Question

You are a CIMA (Chartered Institute ofManagement Accountants) student employed as a company secretary for a small family owned limited company. The board is made up of family members, with only one family member holding an executive position as MD. There are some disagreements within the family regarding the will of the recently deceased chair of the board, the mother of the family. The board have twice voted to pay pension contributions to one of the members of the family on the board as non-executive director, a brother of the MD, and this has been approved by majority in meeting. However, you have since been advised by the MD not to make the payment.What would you do? answer the above question and back up your answer with logical reasoning. Include a comment to EACH of the 5 critical pieces of ethics (INTEGRITY, OBJECTIVITY, PROFESSIONAL COMPETENCE, CONFIDENTIALITY and PROFESSIONAL BEHAVIO);how they would be disregarded, and what would make it right? Minimum of 250 words is required.

Answer 1

I, as a Company Secretary, should make the payment to the non-executive director, chosen by the majority of board members. The justifications required for this decision are as follows:

Integrity: A Company Secretary is a secretary of the company and not an individual. So, he should serve to the company and abide by the decisions taken in Board meetings and shareholders' meetings.

Objectivity: Board of Directors have the deciding authority after the shareholders and the MD cannot surpass the decision of the Board. A Company Secretary should not act in a biased manner.

Professional Competence: A Company Secretary should comply with the rules and regulations of company law of a country and not of any individual.

Confidentiality: It would not be desirable to reveal what MD has told to the Company Secretary. A Company Secretary should maintain the confidentiality of statements made by the Managing Director.

Professional Behaviour: A Managing Director is the most important person to run a company. So, the Company Secretary should make him understand the consequences of not following Board decisions. A Company Secretary should make a balance among all the stakeholders of a company.

Therefore, a Company Secretary is a key personnel in any company, who keeps in consideration the interest of all the stakeholders while abiding by the rules and regulations of company proceedings.