Expanded Role of Corporate Secretary and Technology Issues
Earlier this month, I spent 6 hours providing CLE instruction online with my friends/colleagues, Prof. Bob Ledig at GMU Scalia law school and Angela Wilson, a fintech expert practicing law in the District. Our program was to an internal legal division training audience at a major federal bank regulatory agency. In future posts, I will comment in more detail and/or post the topics that I covered which included reg tech/supervisory tech; AI/machine learning; faster payments systems, third party vendor contracts and relationships between fintech and banks as well as other general fintech matters.
One area of ongoing interest from this training program and from other client inquiries pertains to the continued evolution of the Corporate Secretary role in modern times. The traditional duties of the Corp Secy, of course, remain unchanged in terms of maintaining records of the corporation, including the all important minutes of Board and Board committee meetings. However, there also has been a great expansion of the role of the Corp Secy to encompass greater corporate governance roles beyond just planning and executing the annual meeting activity and maintaining the related stock ledger records throughout the year. In today's corporate world, the Corporate Secretary is a critical member of management and an important bridge between senior management and the Board on matters of corporate governance as well as between the Board's Audit Committee and senior management on Audit Committee governance issues while also keeping the Board always properly informed.
The technology impact on the role of the Corporate Secretary also has increased dramatically. I am technology neutral and am not endorsing any specific cloud based solution or other software application package in the marketplace. However, there are significant organizational and corporate governance matters that the Corp Secy in consultation with the IT experts as well as with strong input from the Board must consider as there is a greater utilization of computer based data and record systems, as well as additional email and other encryption protocols for Board level communications to consider. This area of corporate activity is not completely settled and legal, regulatory and other issues are still being considered and resolved.
What lies ahead are even more significant technological issues for Corporate Secretaries as they consider the use and deployment of blockchain and distributed ledger methodologies for organizing and storing internal data. There are technological challenges, oversight and related management challenges and operational planning challenges as more activity comes within the ambit of using blockchain technology, for example.
To that end, I have created a "McTaggart's Best Practices for Corporate Secretaries" which is a guide to do a gap analysis as part of an internal review/due diligence exercise to identify any risk areas of concern, or other areas which may need further attention and review. The best practices are intended to be wide sweeping and start with the traditional roles and duties of Corporate Secretaries but then advances through modern day computer data and IT practices and includes direction for emerging technologies such as blockchain. The regulators are going to need to reconsider and possibly rethink their processes in this area as well and the best practices are useful for both the regulated parties and the regulator parties to develop some common baseline understanding of accepted best practices.
We are doing more training on these topics and I am happy to chat with anyone interested in learning more about training, due diligence reviews/gap analysis reviews and other briefings for senior management and Board members.
Tim McTaggart
May 18, 2020