ACCA F4: Chapter 10 - Corporate Administration

1 Company secretary Every public company must have a qualified company secretary. Private companies may choose to appoint a secretary, but are not obliged to do so. The secretary is usually appointed and removed by the directors

1 Company secretary - They must have held the office of company secretary in a public limited company (plc) for at least three out of the preceding five years. - They must be a solicitor, barrister or member of ICAEW, ACCA, CIMA, ICSA, CIPFA. - They must appear to be capable of discharging the functions by virtue of another position or qualification.

1 Company secretary There are no statutory duties, therefore the duties will be whatever the board decides. - check that documentation is in order- make returns to the registrar- keep registers- give notice and keep minutes of meetings- countersign documents to which the company seal is affixed.

1 Company secretary - yes - actual authority – this is the authority delegated by the board- apparent authority regarding contracts of an administrative nature.

1 Company secretary 1) Panorama Developments (Guildford) v Fidelis Furnishing Fabrics (1971)The company secretary ordered services for his own, not the company’s, use. It was held that the contract was binding on the company as the contract was of the sort that a company secretary should be able to carry out. ‘He is no longer a mere clerk…He is entitled to sign contracts connected with the administrative side of a company’s affairs, such as employing staff, and ordering cars, and so forth.’ 2) Maidstone Building Provisions (1971).It does not extend to making commercial as opposed to administrative contracts Cleadon Trust Ltd (1938)It does not usually carry the authority to borrow money: Re Cleadon Trust Ltd (1938).

2 The auditor A member of recognised supervisory body (ICAEW, ICAS or ACCA) and eligible under their rules, or qualified by a similar overseas body and authorised by the Department for Business, Innovation and Skills.

2 The auditor An officer or employee of the company or the partner of an officer or employee of the company.

2 The auditor The auditors should generally be appointed by the shareholders by ordinary resolution. However, the directors can appoint the company’s first auditor and fill casual vacancies. A company must inform the Secretary of State if it has failed to appoint an auditor within 28 days of circulating its accounts. The Secretary of State has power to appoint an auditor in those circumstances.

2 The auditor Have a turnover of not more than £6.5m; and have gross assets not more than £3.26m. However, these exemptions do not apply to public companies, banking or insurance companies or those subject to a statute-based regulatory regime.

2 The auditor 1) An auditor can resign at any time by giving written notice to the company: s516 CA06 2) The resignation is effective from the date it is delivered to the company’s registered office, or from a specified later date. To be effective it must be accompanied by the statement required by s519 3) A company whose auditor resigns is required to inform the registrar: s517 CA06. Failure to do so is an offence. 4) Under s518 CA06, an auditor who resigns can require the directors to convene a general meeting to consider his explanation of the circumstances that led to his resignation. The directors have 21 days to send out a notice convening a meeting and it must be held within 28 days of the notice.

2 The auditor An auditor can be removed by ordinary resolution: s510 CA06. The resolution must be passed at a general meeting; a written resolution cannot be used to remove an auditor. Special notice of the resolution is needed (i.e. 28 days). The company must send a copy of the resolution to the auditor and he has the right to make a statement of his case. The company then has to circulate his statement to the shareholders. However, if time does not allow for circulation, the statement can be read out at the meeting. Notice of the resolution removing the auditor must be sent to the Registrar within 14 days.

2 The auditor 1) For quoted companies, this statement must explain the circumstances surrounding his departure. 2) For other public companies and all private companies, it should explain the circumstances surrounding his departure, unless the auditor thinks that there is no need for them to be brought to the attention of the shareholders or creditors. In that case, the statement should state that there are no such circumstances. 3) Unless there are no circumstances to be brought to the attention of shareholders and creditors, the company is obliged to circulate the statement to everyone to whom it needs to send the annual accounts. It must do this within 14 days of receiving it. If the company does not want to circulate the statement, it can apply to the court for an order that it need not circulate the statement.

2 The auditor That the accounts give a true and fair view and have been properly prepared in accordance with the Companies Act and the relevant financial reporting framework.

2 The auditor - proper books of accounting records have been kept - proper returns adequate for their audit have been received from branches not visited by them - the accounts are in agreement with the books of account and returns - the information given in the directors’ report is consistent with the accounts.

2 The auditor If the auditor is dissatisfied with the findings of his investigation he must qualify the audit report