What Is the Liability of a Secretary of Corporation?
The secretary of a corporation is corporate officer, and is held to high standards of good faith and ethical conduct.
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Position
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The secretary is a corporate officer, elected by the board of directors. In large companies, the corporate secretary will have a full office, staffed with multiple undersecretaries.
Traditional Duties
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The secretary (along with a president and treasurer) is a necessary member of a corporation. The secretary keeps the corporate seal and corporate records, and usually has implied authority to attest to those records on behalf of the corporation. Corporate proxies, for instance, are usually directed to the corporate secretary, authorizing a third party to vote shares.
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Sarbanes-Oxley Implications
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The Sarbanes-Oxley Act (2002) has dramatically increased the role of the corporate secretary in governance of the corporation. In the current environment, the secretary often acts as a gatekeeper, clearing information before it is reported to outside regulatory bodies.
Legal Liability
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Although the secretary need not be an attorney, many secretaries are attorneys, since their role often involves advising the board on the legal implications of board decisions. If the secretary offers such legal advice, his conduct must also conform to the applicable legal code of ethics.
Third-Party Reliance
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A third party is entitled to rely completely on a corporate secretary's certification of facts or records about the corporation. This increased responsibility increases the pressure on the secretary to perform his gatekeeping function with due diligence and good faith, two of the tenets of good corporate governance.
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