Do I need a company secretary?

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With limited companies still having the take-home pay edge for techies who want to freelance or work temporarily, it’s worth asking whether the potentially second most important person in the company is actually legally required.

In other words, and in IT contractor parlance, writes chartered accountant Matt Fryer, managing director of Brookson, a People 2.0 Company, ‘Do I need a company secretary?’

Company secretary vs company director; what’s the difference?

Both company directors and company secretaries are officers of a company; they are formally appointed at Companies House and as such, they are authorised to represent the company and make decisions regarding how it is run.

Essentially, directors are the individuals who take care of the general day-to-day running of a limited company, whereas secretaries are the individuals who ensure that the company is up-to-date with its filing responsibilities.

It’s important to note that shareholders are not officers and would only be considered as such if they were also appointed as a director or secretary.

What duties as a company secretary?

Unlike the director, there are no set guidelines defined by the Companies Act when it comes to the duties of the secretary.

N.B. The Companies Act 2006 imposes certain general duties on a director of a UK limited company, and penalties can be imposed for non-compliance.

Top 5 company secretary duties

That said, if a company secretary is appointed by your limited company, they would usually take care of the following five:

1.  Making sure Companies House are informed of any changes to the company;

2.  Ensuring the company statutory registers are kept up to date;

3.  Filing annual financial statements and the filing confirmation statement at Companies House on time / to deadline;

4.  Filing company tax returns and paying corporation tax before HMRC deadlines;

5. Potentially scheduling meetings with directors and shareholders. Of course general meetings will be just as and when required, but some meetings such as at the company’s formation or upon the drawing of a dividend will require ordinary/special resolutions and/or the documenting of minutes from the meeting.

Where a limited company accountant might come in...

The above tasks will often fall within the scope of the duties of the company secretary. But with none of the duties required by law, some may or may not be carried out by the secretary who you choose to appoint, or there may be some overlap with what the director does.

In practice (and our experience of the tech contractor sector), most directors of limited companies (also known as Personal Service Companies) tend to delegate the above duties to their accountant or tax adviser. The secretary, however, often acts as the go-between, liaising with the accountant on behalf of the company/director, and sharing in the above five tasks.

Crucial to remember though -- it is the director who is ultimately responsible for ensuring that all aspects of statutory requirements are completed.

Who can be a company secretary?

Provided that you are individual who is at least 16 years old and have not been disqualified from being a director or an undischarged bankrupt, then you can be a company secretary.

Do I need a company secretary?

All public companies are obliged to have a company secretary.

However, in April 2008, as a result of the Companies Act 2006, the post became optional for private limited companies -- unless their Articles of Association explicitly required them to have one.

Therefore PSCs are not required to formally appoint a company secretary.

So there is no ‘need,’ required in law, for a UK company secretary since 2008, factoring in the above point about the Articles of Association.

Why PSC contractors in sectors like IT may not miss not having to have a company secretary

Keep in mind, personal service companies are generally set up by single contractors in sectors like technology to provide services to clients. They are usually the only shareholder and director of the business.

To reiterate the above, most sole PSCS tend to not to appoint a company secretary as there is no obligation to do so, as the duties are mainly administrative in nature.

Potentially, if you are a director you can also be a company secretary, but as the responsibility lies wholly with the director to get things done, it may be seen to be an arbitrary role.

Are there any tax benefits to appointing a company secretary?

There are income-extraction /tax planning benefits with appointing a spouse as shareholder -- mainly in the form of paying them a small salary and the residual amounts as dividends. There are also practical benefits, as well, where your spouse could provide company secretarial assistance to the company.

But there is no requirement for your spouse or partner to be appointed as a company secretary to do this. For instance, these duties would support any salary taken from the company, the level of which should be commensurate to the work performed.

Lastly, if in doubt; talk it out…

We would always advocate speaking to your accountant in relation to your company tax planning -- and your personnel planning perhaps -- so your director duties and any company secretary appointment both run smoothly, while remembering it is the director who is ultimately responsible and accountable to both HMRC and Companies House.

Written by

Matt Fryer

Managing Director of Brookson Group

Matt is a Chartered Tax Advisor with 18 years' experience of advising on tax planning and compliance. Matt has been with Brookson since 2009, having previously worked for Big 4 accountants, KPMG and PwC. Matt’s primary role is to ensure that the services provided by the Brookson Group comply with relevant legislation and regulatory requirements. Matt is also a Board member of the FCSA, the UK's leading membership body dedicated to promoting supply chain compliance for the temporary labour market.

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