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Company Secretary & Auditors

Last Updated on Sunday, 10 January 2010 18:46

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COMPANY SECRETARY

Every company must have a secretary.  In Sole member companies, the sole member can also occupy the office of Director and Secretary.

  • Company Secretaries can be individuals or any other body corporate. The secretary is an officer (like a director) and can also be an employee, any changes to the secretary must be reported to the Registrar.

    • Appointment Process

    Initial Appointment

    The Secretary, upon incorporation of the company is named in the articles of the company and/or by submitting form HE3 First Directors and Secretary.

    Further, money laundering laws of cyprus require that the identity of the secretary (whether an individual or body corporate) is established, see know your client.

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    Change of Company Secretary

    The articles of a company (or Table A) give power to the Board of Directors to appoint a Secretary for a term and a remuneration and conditions as the Board deems appropriate.

    A HE4 form (Notification of Change of Directors or Secretary or their particulars) is required to be lodged with the Registrar.

    1. The company secretary is appointed by a "Directors written resolution".
    2. The directors give notice in the form of a letter to the existing secretary requesting their resignation .
    3. The former company secretary must submit a letter of resignation to the board.

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    Resigning Secretaries

    A Secretary leaving office must present to the board a letter of resignation.

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    Duties of Secretary

    • The Secretary has a fiduciary duty to the company, as well as a duty of skill and care.
    • Main duties are determined by compaies law and articles.
    • The Secretary acts on the instruction of the board.
    • Maintains all company registers, prepares and lodes filings and notices of meetings.
      • Includes;

    1. Signing as witness (together with a director) the company seal when applied to documents
    2. Prepares notices for meetings board or shareholders (attends and takes minutes)
    3. Maintain statutory registers
    4. Issues share certificates
    5. Prepares and delivers to Registrar returns (e.g. annual return etc)
    6. Preparation of any document required by government department and official bodies

    • May sign statutory declarations to provide conclusiveness of company certificates of incorporation etc.
    • May authenticate company documents.
    • Additional duties for companies with shares in listed stock exchanges.
    • To furnish the annual return of the company to the Registrar (within 42 days of the AGM for that year)

    The Secretary has criminal liability if she/he defaults according to the statutes.

    The Secretary has the power to bind the company, but must have actual authority or apparent authority.  The board represents by its conduct if the secretary has authority.  The secretary may haveaparent or implied authority to enter into administrative contracts on behalf of the company.

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  • COMPANY AUDITORS
  • Appointment
    Companies must appoint auditors by the AGM, but its first auditors are appointed by the board and are approved at the first AGM.  The appointment is ratified by members at each AGM by the passing of an ordinary resolution.  

    • Remuneration

    If the auditors are appointed by the shareholders, they will also fix their remuneration, however if the auditors are appointed by the directors (e.g. first auditors or to fill a vacancy) the directors will determine the remuneration.

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    Qualifications

    An auditor may not be an

    • employee of the company
    • Partner or employee or officer of the company
    • A parent, spouse, brother, sister, child of an officer of the company

    Must be

    • A member of a recognised supervisory body and
    • eligible under the rules of that recognised supervisory body

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    Rights of Auditors

    Auditors have the right to

    • receive notices of all general meetings
    • attend GM and speak on any business that concerns them
    • have access to books, accounts, vouchers of the company
    • require from officers of the company all information and explanations necessary for the performance of their duties (criminal liability is imposed on officers if they give false information)
    • obtain information about a company's subsidiaries where necessary
    • require directors to call an EGM in the event of resignation

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    Duties

    • Duty to exercise reasonable care
    • Must report to shareholders during an AGM
    • They must report whether in their opinion
      • The accounts have been prepared in accordance with accounting practises
      • Give a true and fair view
    • To form their opinion the auditors must carry our investigations to enable them to form an opinion whether
      • Proper books of accounting records have been kept
      • Proper returns adequate for their audit have been received from branches not visited by them
      • The accounts are in agreement with the books of account and returns

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    Liability of auditors

    Auditors have a duty of care to third parties only when

    • they knew their statements in the audit report would be communicated to third parties and that in respect of transactions of a particular kind the third party would rely on it
    • they can reasonably anticipate and foresee the risk of causing loss to third parties

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    Termination of Auditors office
    Removal

    • Special notice of the resolution to appoint a person other than the retiring auditor is required, or providing expressly that a retiring auditor shall not be re-appointed.
    • A copy of the notice of such an intended resolution is sent to the retiring auditor and the auditor is entitled to be heard on the resolution at the meeting
    • The retiring auditor is entitled to have their written representations sent to every member of the company to whom notice of the meeting is sent.

    Resignation

    • The auditor may resign at any time by serving a notice in writing at the company's registered office
    • The date of resignation is the date of the notice or any other date specified in the notice
    • Resignation takes effect if it includes

    A statement of the circumstances connected with the resignation the auditor that the auditor believes should be brought to the attention of the member/creditors, is made or a statement that there are not such circumstances

    • The auditor can require the directors to call an EGM to consider the circumstances of the resignation.  21 days notice is required for an EGM.  The EGM must be called within 28 days of the date of notice to shareholders.

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    Compulsory audit of financial statements (under Company Law)

    • all public companies
    • all companies required by company law to prepare consolidated financial statements
    • all private companies that are not small companies

    Small companies are companies that do not exceed two of the following three threshholds

    • Total assets equivalent to €3,417,203 (CYP 2m)
    • Net turnover equivalent to € 7,005,266 (CYP 4.1m)
    • Average number of employees - 50
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