Retaining a professional company secretary or charity secretary can bring peace of mind
With an increased focus on effective governance arrangements in companies, not for profits, academy trusts, clubs and social enterprises, and an ever-expanding burden of red tape and compliance duties, Mark Johnson argues that a professional company secretary or charity secretary can add real value to your organisation and provide peace of mind for directors or committee members.
Does any of this sound familiar to you…?
“Sorry we couldn’t get the Board papers out in advance – there just wasn’t time, so can we just scan through the papers during the meeting and take them as approved..?
“The minutes weren’t circulated after the meeting because Jean didn’t have time this month what with her mother being so ill; so most of the action points were unfortunately overlooked. But don’t worry we’ll pick them up at next meeting in 3 months’ time…
“I’m sure this issue has come up in previous meetings, if only we could find the minutes and records to look back through. They used to be on John’s laptop before he stepped down..
“The Board has been grappling with this issue for a while now: like a bad smell, it keeps coming back to every meeting – but no one seems to get hold of it, find out what the answer is, nail it and allow us to move on! I would ask our lawyers, but I worry they would make an industry out of it and it could end up costing us a fortune…
“I sometimes worry about whether we are keeping up to date with our responsibilities – law and policy can change really fast in this area and none of us really has the time to research the latest position. I don’t really know what would happen if we got it wrong – I just hope we’re properly insured…if only we could find the policy documents.
“I know our policies and procedures probably need a thorough review and updating, but we’re all volunteers and we just don’t have the time and capacity to move it forward.
“I just assumed that the Treasurer would file the accounts and annual return by the deadline. It came as a very unpleasant surprise when we all got fined for missing the deadline.
“It came as a nasty shock when we realised were responsible for thousands of pounds in redundancy payments. We assumed the manager who signed the contract had read it properly, but it seems not, and the Board were really unaware of what we had taken on. This could mean we have to close down.”
Don’t leave it to chance
Running a company, charity, club or social enterprise involves a wide range of legal and compliance duties. Effective governance requires proper systems for planning meetings, analysing information, following up action points, and keeping on top of compliance and legal responsibilities. Sometimes you don’t know what you don’t know until it is too late! Unfortunately, ignorance of the law is no defence. It can often be very difficult for busy directors and volunteer board members to keep on top of everything. But the consequences of getting it wrong can be very serious. Some recent examples you may have heard about:
- Charity was fined £200,000 for a breach of data protection laws – hackers broke into their website and stole data about service users. There was no data protection policy in place and staff had not been trained on the importance of data security.
- The Trustees didn’t really understand how the organisation’s business model worked- they all had busy day jobs and they trusted the highly charismatic leader- after all, she brought in so much funding, and enjoyed a high public profile. What could possibly go wrong? They were devastated when the black hole in the finances came to light and the organisation went bust and they were all ‘named and shamed’ by the media.
- The Trustees weren’t aware that the wife one of their fellow trustees was a shareholder in a business which had been awarded a contract worth £150,000 by the Trust; the Trustee hadn’t declared his interest, but the auditor picked this up at year end as a ‘related party transaction’ and once it was made public in the annual report and accounts, the media had a field day. The trust is now under investigation for governance failures and accounting irregularities.
- A local charity was forced to abandon a fundraising event because the required licences from the local authority had not been applied for in time. Tickets had to be refunded. The organisers faced a backlash from the angry public.
- A housing association signed a contract to deliver a high profile new project and later found that it did not have the necessary powers in its constitution to carry out the activity- the project had to be unwound and thousands of pounds and management time were wasted.
- The marquee blew over during the event, causing injury to a child. After consulting some rabid claims management consultants, the parents sued the committee members. They all thought they were insured, but the policy hadn’t been renewed. They ended up paying £10,000 each from their own pocket to settle the case.
All of these problems could probably have been avoided if a professional company secretary or charity secretary had been employed to keep on top of the paperwork, ensure compliance with regulations, analyse risks and sort out problems. Professional company secretaries holding Chartered Status with ICSA- the Governance Institute have undertaken rigorous academic and practical training across a wide range of areas, including corporate law, corporate governance, risk management, strategy and finance.
Start your New Year on the right footing. Consider retaining an ICSA qualified professional company secretary or charity secretary to help you:
- manage the paperwork,
- ensure effective meetings
- keep on top of compliance duties
- identify and manage risks
- enhance board performance.