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CSEET · Business Laws and Management · Management Knowledge for Company Secretaries

Meridian Textiles Ltd's board meets to approve a major related party transaction. The Company Secretary notes that the agenda papers were circulated only one day before the meeting, short of the notice period required by the Secretarial Standards, and the proposal needs a director's disclosure of interest that is missing. What is the most appropriate action for the Company Secretary as the governance adviser?

The Company Secretary should advise the board about the short notice and missing disclosure of interest and recommend rectifying them before the decision. This reflects the CS's role as governance adviser and compliance guardian, rather than a passive recorder, a resigning officer or a public announcer.

  1. ARecord the approval anyway, as board decisions cannot be questioned by the secretary
  2. BAdvise the board of the lapses and recommend rectifying notice and disclosure before the decision is takenCorrect
  3. CResign immediately from the company because of the lapses
  4. DInform the shareholders by newspaper advertisement before the meeting

Explanation

The CS must advise the board on compliance with law and Secretarial Standards, so should point out the short notice and missing disclosure and suggest correction before proceeding. Merely recording the decision ignores the advisory duty, while resigning or advertising is disproportionate and not the standard first step.

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