Should the general counsel also be the company secretary?

“Should our company secretary also be our general counsel? Are the roles too big for one person and can it create conflicts or confusion if the two hats are worn?” 

In many organisations, the role of company secretary is often combined with that of the general counsel (GC). In smaller organisations in particular, it is a way of creating a larger or full-time role, rather than two smaller or part-time roles where it is perceived the expertise of one will complement the other. Whether it is too big a role for one person, depends on the size and complexity of the organisation and can be managed through resourcing. The more significant issue is the potential for conflict and confusion when one person wears two hats.

Company secretary vs general counsel

The company secretary role is defined by both the Corporations Act 2001 (Cth) and the terms on which the secretary is appointed by the directors. The secretary is an officer of the company and, as such, is bound by the provisions of the Act imposing duties to exercise care and diligence, act in good faith and not improperly use the position. In addition, the secretary is responsible for a range of corporate contraventions, such as failure to give notice of changes to registers or share issues. The Act specifically provides that contravention of these corporate responsibility provisions is a contravention by the secretary.

The secretary is appointed by the directors and is responsible to the board. He or she is usually tasked with providing meeting papers to the directors ahead of board meetings.

By contrast, the GC role is an employed management position, ultimately responsible to the CEO or managing director. The GC’s practising certificate effectively limits the ability to give legal advice to advising the company itself, not individual directors, employees or stakeholders. 

Potential conflict situations

A conflict will occur when the duty of the GC to give frank and fearless legal advice, or to comply with legal obligations, is compromised in some way. Two distinct reporting lines can further complicate the issue. In both roles, the duty of the secretary/GC is to the company, but that individual may receive conflicting instructions. The risk of conflict of duty is greatest if there is misalignment between the views of the chair and/or the wider board, and the CEO. In this context, an obvious risk for the GC/secretary arises over the level of information to give to the board, including provision of legal advice. Failure to provide relevant information could contravene the secretary’s duty to exercise care and diligence, as well as the duty of the GC to the company as distinct from acting on the direction of the CEO.