Chapter 19


Chapter Contents

19.1    Introduction

19.2    Duties of the secretary

19.3    Responsibilities of the secretary

19.4    Qualifications


Self-test questions

Further reading

19.1  Introduction

One hundred years ago, a company secretary would have found his powers were few. The question of the authority of the company secretary was considered many years ago in Barnett Hoares & Co v South London Tramways Co (1887) 18 QBD 815.

In this case, the South London Tramways Co had made an agreement with Messrs Green and Burleigh, who were contractors, to construct part of the tramline. The company, as is common in building and construction contracts, retained a certain percentage of the amounts for which their engineer had certified completion, since Green and Burleigh were to maintain the line for a period of time. The retention money was payable to the contractors at the end of this period. The contractors had applied to the bankers, Barnett Hoares & Co, for a loan and had given them as security a letter that purported to assign to them the retention money of £2,000 under the contract.

The bankers had then written to the Tramways company’s secretary for the confirmation that £2,000 was held and the required confirmation had been given. When Barnett Hoares were not paid back by the contractors, they had claimed the retention money. They then discovered that only £675 was held as retention money, despite the written assurances of the secretary. The issue in the case they brought against the company concerned the authority of the company secretary. Had he had the authority to bind the company?

The outcome in the case was clear and unequivocal: the company secretary had not had the authority to bind the company.

As Lord Esher MR said:

A secretary is a mere servant; his position is that he is to do what he is told and no person can assume that he has any authority to represent anything at all, nor can anyone assume that statements made by him are necessarily to be accepted as trustworthy without further enquiry …

Things have changed. In 1971, the Court of Appeal again considered the role and significance of the company secretary in Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711.

Panorama Developments (Guildford) Ltd ran a car hire business which was called Belgravia Executive Car Rental. The company fleet comprised limousines which included Rolls-Royces and Jaguars. Fidelis Furnishing Fabrics Ltd was a company of good repute, and its managing director was a man of integrity. However, its company secretary, R.L. Bayne, was not of the same cloth. He told Panorama that Fidelis wished to hire cars so that he could meet important customers at Heathrow Airport. He claimed that he took these customers to the company’s office and the company’s factory in Leeds.

This was not true. No customers were met at Heathrow and the company did not have a factory in Leeds. The cars had been used by Bayne personally. Panorama sued Fidelis Fabrics for their hire charges.

As in the earlier Barnett case, the defendants argued that they were not bound by the acts of their company secretary, who fulfilled a very humble role and had no authority to make any contracts or representations on behalf of the company. However, the Court of Appeal decided that, on the contrary, the company secretary had bound the company. In considering the Barnett case, Lord Denning MR said:

But times have changed. A company secretary is a much more important person nowadays than he was in 1887. He is an officer of the company with extensive duties and responsibilities. This appears not only in the modern Companies Acts, but also by the role which he plays in the day-to-day business of companies. He is no longer a mere clerk. He regularly makes representations on behalf of the company and enters into contracts on its behalf which come within the day-to-day running of the company’s business. So much so that he may be regarded as held out as having authority to do such things on behalf of the company. He is certainly entitled to sign contracts connected with the administrative side of a company’s affairs, such as employing staff, and ordering cars, and so forth. All such matters now come within the ostensible authority of a company secretary.

Today, then, the secretary is one of the principal officers of the company and he is the agent through whom much of the company’s administrative work is done. Indeed, when making contracts on behalf of the company, it is advisable for the secretary to ensure that he does so as agent of the company to avoid any personal liability.