CORPORATE GOVERNANCE

GOOD SECRETARIAL PRACTICES AND STANDARDS FOR

CORPORATE DISCLOSURE BY THE BOARD OF DIRECTORS.

By
VAISHNAVI SURESH
20201BCL0036
B-COM LLB (HONS.) & SECTION: 5

SUBMITTED TO
Asst. Prof. PRIYANKA MANGARAJ

SCHOOL OF LAW, PRESIDENCY UNIVERSITY

BANGALORE
KARNATAKA, INDIA
November, 2024
 GOOD SECRETARIAL PRACTICES AND STANDARDS FOR
CORPORATE DISCLOSURE BY THE BOARD OF DIRECTORS.

1. Introduction
Lack of corporate governance is not a luxury that companies can afford in the modern world
because the ills of corporate governance the world over are making a mark on organizations. The
figure from World Economic Forum stunned corporate world, stating that poor corporate
governance can wipe out 20 per cent of market value. These failures are often the result of lack
of supervision and control – and these two problems can be frequently attributed to secretarial
inefficiency. From delays in delivering financial reports, inadequate documentation or flawed
disclosure, governance failures can significantly dent an organisation’s financial performance,
cheat investors blind faith, and send goodwill packing in a blink of an eye.
With the current increased legal framework and globalization, corporate governance has emerged
as a critical success factor and sustainability of an organization. The investors, the regulators and
the public in general allow companies to operate and earn their profits on condition that they
inform their stakeholders about their performance, operation and legal and ethical compliance.
Of all these components of governance, corporate disclosure has developed to be critical to
governance as it allows stakeholders to make right decisions at the correct time with correct
information. Failing to meet such expectations does more than invite regulatory sanction: a
company risks losing its credibility with customers and competitors.1
However, the responsibility for ensuring that these expectations are met often falls on one of the
most critical yet underappreciated figures in corporate governance: the company secretary. In
light of these considerations the company secretary holds a central position within the board and
stakeholders and regulatory authorities essential in influencing the degree of transparency,
accountability and ethical standards in organisations. This blog is a humble attempt to raise
awareness of the critical contribution company secretaries make to corporate reporting, how best
practices are being embraced to ensure high standards in corporate reporting.
They are not mere clerks and administrative workers in an organization; they are professional
advisers whose efforts go beyond the approval of documents and management of companies to
guaranteeing organizational compliance with the law and expected standards of ethics in
1
Jonathan Solomon, Corporate Governance and Accountability (2017).
governance. They are the barometers for disclosure, and not only provide timely and accurate
information, but must also demonstrate how the company complies with the complex regulatory
structure that surrounds it’s activities.
The main traditional function of a company secretary is the executive and administrative
responsibility for managing the company’s governance system and coordinating relations
between the board of directors, shareholders and authorities. By maintaining records, following
law requirements, and managing meetings effectively company secretary makes sure that
corporations’ information is accurate, comprehensive, and fair. This makes secretarial function
significant to the capability of the company achieve for enhanced transparent, investor enjoyed
and regulatory compliance.
The company secretary function is considered trivial although it is crucial for the proper
functioning of an organization. Van der Linde and Botha’s conceptions of good secretarial
practices show that compliance is a long way from a satisfactory framework for long-term
success. The company secretary of today requires to not only refine legal compliance but, be the
watchdog that engenders improved governance framework that helps deliver more accurate
reports for stakeholders.
The inevitable outcome from the corporate failures in governance due to poor secretarial
practices is financial implications and loss of reputation of the organization. From issues of
record management, filing, and material information non-disclosure, poor secretarial practices
put the company at great risk. On the other hand, the companies that aim at increasing effective
secretarial operations have increased confidence, investors’ loyalty and thus better business
continuity in the future.

2. The Company Secretary: A Multifaceted Role

Widely, the CS plays a crucial role in the annals of corporate governance where preservation of
law, regulation as well as ethical standards of the company are maintain with transparency and
accountability. The corporate Secretary which was previously limited to the clerical activities of
the corporation now engages in strategy, compliance and shareholders’ relations. This section
looks at the various roles played by the company secretary which show why his input in
supporting good corporate governance standards and proper corporate reporting is crucial.
The Gatekeeper of Governance: Bridging Stakeholders
The company secretary is mostly called the ‘corporate governance’ which is a name that reflects
the role of the official in managing corporate compliance requirements. Their primary role is to
provide a bridge between the board of directors, shareholders, and other regulatory authorities to
ensure proper and effective flow of information is provided.
Key Responsibilities:
The company secretary also has a big responsibility in corporate governance as a result of having
responsibility of communication dissemination and receipt, providing advice to the board and
communicating with the regulators. One of their key responsibilities is to provide clarity in their
communication, between the board, shareholders and the regulator. For example, during AGMs,
the company secretary makes sure the shareholders get timely, relevant, and easy-to-understand
information to enable them make right decisions fully understanding the dynamics of the board.
In addition to record-keeping, the company secretary further performs a strategic role in acting as
the board advisor in governance structures and legal requirements covering the legal aspects of
decision making such as risk profiling or business opportunities in the fulfillment of the board
duties, and conformity to governance practices. In. Furthermore, due to the company secretary’s
responsibility for organization’s relation with the authorities, he/she also oversees the submission
of the following documents: annual return, compliance report, and notification of a material
event among others.2 They also oversee the compliance audit, and effectively engage the relevant
regulating authorities to guarantee the organization’s compliance to the law and statutes. This
define the concept of the company secretary to show the authority and relevance in the way the
organization conducts its business to meet legal, ethical and governance requirements.

The Compliance Connoisseur: Navigating Legal and Regulatory Landscapes

Company secretary is not only performing routine administrative tasks but at the same time
should have considerable legal knowledge of the country. Since the company secretary is the
compliance connoisseur, he or she is charged with the responsibility of making sure that all
corporate activities are legal, well-documented and in compliance throughout the company.
2
Inst. of Co. Sec’ys of India, Secretarial Standards on Meetings of the Board of Directors and
General Meetings (2020), https://www.icsi.edu.
Key Areas of Expertise:
Besides, the company secretary assumes the responsibility of overseeing statutory compliance,
providing guideline on changes that are permissible in law, and establishing sound compliance
regimes for maintaining this governance. It involves guaranteeing statutory compliance; statutory
registers; registrars; filings; and relevant laws including the Companies Act, SEBI LODR
Regulations and sector-specific rules. For example, in India the company secretary manages
filings of the financial statements, corporate government reports and FEMA. Also, through
dynamic world of regulation, the company secretary is the board’s "navigator", who detects and
defines new regulations that can pose threats to the company and reports on possible changes to
the board’s strategy that will help avoid penalties for non-compliance. In addition to actively
ensuring compliance, they develop and integrate organizational compliance solutions including
checklists, disclosure procedures as well as employee training mechanisms. It reinforces the
governance and reduces risks at the same time, promoting the legal and ethical practice of the
organization.3

Strategic Partner in Governance: Aligning Legal and Business Objectives

It might be noted that today, there are great strategic responsibilities vested in the company
secretary than merely the compliance position. They are specialists in corporate governance legal
issues and shareholder management and as such, they take up the role of the organization’s
consultant in how the board and its decisions are implemented to the fine satisfaction of legal
statutes and organizational objectives.
The company secretary plays a pivotal role in supporting the board’s strategic goals, promoting
ethical practices, and managing crises, thereby serving as a cornerstone of effective corporate
governance. By providing valuable insights into the legal and governance risks associated with
business decisions, the company secretary ensures that the board’s strategic objectives are
aligned with best practices in governance and regulatory compliance. Their comprehensive
understanding of the company’s operations and the legal environment enables them to offer
informed advice that helps the board navigate complex legal landscapes, mitigate risks, and
make decisions that promote long-term sustainability and success.

3
Glob. Reporting Initiative, GRI Standards (2021), https://www.globalreporting.org.
As custodians of corporate integrity, company secretaries are instrumental in fostering a culture
of accountability and transparency by promoting ethical business practices. This includes
implementing and overseeing codes of conduct, conflict-of-interest policies, and other ethical
guidelines, ensuring these principles are upheld at every level of the organization. Their efforts
not only safeguard the company’s integrity but also strengthen stakeholder trust, which is
essential for the organization’s reputation and growth.
During crises, such as regulatory investigations, public relations challenges, or internal
governance failures, the company secretary assumes a critical role in managing communication
with internal and external stakeholders. By ensuring timely and accurate legal and regulatory
disclosures, they help mitigate potential reputational damage while demonstrating the
organization’s commitment to accountability and transparency. 4 Their expertise in crisis
management and governance enables the organization to respond effectively, minimizing risks
and restoring stakeholder confidence. Through these multifaceted contributions, the company
secretary significantly enhances the company’s resilience and strategic agility in both routine
operations and challenging circumstances.

Company secretary can be described as the behind the scene figure who enforces the governance
framework within an organization. Through being the chief guardian of governance, the
compliance connoisseur, strategic advisor he upholds integrity, and brings legal compliance in
order to maintain transparency of the business. Lack of their input, corporate decision-making
would be legally inconsequential, shareholders might not be engaged, and the organization might
face regulatory consequences.
In the need to approve board appointments, oversee compliance, advice on governance issues
and also encourage communication, the company secretary is instrumental in a way that he
facilitates corporate governance and establishes accuracy and compliance of disclosure
statements amongst other duties. In the following sections, we will demonstrate how these stand
for core responsibilities are exercised in practical secretarial processes to unveil strong corporate
disclosure quality that will keep the company’s afloat in a competitive and increasingly regulated
environment.

4
10 Responsibilities of the Corporate Secretary in the Boardroom, Diligent Insights,
https://www.diligent.com/resources/blog/10-responsibilities-corporate-secretary-boardroom
(last visited Nov. 29, 2024).
3. Good Secretarial Practices: The Foundation of Trust and Effective Governance
Effective secretarial practices as we see, are not merely the formality of a business organization
but are in fact vital components of corporate governance system. Both of these practices act as
the foundation upon which shareholders, the board of directors, regulators, and other
shareholders have laid the foundation for developing transparency, compliance, and trust. It
includes a wide array of services, including recording keeping and management of the legal
environment, to the administration of the board of directors. This section discusses the
fundamental principles of proper secretarial functioning and points to the contribution they make
to proper corporate governance and ethical business conduct.5

3.1 Mastering Record-Keeping: The Pillar of Documentation

In the context of corporate governance, precise and comprehensive documentation is
indispensable. The company secretary plays an instrumental role in safeguarding the integrity of
the company’s documentation, ensuring that all records are both traceable and defensible in case
of audits, legal disputes, or regulatory inquiries.
Adhering to the principles of good documentation and record keeping is one of the grateful
fundamentals of proper corporate governance where the company secretary mainly facilitate
proper record keeping and record search. In addition to statutory registers, company secretaries
are required to maintain formal records of board of directors’ meetings, communications with
shareholders, corporate resolutions, and compliance filings and all documents to contain
annotations of decisions and actions, time lines. Digital technology includes cloud storage,
encryption, and document management systems and makes these records efficient, accurate, and
secure. In a similar manner, contemporaneous and comprehensive records are equally important
as outdated or incomplete records, such as a shareholding register that is out of date, or unfiled
corporate resolutions that may give rise to shareholder disputes, legal liabilities or regulatory
enforcement actions. For illustration, one has a multinational firm that fell foul of regulators over
alleged discrepancies between the minutes of the meeting and the financial statements which the
firm explained where as a result of bad practices in documentation. Under the direction of the

5
10 Responsibilities of the Corporate Secretary in the Boardroom, Diligent Insights,
https://www.diligent.com/resources/blog/10-responsibilities-corporate-secretary-boardroom
(last visited Nov. 21, 2024).
company secretary, the concerns of the organization addressed the necessity of documentation
standards, and as a result, future penalties were avoided, and the trust of its shareholders was
regained due to the objective necessity for the reliability of records. As illustrated by this
example it is crucial for an organization’s legal and reputation book to adhere to precise
documentation standards.

3.2 Navigating Legal Standards: The Compliance Compass

Compliance can be defined as one way that a company is able to demonstrate that it is in
compliance with the law and provides a strong reputation to the stakeholders. Such a system is
critical in a corporate environment and especially in the case of a company required to operate
under complex regulations and requirements; the company secretary is central in both designing
as well as implementing this kind of system.

Understanding the Regulatory Framework:

A company secretary has legal duties in every corporate legal area. In fields like Indian context,
it covers Companies Act, 2013, SEBI LODR, FEMA and many segment laws. To multinational
corporations, compliance becomes complicated primarily because it must conform to these
international standards like the Sarbanes-Oxley Act in the US or the General Data Protection
Regulation in the EU.6

Key Compliance Areas:

Being an in-house legal advisor, the company secretary has overall responsibilities for legal and
reporting compliance matters on legal – annual returns filings, statutory registers, and
appropriate disclosures of material information. They also act as a special consultant of the board
to update them on the new and changing legislation and hence the organization is quick to align
with changes in legislation. Making use of an effective tool, such as an interactive compliance
checklist, may be highly helpful for compliance management. Such a checklist assists an
organisation in determining its current level of compliancy by answering questions like; statutory
filings such as annual return and financial statements are done at what time, has the board be

6
World Econ. F., The Global Competitiveness Report (2021), http://www.weforum.org.
appraised on the recent regulatory changes, internal compliancy audits are conducted at what
interval, do the corporate disclosures provided meet what legal and ethical standards?

Especially in the growing world of today’s business, the use of technology plays a major role in
raising the effectiveness of managing compliance. Compliance management software performs
key functions that are monitoring of filing due dates, timely notifications for regulatory changes
and submission of statutory compliance filings among others. Such systems help organizations
set up the right tone and culture to approach compliance in an effectively and proactively
manner, and manage the compliance risks thus avoiding compliance errors or failure in future
besides enhancing on governance structure. A strategic management of the company secretary
that integrates modern technological procedures makes it possible to guarantee sound or
adequate compliance which is relevant to legal and ethical requirements.

3.3 Facilitating Board Operations: The Maestro of Meetings

Board is one of the most important organizational components that significantly define the
quality of the organizational management, and the company secretary is responsible for the well-
functioning of the boards and the efficiency of their decisions. This can include scheduling
meetings, making sure that they are well formatted and providing information in the form of a
director’s package for their use. The company secretary also records very detailed minutes,
including the discussion points, decisions made, and appropriately documented action points for
requisite legal compliance. Lastly, they monitor the degree of compliance with decisions made,
they are accountable for enforcing solutions made. A real example of a financial company
reveals that structured board practice, implemented by the company secretary, enhance
governance, transparency and shareholders’ satisfaction. It is therefore important that secretarial
practice should be accurate to promote ethical governance and corporate accountability in order
to have sustainable benefits to the organizations.7

4. Standards for Corporate Disclosure: Transparency in Action

The specialty of corporate disclosure is that it is the fundamental pillar of corporate governance,
underlying organizations’ operations and their relationships with the latter. Therefore, through

7
World Econ. F., The Global Competitiveness Report (2021), http://www.weforum.org.
disclosure of information that meets the highest legal requirements, organizations not only fulfill
the legal requirements of the state but also develop corporate transparency as a work ethic that
improves their image. This section looks at what is required in corporate disclosure, what can
and cannot be disclosed and the components of the disclosure process.
4.1 Mandatory Disclosures
Legal regulatory disclosure is as a legal requirement where various reports needed to be
produced and filed by the company to put into awareness the stake holders of the correct facts in
relation to position of the company, its management, and significant events. The main objective
of these reports is to avail, to investors, creditors, regulators, and the public in general,
information, which is relevant and could have a bearing on the decision making process.
Key Types of Mandatory Disclosures
Business organizations prepare numerous reports, and financial statements are considered one of
the most important for disclosing organizational responsibilities. It refers to the balance sheet,
income statement, cash flow statement and notes which aides the common user in evaluating the
company’s performance according to the accounting principals such as IFRS or GAAP.
Management discussion, governance reports, and annual key ratios, constitute new elements of
annual reports apart from the financial statements. 8 Companies also have to submit quarterly or
interim reports which provide such timely information on the company’s performance. Also,
matters of substance across materials such as mergers, leadership changes, or stock repurchases
require reportage in short orders. Government agencies such as SEBI for India and SEC for the
united states require the application of these reporting practices to maintain integrity, credibility
and to facilitate right decision making by the interested parties.
The Disclosure Dilemma
While mandatory disclosures play a crucial role in ensuring transparency, excessive or poorly
structured information can obscure critical insights and overwhelm stakeholders. For example,
highly detailed financial disclosures or complex legal jargon may confuse investors and dilute
the impact of more relevant data. Companies must strike a balance between providing adequate
information for decision-making and avoiding unnecessary complexity in their disclosures.

8
Shyam Agrawal, Company Secretaries: An Important Pillar of Corporate Governance, Prime
Database, https://www.primedatabase.com/article/2016/48.Article-Shyam%20Agrawal.pdf
(last visited Nov. 21, 2024).
To streamline the process and ensure compliance, companies can create infographics or visual
aids that simplify the timeline for mandatory disclosures, helping them stay organized and meet
all filing deadlines.

4.2 Materiality Matters: Defining What’s Important

Materiality is a fundamental concept in corporate disclosure, referring to the significance of
certain information that, if omitted or misstated, could influence a stakeholder’s decision-making
process. Properly assessing materiality is essential for companies to avoid both under-disclosure
and over-disclosure, which can hinder transparency and clarity.
Understanding Materiality
S materiality thresholds decide whether a piece of information is relevant depending on the effect
the information will have on a particular investor or stakeholder. Information is considered
material if omission or provision of it will make a reasonable investor change his or her decision.
Even the SEBI and the SEC, these two agencies for instance use some quantitative and
qualitative measurements to determine materiality. Quantitative factors are such within financial
numbers such as revenue changes or variations in earnings and these are often used in making
materiality decisions. Management changes are also important factors in this case, together with
the effects of cyber-attacks depending on the business environment. Other factors which may
dictate the materiality of some information include; industry circumstances or the regulatory
framework within which an enterprise operates. Finally, materiality implies evaluating whether
the information serves the interest of the company and its users when making decisions, to justify
disclosures to the public.9

Legal Framework for Materiality

Regulatory bodies like SEBI’s Listing Obligations and Disclosure Requirements (LODR) and the
SEC have established guidelines for determining material events. These guidelines stipulate that
companies must disclose information based on specific criteria, including thresholds for financial
metrics and qualitative factors that could influence stakeholders' assessments. However,
companies must often use judgment to assess the materiality of certain events, particularly when
the thresholds are not explicitly defined.

9
Glob. Reporting Initiative, GRI Standards (2021), https://www.globalreporting.org.
Real-World Examples
Misjudging materiality can lead to significant legal, reputational, and financial consequences:
 A global technology firm faced regulatory scrutiny and reputational damage after failing
to disclose a cybersecurity breach in a timely manner, citing the attack as immaterial. The
breach’s public revelation led to investor backlash and legal consequences.
 A manufacturing company failed to report geopolitical tensions that threatened its supply
chain, resulting in unforeseen delays and significant financial losses. When investors
discovered the risks after the fact, the company faced sharp criticism for not disclosing
the information earlier.
Practical Guidance for Assessing Materiality
To effectively assess materiality, companies should adopt the following best practices:
1. Establish clear internal guidelines for determining materiality, considering both
quantitative and qualitative factors.
2. Regularly review and update materiality criteria based on evolving business operations,
industry dynamics, and stakeholder expectations.
3. Ensure that the decision-making process behind materiality assessments is well-
documented and defensible to avoid potential legal challenges.

4.3 Engaging Stakeholders: The Communication Challenge

Effective corporate disclosures go beyond mere compliance with legal requirements—they serve
as a tool for building and maintaining trust with stakeholders. To achieve this, companies must
adopt transparent and accessible communication strategies that engage stakeholders effectively
and provide relevant, timely information.
The Importance of Stakeholder Engagement
Stakeholder engagement is a two-way process that involves not only disseminating information
but also listening to stakeholder feedback. By fostering open communication channels,
companies can address concerns, clarify misunderstandings, and improve the quality of their
disclosures.
Strategies for Effective Communication

Interactive Poll Idea

An interactive poll can help companies assess stakeholder preferences in corporate disclosures.
For instance:
 Question: "What is the most important aspect of corporate disclosures?"
o Timeliness
o Accuracy
o Relevance
o Accessibility
This feedback can guide companies in refining their communication strategies and improving
future disclosures.

High-quality corporate disclosures are essential for maintaining stakeholder trust, ensuring
regulatory compliance, and fostering long-term business success. By understanding the legal
requirements for mandatory disclosures, defining materiality with precision, and engaging
stakeholders through clear communication, companies can create a culture of transparency and
accountability. Ultimately, effective disclosure practices not only safeguard the company's
reputation but also enhance its governance standards, ensuring a sustainable and trustworthy
corporate environment.10
As we move forward, the discussion will continue to explore ethical considerations in corporate
disclosures and the strategies companies can adopt to address challenges in implementing these
standards.
7. Conclusion:
Sustaining good secretarial practices and high standards of corporate disclosure are the pre-
requisites to the achievement of effective corporate governance structure that would guarantee
organisations’ operations and disclosures are ethical and legal. The company secretary is another
significant factor of the corporation as it main responsibilities include keeping records of the
corporate compliance issues, acting as an interface between the board, the management, and
other stakeholders and participating in the decision making process mostly at the board level.
They include record keeping, board management, compliance with legal and non obligatory rules
on disclosure so as to enhance the company’s transparency, accountability, and hence

10
Shyam Agrawal, Company Secretaries: An Important Pillar of Corporate Governance, Prime
Database, https://www.primedatabase.com/article/2016/48.Article-Shyam%20Agrawal.pdf
(last visited Nov. 21, 2024).
improvement of stakeholder confidence. Integrity and fairness while disseminating information
remain critical to maintaining and improving upon best practices, especially in addressing issues
such as regulatory factors and constraints, scarcity of resources, and shifting circumstances and
expectations, through the provision of a materiality framework within the broader context of
stakeholder focus and leveraging of technologies. Pre-emptive risk management with respect to
the organisation’s regulatory environments; preparation for new regulatory requirements; and
management of social and other capital are critical facets for future growth. To address issues of
compliance, organizations need to prioritize training, implement strong compliance systems,
involve stakeholders effectively and model, lead, and reward ethically to support effective
governance and adopt technology in organizational governance. These efforts in particular pay
regard not only for the compliance of laws but also for the realisation of a competitive advantage
for the organisation in the contemporary and increasingly monitored business world. Because of
this, the commitment to the culture of performance improvement and high standards of
governance will ensure that organizations become stronger and trustworthy organizational
structures in the global market arena.