Corporate secretaries have long been the unsung heroes of boards and corporations. They’ve been the “go-to” people for everything from setting up board meetings to answering questions and referring other resources. Corporate governance is changing rapidly, which is affecting the role of corporate secretaries in significant ways. Today’s business world views the corporate secretary as an executive-level corporate officer who plays a leading role in board directorship. New directors get their first impression of the board and the company from their initial interactions with the corporate secretary.
It’s common for board directors to serve on several boards of directors. Their induction into a new board is often colored by their experiences on other boards—good or bad. During the onboarding experience, new directors are looking for assurance that the corporate secretary will help them build the cornerstone of a relationship that transcends to other members of the board and the management team.
The process of onboarding and orienting new board directors looks different at every company. While the process should be different, it should also reflect a strong focus on good corporate governance and compliance. In addition, the process should give new directors the first taste of the corporate culture.
Corporate secretaries of today still wear many hats inside and outside of the boardroom. They may participate more or less in onboarding new directors than in the past, but they remain the “go-to” people for all board directors.
The Role of the Corporate Secretary Is Evolving
All state laws require companies to have a corporate secretary. A corporation’s bylaws set the powers and duties of the corporate secretary.
When board directors don’t know the answer to an important question, they ask the corporate secretary. If the corporate secretary doesn’t know the answer, it’s his or her responsibility to find it. Corporate secretaries need to take all inquiries seriously and respond to them in a timely manner with accurate information.
One of the other duties of the corporate secretary that hasn’t changed is making sure that they record the board meeting minutes with accuracy. Meeting minutes should also serve as a record that demonstrates that the board is performing its fiduciary duties with fidelity.
One of the key duties of the corporate secretary is to act as a confidante to board and senior management, providing advice and counsel on board logistics and subsequent responsibilities.
Corporate Secretaries Play a Primary Role in Inducting New Board Members
Corporate secretaries usually spend more time with new board directors than other board members or managers do. Whether a corporation has a succinct in-person orientation or a comprehensive orientation that lasts a few days, the corporate secretary is still the primary point person who helps board directors understand their duties, roles and responsibilities.
Experienced corporate secretaries will understand the importance of providing new directors with some context of the board’s work. It’s helpful for new directors to learn about the corporation’s history, as well as the major obstacles and milestones that past boards have experienced. It’s also important for board secretaries to bring new directors up to speed with the major issues and current challenges that the board will be discussing in upcoming meetings. Corporate secretaries should be sure to review the company’s financial reports, strategic plans, operations and risk management profile with new directors.
Corporate secretaries will know where to find the Directors’ & Officers’ (D&O) insurance policies. New directors need to be aware of what is and isn’t covered as it pertains to their words and actions regarding board work. It’s not necessary for the corporate secretary to cover the policy wording in detail, but new directors should be aware that D&O insurance policies cover negligence, but not criminal acts. Secretaries will want to be sure to cover any exclusions under the policy and any deductibles that a board director may have to pay in the event of a claim where they are implicated. Directors should also be aware of any policy limitations regarding the term of coverage, which usually lasts for up to seven years after the board director’s term on the board expires. The secretary should emphasize that while the director is covered under the company’s liability policy, the coverage is intended to be a safety net and is not a substitute for avoiding unscrupulous behavior.
Various Onboarding Duties of the Corporate Secretary
Post-election times are busy times for corporate secretaries. After the congratulatory letters get mailed, corporate secretaries must get to work arranging and conducting the onboarding and orientation processes. In addition to their regular duties, corporate secretaries often set up a series of small meetings with members of management for briefings. Many corporations also like to have new board directors visit the company’s facilities and see their operations first-hand.
Most corporate secretaries will also spend at least some one-on-one time with the new director to go over some important company policies, including:
- Codes of conduct
- Conflict of interest
- Whistle-blower policy
- Remuneration policies
- Reimbursement policies for board training
- Compensation for relevant professional associations
- Compensation for expenses
- Board nomination policies
- Diversity policies
- Securities trading policies
Some corporations like to include the board chair or CEO in on discussions about corporate policies with the secretary and new directors. This is the best time to accentuate the new director’s expected level of commitment.
It’s also crucial for the board secretary to go over the company’s communication protocols with new board directors. Most companies assign a point person to act as the dedicated voice of the board. Often, that person is the board chair or CEO. The same person or another person may be appointed to be the sole communicator with shareholders, so that information from the board is clear and won’t be misinterpreted.
Corporate secretaries should always emphasize to new board directors that they shouldn’t communicate with media without authorization, even if reporters are pursuing them heavily. Board directors should also be firmly aware of the chain of command in the event of a crisis or emergency. New board directors should feel prepared for all situations because the company’s reputation is continually at stake.
Corporate secretaries are the prime people responsible for onboarding. When they do it well, it benefits the corporation as much as it benefits the director.