Founder Series: The Role of a Company Secretary in Your Startup's Success

Orrick's Founder Series offers monthly top tips for UK startups on key considerations at each stage of their lifecycle, from incorporating a company through to possible exit strategies. The Series is written by members of our market-leading London Technology Companies Group (TCG), with contributions from other specialists. Our Band 1 ranked London TCG team closed over 200 growth financings and tech M&A deals totalling $3bn in 2023 and has dominated the European venture capital tech market for 35 quarters in a row (PitchBook, Q3 2024). View previous series instalments here.

As a tech startup founder, you’re likely focused on innovation, growth and securing investment. However, the administrative and compliance aspects of running a company are equally crucial.

One key role that can significantly impact your company's success is that of a company secretary. Although UK private limited companies are not required to appoint one, a company secretary can help to maintain statutory records, ensure compliance and enhance investor confidence. In this instalment, our UK Corporate Solutions team explore why this role is vital for your startup.

1. Ensuring Accurate and Timely Filings

While one of the functions of Companies House is to serve as a repository for company information, it doesn't capture all of the information a UK company is required to keep. A company secretary plays a crucial role in ensuring filings are accurate and timely.

Common pitfalls when making filings at Companies House include:

• Using the wrong Companies House forms.
• Failing to file necessary documents at all or within the prescribed timeframes.
• Disclosing information that should remain private, for example directors’ residential addresses.
• Providing incorrect information or making incorrect disclosures, for example he incorrect disclosure (or non-disclosure) relating to the Person with Significant Control (“PSC”).

Certain changes require filings with Companies House, usually within 14 days. A company secretary maintains records and makes them readily available, providing a comprehensive and accurate picture of the company’s legal framework. This facilitates smoother investment discussions and instils confidence in potential investors about the company’s governance and transparency.

By managing these filings, a company secretary can help prevent costly errors, potential legal issues and unnecessary delays to your financing round resulting from errors identified during due diligence.

2. Comprehensive Record Keeping Beyond Bookkeeping

Beyond financial records, maintaining statutory records is essential, especially when seeking investment. Investors often require a thorough review of a company's statutory records during due diligence. It's often during this process that companies realise filings at Companies House alone are insufficient.

These records will include the statutory registers, any records and/or resolutions that detail changes in the shareholding or structure of the company and various supporting documents. Many of these should not be publicly available at Companies House.

The statutory records are required to be maintained and kept at the registered office of the company (or a single alternative inspection location).

The law requires all companies to keep and maintain the following statutory registers:

• Register of Members: This crucial document reflects the legal ownership of the company’s shares. It tracks shareholder entries and any movement of shares, such as additional share issues or transfers. Proof of legal ownership of the shares is determined by the registers of members, not by share certificates.
• Register of Directors and Register of Secretaries: These registers list current and past directors and secretaries, providing transparency about who is responsible for company decisions.
• Register of Residential Addresses: This register records the current residential addresses of directors, which must be handled with care to avoid inadvertent public disclosure.
• PSC Register: This register identifies individuals or entities with significant control over the company including their nature of control, or, where not applicable, a statement that there is no PSC.
• Register of Mortgages: Where applicable, this register records any charges against the company’s assets.

A company may also maintain non-statutory registers, such as the Register of Allotments, Transfers and Debentures.

Many of these records contain sensitive information that should not be publicly available at Companies House.

3. Legal Compliance and Avoidance of Sanctions

Failure to maintain statutory records may result in financial and/or criminal sanctions against company officers. A company secretary ensures compliance with legal requirements, including the timely updating of the statutory registers and where required, Companies House.

Despite the possibility of sanctions, the statutory registers and Companies House are often neglected or not updated within the statutory timeframe.

4. Navigating Legislative Changes

The regulatory landscape is continually evolving, with new requirements such as those introduced by the Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) on 4 March 2024. Please see our articles on this topic here.

The ECCTA empowers Companies House to sanction and penalise non-compliance, making timely filing of papers and forms critical. The penalties for defaulting on these provisions are designed to be significant.

This underscores the importance of having a company secretary who can navigate change and ensure your company remains compliant as new changes are introduced (for example, the upcoming identity verification requirements set to be introduced in Spring 2025).

5. Managing Annual Filings and Compliance Calendar

A company secretary maintains a compliance calendar for annual filings, ensuring timely submissions of accounts and Confirmation Statements. This proactive management prevents last-minute scrambles and potential fines for late submissions.

Appointing a company secretary is not a legal requirement for UK private limited companies, but a company secretary can play a crucial role in ensuring compliance and preparing your startup for growth and investment.

Want to know more? Contact Viv Holyoake.