The hidden governance risk: Inadequate company secretarial support in regulated firms

Corporate governance weaknesses do not necessarily reflect a lack of senior leadership oversight. They may instead arise from deficiencies in the governance framework and supporting infrastructure through which boards discharge their oversight and decision-making responsibilities.

In financial centres such as the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), regulated firms are subject to extensive governance, compliance and reporting requirements, supported by functions including senior management, compliance and legal. Yet the Company Secretarial (CoSec) function, which can play an important role in facilitating board processes, information flows, corporate records and compliance with governance procedures, may receive comparatively less strategic attention.

Drawing on their respective experience, Shamshad Khan and Leevyn Isabel argue that treating CoSec support as a purely administrative function, rather than as an important governance safeguard, can expose firms to significant regulatory, tax and corporate risk. Board minutes, resolution tracking and statutory register maintenance are often delegated to executive assistants or stretched in-house legal or compliance functions. Where these processes lack appropriate oversight and quality control, gaps in governance records may arise and remain undetected until a regulatory inspection, audit or tax assessment.

The central risk is evidentiary. A firm may have appropriate governance arrangements and conduct the necessary discussions, but if these are not documented accurately and in a timely manner, it may be difficult to demonstrate that effective regulatory oversight was exercised, that key decisions were properly considered and approved, and that applicable corporate or tax requirements were satisfied.
 

The governance gap

Regulators may consider how board members exercise oversight, engage in strategic discussions, and challenge management, rather than simply confirming that meetings took place.

Where CoSec responsibilities are rushed or inadequately performed, board minutes may reduce a complex, three-hour strategy session to a generic resolution such as "The Board resolved to approve the Risk Management Framework." During a DFSA or FSRA supervisory review or risk assessment, minutes of this nature may provide limited evidence of the substance of the Board’s deliberations, including the questions raised, challenges made and rationale supporting key decisions.
 

Absence of independent challenge

Regulators may look for evidence that Non-Executive Directors (NEDs), as well as relevant control functions, appropriately challenged management on matters such as risk appetite, capital adequacy, compliance and financial crime risks. Minutes that record only the final decision, without capturing material discussion or challenge, may make it difficult for a firm to demonstrate that effective oversight was exercised.
 

Incomplete resolution audit trails

Decisions made by written or circular resolution should be supported by appropriate records evidencing the approval process and compliance with applicable constitutional and corporate requirements. Incomplete records relating to matters such as director approvals, conflicts of interest or other procedural requirements may create uncertainty as to whether the appropriate governance process was followed and, in some circumstances, may call the validity of the relevant corporate action into question.
 

Neglected statutory registers

Failing to maintain and update required corporate registers, including those relating to directors, beneficial ownership, shareholding and share transfers, can result in breaches of applicable DIFC or ADGM corporate requirements and expose the entity and, where applicable, its officers to regulatory or administrative consequences.
 

Governance principle

In practice, if material debate, challenge, decision-making or conflict disclosures are not adequately reflected in the official governance record, a firm may find it difficult to demonstrate to regulators that appropriate governance and oversight occurred.

Governance weaknesses can also extend beyond regulatory exposure. In the UAE’s evolving corporate tax environment, incomplete or inadequate corporate records may make it more difficult for a firm to evidence where and how key decisions were made, demonstrate the substance of its governance arrangements and support its tax position if challenged.
 

Creating a defensible governance record

Effective CoSec support helps ensure that governance records are prepared accurately and in a timely manner and are supported by an appropriate audit trail. Board packs, meeting notices, agendas, attendance records, resolutions, and executed minutes should collectively provide a reliable record of the governance process and the decisions taken.

Generic resolutions or records prepared significantly after the relevant decision may provide limited evidence of the substance of the Board's deliberations or the circumstances in which a decision was made. Maintaining complete and timely records therefore strengthens a firm's ability to substantiate its governance arrangements.
 

High-standard secretarial support execution

An effective CoSec function can operate as an important component of a firm's wider governance and risk management framework:

Board pack management

Coordinating and distributing structured board packs sufficiently in advance of meetings to allow directors appropriate time to consider various management information reports.

Substantive minute-taking

Maintaining an accurate record of material board discussions, including significant questions and challenges raised by directors, management responses, matters requiring further action, conflicts disclosed and the rationale supporting material decisions.

Statutory compliance

Monitoring applicable annual filing and registry requirements, director appointments and resignations, changes in ownership and beneficial ownership information, and maintaining statutory books and registers in accordance with applicable DIFC or ADGM requirements.

Regulatory coordination

Supporting the timely identification and completion of corporate and regulatory filings and coordinating, where appropriate, with the compliance officer, MLRO and other control functions.
 

CoSec support as a strategic risk control

In highly regulated jurisdictions such as the DIFC and ADGM, CoSec support extends well beyond administrative record-keeping. A well-managed CoSec function helps create the governance records on which regulators, tax authorities, auditors, and other stakeholders may rely when assessing how a firm is directed, controlled, and overseen.

When performed effectively, CoSec support strengthens regulatory resilience, supports the firm's ability to evidence compliance with applicable corporate and tax requirements, and protects the integrity of board decision-making. It should therefore be viewed not simply as an administrative overhead, but as an integral component of an effective governance framework.