Company secretaries remain one of the most misunderstood roles in South African business, with many entrepreneurs uncertain whether their companies need one, what secretaries actually do, or how to appoint them properly. Understanding company secretary requirements prevents compliance gaps that can prove costly while helping you decide whether professional secretarial services make sense for your specific situation.
When Company Secretaries Are Mandatory
The Companies Act requires certain companies to appoint company secretaries while making the role optional for others. Understanding which category your company falls into determines your legal obligations. Private companies with Public Interest Scores exceeding 350 points must appoint company secretaries. The calculation includes turnover, asset values, number of employees, and other factors creating a composite score that triggers various compliance thresholds.
Most small and medium private companies score below the 350-point threshold, meaning secretary appointment remains optional. However, many choose to appoint secretaries voluntarily to access professional compliance expertise and administrative support. The flexibility to decide based on business needs rather than legal mandates allows companies to structure governance support appropriately for their circumstances.
Public companies and state-owned companies must always appoint company secretaries regardless of size or complexity. These entity types face enhanced governance requirements reflecting their broader stakeholder impacts and regulatory scrutiny. The mandatory secretary requirement ensures professional compliance support exists for entities with heightened accountability obligations.
Personal liability companies previously required secretaries, but amendments to the Companies Act removed this blanket requirement. PLCs now follow the same rules as private companies, with secretary appointment mandatory only when Public Interest Scores exceed thresholds. This alignment simplified compliance requirements for smaller professional service firms operating as PLCs.
Understanding the Company Secretary Role
Company secretaries serve as governance professionals responsible for ensuring companies comply with statutory requirements and maintain proper corporate administration. The role combines legal compliance, administrative coordination, and advisory functions that support effective board operations and corporate governance.
Statutory compliance responsibilities include maintaining statutory registers, filing annual returns, submitting beneficial ownership information, and ensuring companies meet all CIPC deadlines. Secretaries track compliance calendars, prepare required documentation, and coordinate filing processes that directors might otherwise overlook amid operating pressures. Our guide on CIPC annual returns explains many of the compliance obligations that secretaries help companies manage.
Board support activities involve coordinating board meetings, preparing agendas and supporting materials, recording minutes, and maintaining governance documentation. Secretaries ensure proper notice procedures are followed, quorum requirements are met, and resolutions are properly documented. This administrative foundation enables boards to focus on strategic matters rather than procedural details.
Advisory services include guidance on corporate governance best practices, director duties, and compliance implications of proposed actions. While secretaries aren’t legal advisors and shouldn’t provide legal opinions, their governance expertise helps directors understand their obligations and make informed decisions. This advisory role proves particularly valuable for first-time directors unfamiliar with corporate governance requirements.
Qualification Requirements for Company Secretaries
Not everyone can serve as a company secretary. The Companies Act specifies qualification requirements ensuring secretaries possess adequate knowledge and experience. Individuals with specific professional qualifications including attorneys, chartered accountants, chartered secretaries, or similar credentials automatically qualify as company secretaries. These professional designations demonstrate the governance and compliance expertise needed for effective secretarial service.
Persons without formal qualifications can serve as secretaries if they possess “appropriate knowledge and experience.” This flexible standard allows experienced business professionals to serve as secretaries based on practical expertise rather than academic credentials. However, the subjective nature of “appropriate knowledge and experience” creates uncertainty that makes professionally qualified secretaries preferable for companies facing complex compliance situations.
Companies appointing unqualified individuals as secretaries bear risk if compliance failures occur and questions arise about whether the secretary possessed adequate expertise. Directors cannot delegate their compliance responsibilities entirely to secretaries, but appointing clearly qualified secretaries demonstrates reasonable care in ensuring professional compliance support exists.
Certain individuals are disqualified from serving as company secretaries including persons disqualified from being directors, insolvent individuals, and those convicted of specified offenses. These disqualifications protect companies from secretaries whose personal circumstances might compromise their ability to fulfill governance responsibilities effectively.
Appointment Procedures and CIPC Notification
Appointing company secretaries requires board resolution documenting the appointment decision, effective date, and appointment terms. Board minutes should record the appointee’s qualifications and the board’s satisfaction that qualification requirements are met. This documentation proves important if appointment validity is later questioned.
Form CoR24.1 notifies CIPC of secretary appointments within the required timeframe. The form requests secretary details including full names, identification information, and physical addresses. Secretaries must consent to their appointments, typically through signed consent forms retained with company records. Failing to obtain proper consent can invalidate appointments and create compliance violations.
Service agreements between companies and secretaries should specify duties, compensation, notice periods, and termination procedures. While not legally required for all secretary appointments, written agreements prevent misunderstandings about expectations and obligations. Professional secretaries typically provide standard service agreements covering typical secretarial responsibilities and fee structures.
Updating beneficial ownership documentation after secretary appointments might be necessary if secretaries acquire shares in the company or exercise control through constitutional provisions. Most secretaries serve in purely administrative capacities without beneficial ownership implications, but companies should verify whether specific secretary arrangements affect beneficial ownership calculations. Using BoDocs ensures beneficial ownership documentation remains current if secretary appointments affect control structures.
Deciding Between Internal and External Secretaries
Companies can appoint employees as internal company secretaries or engage external professional firms providing secretarial services. Each approach offers distinct advantages depending on company size, complexity, and governance needs.
Internal secretaries work exclusively for one company, developing deep familiarity with business operations, culture, and specific governance challenges. This dedicated focus allows internal secretaries to provide tailored support closely aligned with company needs. However, internal appointments require companies to employ qualified individuals, cover associated employment costs, and ensure adequate training and professional development.
External secretarial firms serve multiple clients, spreading professional expertise across various companies while achieving economies of scale. Professional secretarial practices employ teams of qualified specialists who stay current with regulatory changes and best practices through continuous professional development. Companies access this expertise without bearing full employment costs, making external secretaries cost-effective for smaller businesses.
Hybrid approaches involve appointing internal administrative staff to handle routine secretarial tasks while engaging external professionals for complex matters or specialized compliance requirements. This structure provides daily operational support at reasonable cost while ensuring expert assistance remains available for challenging situations.
The decision between internal and external secretaries depends on company size, governance complexity, available budget, and director preferences. Companies with simple structures and limited compliance obligations might find external secretaries provide better value, while larger organizations with complex governance needs often benefit from dedicated internal secretaries.
Cost Considerations and Fee Structures
External company secretary fees vary widely based on company complexity, service scope, and provider reputation. Annual retainer arrangements typically range from R15,000 to R50,000 for small to medium companies with straightforward compliance needs. Larger companies or those with complex structures can expect substantially higher fees reflecting increased service demands.
Time-based billing represents an alternative to fixed retainers, with secretaries charging hourly rates for services rendered. Rates range from R1,500 to R3,500 per hour depending on secretary qualifications and firm prestige. Time-based arrangements work well for companies needing occasional secretarial support rather than continuous services.
Transaction-based fees apply when secretaries charge separately for specific services like preparing annual returns, filing beneficial ownership submissions, or coordinating shareholder meetings. This unbundled approach allows companies to engage secretaries only for particular needs while handling routine matters internally. However, understanding what services are included versus charged separately becomes critical to avoiding unexpected costs.
Internal secretary costs include salary, benefits, professional development, and support resources. Junior secretaries might earn R300,000 to R500,000 annually, while experienced professionals command R600,000 or more. Companies must evaluate whether dedicated internal secretaries justify these costs compared to external service alternatives.
Professional Secretarial Services vs DIY Compliance
Many companies, particularly smaller ones, question whether professional secretarial services justify the cost when directors could handle compliance matters themselves using available tools and resources. Understanding what secretaries provide versus what business owners can reasonably manage themselves helps inform this decision.
Routine compliance tasks including annual return preparation and beneficial ownership submissions can be handled by directors using automated tools like BoDocs for beneficial ownership documentation. At R399.99 per submission, automated compliance tools provide professional-quality results at fractions of traditional secretarial service costs. Our guide on DIY versus professional help for beneficial ownership explores when DIY approaches work well and when professional assistance becomes valuable.
Complex corporate actions including mergers, restructurings, or major governance changes benefit from professional secretarial expertise that prevents costly mistakes. Secretaries experienced in these transactions understand procedural requirements and potential complications that inexperienced directors might miss. The cost of professional guidance during complex situations usually proves far less than fixing problems created by procedural errors.
Ongoing governance support beyond specific compliance tasks represents another secretarial value proposition. Secretaries provide continuous advisory services, maintain institutional knowledge across director changes, and ensure consistent governance practices. This sustained support proves difficult to replicate through occasional professional consultations or director efforts.
Secretary Responsibilities and Director Accountability
Appointing company secretaries doesn’t transfer ultimate compliance responsibility from directors to secretaries. Directors remain legally accountable for ensuring compliance regardless of whether secretaries assist with compliance tasks. This means directors cannot simply delegate compliance to secretaries and ignore their oversight obligations.
Effective working relationships between directors and secretaries involve clear communication about compliance status, upcoming deadlines, and governance issues requiring board attention. Secretaries should report regularly to boards on compliance matters, while directors must provide secretaries with timely information needed to fulfill their responsibilities. This collaborative approach ensures compliance obligations receive appropriate attention.
Director oversight of secretary performance includes reviewing compliance filings before submission, monitoring whether deadlines are being met, and ensuring secretary advice is sound. Directors who blindly accept all secretary recommendations without applying independent judgment fail to fulfill their oversight responsibilities. Informed questioning and verification of secretary work demonstrates proper director diligence.
Liability implications when compliance failures occur despite secretary appointment depend on whether directors exercised reasonable oversight and whether secretaries provided competent services. Directors who appointed qualified secretaries, provided necessary information, and maintained appropriate oversight typically demonstrate reasonable care even if specific compliance failures occurred. However, directors who completely abdicated compliance responsibility to secretaries without any oversight face personal liability exposure.
Moving Forward with Secretarial Decisions
Understanding company secretary requirements, roles, qualifications, and appointment procedures helps you make informed decisions about whether your company needs a secretary and what type of secretarial arrangement best serves your governance needs. For companies below mandatory appointment thresholds, weighing the benefits of professional secretarial support against costs and available alternatives determines the right approach.
Many smaller companies find that combining selective professional support for complex matters with automated tools like BoDocs for routine beneficial ownership compliance provides optimal balance between cost and quality. This hybrid approach accesses professional expertise when needed while containing costs through efficient automation of straightforward compliance tasks.
Companies requiring mandatory secretary appointments should carefully evaluate candidates’ qualifications, experience, and service approaches to ensure good fits with organizational needs and culture. Taking time to select appropriate secretaries and establish clear working relationships from the outset prevents misunderstandings and ensures effective governance support.
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Need comprehensive CIPC compliance guidance? Our complete blog library covers annual returns, director changes, company registration, and all aspects of maintaining good standing.
This article provides general guidance on company secretary requirements. For specific advice regarding your situation, consult qualified company secretaries, attorneys, or governance specialists.