would not apply in the case of a single member company.

If the articles of association do not provide a quorum, then it would be perfectly possible for the number of directors who usually attend board meetings to constitute a quorum.

In the case of general meetings, the Companies Act provides that in so far as the articles of association do not otherwise provide, “two members personally present shall be a quorum” although it is common to provide that two members present in person or by proxy will suffice. Once again, the aforesaid provisions would not apply in the case of a single member company.

The quorum must be achieved during the commencement of the meeting, but not necessarily maintained throughout. Therefore if the quorum is lost during the currency of the meeting, this will not render the meeting null and void. Where the quorum cannot be achieved during the commencement of the meeting, it is not uncommon for the articles of association to provide that:

  • if within half an hour from the time appointed for a general meeting a quorum is not present, the meeting, if convened by the requisition of members, should be dissolved;

  • in any other case the meeting will stand adjourned to the same day in the next week, at the same time and place or to such other day and at such other time and place as the directors may determine; and

  • if at such adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the member or members present shall be a quorum.

Minutes

Apart for aiding the chairman to the correct procedure during meeting the role of the company secretary should be to adequately record the minutes of the meeting. One of the first items on an agenda is usually the approval of the minutes of the last meeting for approved without correction or approved subject to such correction as may be agreed upon during the meeting.

Once approved, the company secretary should ensure that the minutes are signed by the chairman of the meeting. It is however customary, particularly if time elapses from one meeting to another (e.g. meetings held on a quarterly basis – for the minutes to be circulated for approval shortly after the end of the meeting. Minutes, duly signed by the chairman of the meeting shall constitute evidence of the proceedings.

In order to ensure the correctness of the minutes taken, it is perfectly possible for the company secretary to interject and ask for guidance from the chairman. Following the taking of the notes, the company secretary would formalize those notes into minutes. The Companies Act does not prescribe the level of detail to be included in the minutes, leaving this to the good judgment of the company secretary. It is however not uncommon for the minutes to be highly detailed, particularly in the case of board meetings. It is possible to summarise all the debate or to minute only the decision undertaken by the board. However, it would be good secretarial practice to give a short summary of the reasoning underpinning the final decisions, record any objections, and take note of the supporting documentation that may be referred to in the meeting (which should ideally be attached to the minutes as a memento). Where there is no unanimity in the decision, the company secretary should record who voted in favour and who voted against the decision.

Voting procedures

The company secretary should also be well versed with the rules governing voting (not only the ones set forth in the articles of association) but also the mandatory provisions set forth in the Companies Act.

In the case of directors’ meetings, the articles of association often provide that questions arising at any meeting should be decided by a majority of votes and that in the case of an equality of votes, the chairman would have a second or a casting vote. In the case of general meetings a distinction must be drawn between ordinary resolutions (passed by a member or members having the right to attend and vote holding in the aggregate shares entitling the holder or holders thereof to more than fifty per cent of the voting rights attached to shares represented and entitled to vote at the meeting, or such other higher percentage as may be prescribed in the memorandum or articles of association) and extraordinary resolutions. Thresholds for extraordinary resolutions differ depending on whether the company is a public or a private company. In the case of a public company, more probity is required, and an extraordinary resolution is one which:

  • has been taken at a general meeting of which notice specifying the intention to propose the text of the resolution as an extraordinary resolution and the principal purpose thereof has been duly given, and

  • has been passed by a member or members having the right to attend and vote at the meeting holding in the aggregate not less than seventy-five per cent in nominal value of the shares represented and entitled to vote at the meeting and at least fifty-one per cent, or such other higher percentage as the memorandum or articles may prescribe, in nominal value of all the shares entitled to vote at the meeting.

If however, one of the aforesaid majorities is obtained, but not both, another meeting should be convened within thirty days to take a fresh vote on the proposed resolution. At the second meeting the resolution may be passed by a member or members having the right to attend and vote at the meeting holding in the aggregate not less than seventy-five per cent in nominal value of the shares represented and entitled to vote at the meeting. If, however, more than half in nominal value of all the shares having the right to vote at the meeting is represented at that meeting, a simple majority in nominal value of such shares so represented shall suffice.

In the case of a private company, an extraordinary resolution is one which:

  • has been taken at a general meeting of which notice specifying the intention to propose the text of the resolution as an extraordinary resolution and the principal purpose thereof has been duly given, and

  • has been passed by a number of members having the right to attend and vote at any such meeting holding in the aggregate not less than fifty-one per cent in nominal value of the shares conferring that right or such other higher percentage as may be prescribed in the memorandum or articles of association.

Votes on a proposed resolution at a general meeting are usually taken in the first place by show of hands (on which each member present has one vote irrespective of the number of shares he holds) unless a poll is (before or on the declaration of the result of the show of hands) demanded:-

  • by the chairman, or

  • by at least three members present in person or by proxy, or

  • by any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting, or

  • by a member or members holding shares in the company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Unless a poll is so demanded, a declaration by the chairman that a resolution has on a show of hands been carried or carried unanimously, or by a particular majority, or lost and an entry to that effect in the book containing the minutes of the proceedings of the company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. If, however, a resolution requires a particular majority in value, the resolution will not be deemed to have been carried on a show of hands by the required majority unless there be present at that meeting, whether in person or by proxy, a number of members holding in the aggregate the required majority. The demand for a poll may be withdrawn. The general rule is that on a poll every member shall have one vote for each share of which he is the holder and votes may be given either personally or by proxy.

The Companies Act lays down statutory rules in relation to polls, which may not be derogated upon, even by provisions in the articles of association. Consequently, any provision contained in the memorandum or articles of association is void in so far as it would have the effect either:

  • of excluding the right to demand a poll at a general meeting on any question other than the election of the chairman of the meeting or the adjournment of the meeting, or

  • of making ineffective a demand for a poll on any such question which is made either (i) by not less than five (5) members having the right to vote at the meeting, or (ii) by a member or members representing not less than one-tenth (1/10) of the total voting rights of all the members having the right to vote at the meeting, or (iii) by a member or members holding shares in the company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth (1/10) of the total sum paid up on all the shares conferring that right. The drafting of the memorandum and articles of association would probably not have been the task of the company secretary and any conflict therein with the mandatory rules of the Companies Act would not therefore usually be the company secretary’s responsibility. Nevertheless, the company should be fully conversant with the rules in the Companies Act and be prepared to apply them if the provisions in the articles are in conflict therewith.

Involvement of company secretary

It is therefore evident that an intimate knowledge of the memorandum and articles of association, the Companies Act and a proper preparation for the meeting are the hallmark of correct secretarial practice. The company secretary should ensure to have a copy of the Companies Act as well as the updated copy of the memorandum and articles of association and minute book. The Company secretary must not take a passive role but intervene in the case of a breach to the articles of association, by bringing up the matter directly to the Chairman. On a purely procedural level, the company secretary plays a pivotal role, in ensuring the correct corporate governance is maintained at all times.

Following the meeting, the company secretary must ensure that all the necessary filings and returns, on matters resolved, are taken care of, without delay, as well as ensuring that the minutes are circulated and the registers of the company, duly updated.

Contact one of our officers for advice regarding company secretarial services and/or to initiate the incorporation of a Maltese registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbsmalta.com or by calling at +356 2338 1500

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