Company secretary and legal registered office
To comply with local company law, Healy Consultants provides to our Clients i) global company secretary services and ii) legal registered office service.
Companies are bodies with a legal personality separate from that of their owners. This means that it can sue, be sued and accrue assets & liabilities independent of the owners. These features mean that companies are sometimes referred to as “legal persons” or “bodies corporate”. The legal process of creating a company is known as “incorporation”.
Company secretaryMost jurisdictions require the company secretary to be a resident individual, whose annual responsibilities include: i) preparation and filing of the legal annual return ii) securely maintain company records and chop iii) receive important government information on behalf of our Clients and iv) ensure legal filing of changes of company structure.
Only recognised in common law jurisdictions, the company secretary is appointed to manage the company’s administrative procedures and filings. The secretary is responsible for annual returns and will organize meetings of directors and shareholders, prepare documents relating to those meetings (minutes and resolutions).
Company secretaries are not always required, and rules on residence, the use of a body corporate, etc., change from country to country. Company secretaries often come from legal and accounting backgrounds, but many countries have no minimum qualifications for company secretaries of private companies (this is different for public companies).
Registered officeIn most countries, the company shall, as from the date of its incorporation, have a legal registered office in the country of incorporation. Consequently, all official government communications and notices will be mailed to this address including: i) annual tax return ii) notice of changes in company law iii) notice of liquidation of the company.
In most countries, the legal registered office will be open and accessible to the public for not less than 3 hours during ordinary business hours on each weekday, public holidays excepted. To comply with this statutory requirement, Healy Consultants local business office will be the registered office address for your company.
When our Client engages Healy Consultants for providing legal registered office services, our client can place Healy Consultants’ office address on invoices, contracts, websites, and business cards.
Registered office address considerationsIt may be necessary for Healy Consultants to move its offices to another location. Consequently, the registered office address of our Clients’ company will change. Healy Consultants undertakes to give the Client as much advance notice as possible of any such move, but it will not accept responsibility for costs incurred by the Client as a result thereof.
The specific government dictates the process of deregistering a company. This process will take a minimum of 6 months. Healy Consultants fee to project manage company de-registration is US$1,450. During this 6 months period, it is mandatory to maintain a resident company secretary and a legal registered office.
Company secretary and registered office feesHealy Consultants annual company secretary and legal registered office fee is US$1,100. This fee excludes i) charges to amend company structure (e.g. share transfer or appointment of director) ii) phone answering and iii) mail handling and forwarding services.
Role of DirectorsThe directors are appointed by the shareholders and take responsibility for managing the company. The minimum number of directors will change from country to country, and the law may require that some proportion of the directors are resident in the country of incorporation.
In some cases, another company may be used as a director (known as a “corporate director”). However, even in these cases it is common for at least one individual (a “natural person”) to be required.
Board of directors
- The board of directors represents the company and signs for the company;
- Generally, the Articles stipulate that the chairman of the board or the managing director has the right to sign for the company alone or via special signing rights together with another board member, or that the board may grant this right to its members or third persons;
- The board of directors is a collective body, acting per the majority of its members. The specific company becomes bound by the deals concluded by the majority of the board members or by a lower number, if the latter is established in the articles of association;
- The board of directors functions as a sole body by majority. The company is bound by the contracts entered into by the majority of its directors, or by a lesser number, if so established in the memorandum of association;
- The board of directors is responsible for the administration and the proper organization of the operations of the company. The board generally elects the managing director and is responsible for the supervision of the book-keeping and control of the company’s financial affairs. The duties of the board of directors include a duty of care and a duty of loyalty, requiring the directors to act with loyalty towards and in the best interest of the company.
The board of Directors responsibilities
- The board of directors is responsible for managing the business activities of the company, for which purpose it is provided with ample management powers;
- The serious disregard by the managers/directors of their respective duties and the violation of the normal performance of the respective tasks, constitutes a just cause for removal;
- As an entity with legal personality, a company is liable for its own debts. This said, the shareholders, managers or officers are not liable for the company’s obligations in general. If a company suffers losses, the company itself has to face such loss by way of its own resources and not by way of the personal estate of its shareholders, managers or officers, its liability being limited to the totality of its patrimony.
The members may decide on removing managers from office at any time as established in the articles of association. This may require a qualified majority or other such requirement to that end, unless he removal from office has just cause. Consequently, simple majority can always approve it;
Liability of board members
- The board of directors and the supervisory board, with the addition managing director, are liable to compensate damages caused to the company by:
- All willful negligent acts;
- All omissions violating the duty of care.
- The compensation liability applies also to damages caused to the company, its shareholders or other persons by willful or negligent acts or omissions violating the Companies Act or the Articles;
- Overall Negligence is measured individually according to the principle of bonus pater familias;
- A shareholder is personally liable for damages only if he/she has through a willful or negligent act or omission violated the Companies Act or the Articles;
- The board of directors decides when to bring an action for damages on behalf of the company from the shareholder. Such action may also be made in the general meeting of shareholders;
- A director (or the managing director) who willfully or negligently breaches his or her duties may be held liable to compensate any damage caused to the company;
- A director (or the managing director) may also be held directly liable towards a shareholder or another third party, if that party has suffered damage through the directors’ breach of the Companies Act or the Articles;
- Breach of the SMA and the directors’ duties towards the securities market – e.g. in connection with the company’s disclosure obligations or in relation to duties in connection with a takeover – may also trigger liability under the securities market legislation. The general meeting can remove a director it has elected at any time.
- The board of directors and the supervisory board, with the addition managing director, are liable to compensate damages caused to the company by:
Director’s resolution considerations
- The Articles of Association specify that all resolutions at board meetings need to be passed by a simple majority (meaning a majority of not less than half of the ballots), unless stated otherwise;
- In accordance with M&AA, the director’s decisions can be either majority decisions at a meeting or unanimous. A decision may not be taken in accordance with this article if the eligible directors would not have formed a quorum. Entitled directors would have been entitled to vote on the subject had it been proposed as a resolution at a directors’ meeting;
- Resolutions are decisions of the company, which are made either by the board of directors (“board resolutions”) or by the shareholders (“shareholder resolutions”). The type of resolution required depends on the split of power between shareholders and directors, as governed by company law and the company’s constitution.
Shareholders' roles, rights and obligations
RolesAs established in law or in the Memorandum of Association, the following acts require resolutions by the members:
- Calling in and repaying supplementary contributions;
- The amortisation of quotas, the acquisition, sale and encumbrance of own quotas. Furthermore, also included is the consent for the division or transfer of ownership of quotas;
- The removal of managers and dismissal of members of the supervisory body or from office;
- The approval of the annual report and accounts for the financial year, including profit sharing and the losses apportionment;
- The waiver of the liability of managers or members of the supervisory body;
- The undertaking of legal action by the company against the management, members or members of the supervisory body, as well as discontinuing and transacting such proceedings;
- The complete amendment of the Memorandum of Association;
- Merger, division, conversion and winding up of the company and the reopening for business of the wound up company.
Unless specifically stated in the Memorandum of Association, the members are also responsible for deciding the following:
- The appointment of managers and members of the supervisory body;
- The sale or encumbrance of real estate, the sale, encumbrance and leasing of premises;
- The subscription or acquisition of equity interests in other companies and their sale or encumbrance.
RightsShareholding members have the following rights, including:
- Individual share in the profits;
- Participate in members´ resolutions;
- Obtain information on the life of the company;
- To be appointed to company bodies and supervisory bodies;
- Special rights established in the articles of association, entiteling one or more members to special benefits, which are not made available to the others;
- Profit sharing;
- According to the particular Companies Act, a director may not participate in the handling of an agreement or other legal act between the director and the company or between the company and a third party if the director would receive a material benefit that may be contrary to the interests of the company;
- Shares and control: Generally speaking, 1 share = 1 vote, so a shareholder’s control of a company is proportionate to the stake held. Dividends, being a payment to shareholders out of the company’s accumulated profits, are also paid in proportion to ownership. Multiple share classes and preferred shares can alter these principles, but it is not important to understand more than that at this point;
- Share capital: Companies are funded with share capital, which is money paid by the shareholders in return for their stakes. Some jurisdictions have minimum share capital values, while others do not. Civil law jurisdictions and public companies are more likely to require a minimum share capital than private companies in common law jurisdictions;
ObligationsShareholding members bear a number of obligations, including:
- Provision of capital contributions for the initial share capital, usually done through the payment of a certain amount of money at the time of incorporation. Furthermore, members can make ancillary or supplementary contributions or provide loans to the company;
- Share in the company’s losses pro- rata to the value of the share capital represented by the relevant quota interests;
- Approval of the management report and accounts for the financial year when it is the company body responsible for such;
- Approval of the proposed appropriation of income;
- Perform a general appraisal of the company´s management and supervision. Consequently, it has the power to remove directors from office, within the scope of its powers, or express its lack of confidence in directors;
- Perform the elections under its jurisdiction;
- Resolve on whether or not to bring a civil liability claim on behalf of the company before the courts against the directors or auditors;
- Resolve on the acquisition by the company of its own equity interests or on on the issuance of bonds;
- Authorize the directors to carry out activities, competing with the company’s activity;
- Set the remuneration of the directors and exempt them from posting a bond;
- Issuance of bonds and acquisition of the company’s own equity interests;
- Amortization of shares;
- Establishment of various representation offices;
- Distribution of assets among the members;
- The articles of association require consent for the transfer of shares;
- The shareholders can approve the amendment of the memorandum of association, unless any other company body is legally provided with powers to that end.
Shareholders resolution considerationsThe Articles of Association can be amended by a special resolution (meaning a majority of not less than two-thirds of shareholders entitled to vote at general meetings) to include any bespoke provisions, including: i) classes of shares ii) rights attaching to shares iii) dividend and voting rights iv) rights on a winding up or return of capital v) appointment and removal of directors and vi) pre-emption rights.
A special resolution is required if shareholders wish to i) alter the M&AA ii) change the company name iii) change of status from public or private iv) variation of class equity rights v) purchase of own shares vi) for winding up and vii) merger of two or more companies.
Par valueThe base value of each share is called the “par value”, which is set at the creation of the company. In some cases there will be a minimum par value, while some countries have no requirement for a par value at all.
Where there is a par value, no shares may be sold for less than that value. However, they may be sold for more than the par value, in which case the difference is called the “share premium”.
Limitations on liabilityEach shareholder’s liability for the obligations of the company is limited to “the amount unpaid on his or her shares”. Put simply, if a shareholder buys shares and pays the full amount agreed in exchange, the shareholder will lose the value of the shares and no more if the company runs into trouble. Where the shareholder has not paid for the shares, or has only partially paid for the shares, the company’s creditors can seek the outstanding amount from the shareholder, but no more.
Annual returnsThese are yearly administrative filings required by companies in most jurisdictions, requiring a list of the company’s shareholders and directors in addition to the company’s address. Many countries also require the company’s accounts to be submitted along with the annual return.
Registered agentSome jurisdictions require resident registered agents, which are distinct from company secretaries in that they tend only to make filings on a company’s behalf.
Companies limited by sharesThe most common form of a company is a company limited by shares. What this means is that each owner will hold shares in the company, which represent their stake in the business. As a result, each of these owners is called a “shareholder”.