The Corporate Secretary (Part 1) (First of 3 parts)

Published August 19, 2021, 7:00 AM

by Atty. Jun De Zuñiga

The corporate secretary is a corporate workhorse being one of only five (5) principal officers enumerated in the Revised Corporation Code, the others being the chairman, the president, the treasurer and, for a corporation vested with public interest, the compliance officer. All the other corporate officer positions are created only by virtue of the bylaws. This article will focus on the responsibilities of the corporate secretary under the Revised Corporation Code and, in addition, will provide some best practices on how one can be an effective and efficient corporate secretary, based on my many years of performing this function. I will now proceed to discuss his following responsibilities:

  1. Registrar of stock transactions. All original issues of certificates of stock are done under the signature of the president and the corporate secretary, with the corporate seal affixed thereon. Subsequent transfers are done by the corporate secretary by cancelling the previous certificates in the stock and transfer book and issuing new ones, under the signatures of the president and himself, with the corporate seal affixed thereon. The following checklist would be useful:

a. For original issuance, the par value of the shares must be fully paid.

b. Ownership of the shares should not exceed statutory limits, e. g., 40% limit for foreign ownership in nationalized corporations, and 40% limit for ownership for a single stockholder in banks.

c. In banks, the corporate secretary should note stockholders owning at least 1% of the voting stock. They are considered as DOSRI accounts and loans to them are subject to specific reporting requirements.

d. For stock transfers, there should be a showing that legal requirements are complied with, e. g., payment of taxes and issuance of the Certificate of Authority to register by the Bureau of Internal Revenue.

e. For transfers of shares in banks, or a series thereof, comprising at least 10% of the voting stock, there should be prior approval by the Monetary Board.

f. For corporations with stock transfer agents, who will do the registration and transfers, the corporate secretary should exercise oversight over them.

2. Custodian of corporate records. The corporate secretary is the custodian of the stock and transfer book, the corporate seal, records of meetings, their minutes, board resolutions and proxies. These will also include records and minutes of board committees like the executive committee, the governance committee, the audit committee, and the risk management committee. The reason is that these committees are all under the umbrella of the board of directors and, consequently, the board secretariat should likewise oversee the secretariat functions in these committees.

3. Secretariat functions. These functions cover the issuance of notices for meetings, organizing the venue and facilities for the meetings, preparing the agenda papers, transmitting them to the directors, and routing for signature the required certifications. Also covered in these functions would be the following:

a. The determination of quorum in meetings, the preparation and finalization of minutes and the certification of board resolutions.

b. The receipt of notices and letters addressed to the board, including objections to board resolutions.

c. The drafting of amendments to the articles and bylaws.

Parts 2 and 3   of this article will cover the other functions of the corporate secretary, namely, the election officer functions, the reportorial functions, the orientation officer functions and administrative functions.

  *       *     *

The above comments are the personal views of the writer. His email address is [email protected]