In this article we will discuss about “Corporate Administration” topic, everything which you have to know to pass the ACCA F4 exam.
Secretary is a person who sees the legal issues in the company, every public company must have well qualified secretary and private can also keep but for private company secretary is not mandatory.
Secretary qualification is necessary and must fill these conditions,
- If a person work already as a secretary in a public company
- He must be a solicitor or member of ACCA, CIMA, ICSA etc.
- They must be able or capable to play role as a secretary even he has not well qualification.
Duties of a secretary
Their duties are decided by the board as there are no statutory duties on secretary, followings are the most important duties for a secretary:
- Checking the document and ensure it is in order
- Work as a registrar
- Giving notice and keep the record of minutes of meeting
- Sign on document when it is required .
Power of Secretary
Secretary has authority to bind a company with a contract. It maybe,
- Express: Authority given by board
- Implied: Authorization for legal work
An auditor is person who check the accounting record and check the errors in the records.
Auditor qualification is necessary and must fill these conditions,
- Must a member of ACCA, ICAEW etc.
- Similar Qualification
Note: An auditor is may not require if there is not more then 6.5 Millions sales/turnover or gross asset less then 3.26 Millions but these are not applied for the public, banking or insurance companies.
An auditor can resign at any time according to giving notice with proper reason or explanation for resign or companies act 2006. Company should inform to registrar if their auditor want to resign.
Duties of an Auditor
He has statutory duties and has to give information,
- Whether it gives true or fair value or not
- Must prepared by following Financial Reporting Framework or Companies Act
He must investigate:
- Whether accounting records are properly record or not
- Whether all records are agree
- Director’s report and accounts should be matched
Powers of an Auditor
- Can set in general meeting
- Can check and access the book at any time
- He can ask to employees or company’s officers about the information or explanation that help him in his audit performance (if it is required).
Some Important Sections In Companies Act 2006
Companies Act 2006, s507: Offence which leads to wrong or false information that can cause mislead. It is punishable with fine.
Companies Act 2006, s532: this section is not an offence this can occur with confusion or by misguiding an auditor by others.
Companies Act 2006, s534: It tells about an agreement between company and an auditor, the liability for an auditor is limited.
Annual General Meeting (AGM)
- Public companies must have an AGM within the six month after end of financial year. If there is no AGM in public company it may be punish with fine.
- Meeting can be held by informing “Department of Business” or “Department of Innovation and Skills”.
- AGM is not necessary in Private Companies.
- 21 day notice period is required and must be tells about AGM.
- Usually AGM discuss about “Final accounts”, “Appoint an auditor”, “Director Selection”, “Dividend Declaration”.
- Members who has 5% of a company’s shares he can pass a resolution, he can request to send the resolution details in hardcopy but if he request before financial year end then he is not liable for the expense of resolution distribution but if after the end of financial year then he has to pay from his own pocket.
- It can be held according to need or requirement (held by public companies)
- Notice should be given 14 day before meeting
- Can discuss general points
- Usually discuss about the changes or variations of class rights
- Notice 14 days before meeting
- Must have minimum member and have 1/3 shares in the company.
Who can call a meeting?
- Directors: they have power to call a meeting
- Members: Can call for a meeting if he has at least 5% of the company’s shares. If they request for meeting directors have to call the meeting within 21 day after his request. If directors do not keep meeting then he can arrange meeting himself if 50% of the companies shareholders are agree and he can claim meeting expense from the directors.
- Resigning Auditor: he can call a meeting to tell a reason for resigning
- Court: court can also call meeting if it is necessary
It helps in making the decision for a company, There are three types of resolution,
- This resolution can only be passed if a person has 75% of voting rights.
- Have to send to registrar with 15 days after passing the resolution
- Special resolution is held for (alter the company’s name, close the company, reducing share capital or change in the articles).
- Need 50% voting right to pass
- Can send or not to registrar (according to requirement)
- Need when special resolution is not needed.
- Required only in private companies
- Has to send to registrar if the voting is above 75%
- Date of meeting is decided by the voting
Quorum: the minimum number required in meeting.
Hopefully you like the “Corporate Administration” topic. This is an important topic for “Corporate and Business Law” paper.
We will post practice questions for “Corporate Administration” very soon.