A. Explanation

To discharge their duties, directors rely on information and support from three groups of people: management, company secretary and external advisers. This Provision emphasises the access of directors to these people.

In general, management is obliged to provide directors with the information it needs (see Provision 1.6). However, in some companies, the CEO may seek to control the information flow to the detriment of the Board’s decision making. It is therefore important for the Board to have access to relevant members of management so as to ensure it gets the right level and type of information.

The company secretary holds a key position in the company; he provides the Board with the main corporate legal and administrative support. The directors should therefore have separate and independent access to the company secretary, without hindrance by management or other parties.

The position of the company secretary is enshrined in the Companies Act. Section 171 of the Act requires one or more company secretaries and identifies their qualifications.

Given the importance of the company secretary, the Provision states that the Board as a whole is to decide the appointment and removal of the secretary. This act should not be carried out by the Board Chairman and certainly not by management.

With the breadth and complexities of today’s businesses, directors, individually and collectively, will not have the all the competencies they need to understand and make informed decisions on all matters that come before them. There will therefore be occasions when they need to seek advice from external advisers. This Provision states that mechanisms be set up to enable directors, whether individually or collectively, to seek such advice when needed at the company’s expense.

B. Practice Guidance

• Practice Guidance 1: Board Roles and Director Duties.

C. Related Rules and Regulations

• Section 157C(1) of the Companies Act: Use of information and advice.
• Section 171(1) of the Companies Act: Secretary.
• Section 171(1A) of the Companies Act: Secretary.
• Section 171(1AA) of the Companies Act: Secretary.

D. CG Guides

• Board Guide 6.3: The Company Secretary [Board Relationships].
• Board Guide 6.7: Advisers [Board Relationships].
• Board Guide Appendix 6D: Guidance Notes for Company Secretaries [Board Relationships].
• Board Guide Appendix 6F: Board Control of Management [Board Relationships].
• Board Guide Case Study 6B-3: Removing the Company Secretary [Board Relationships].

E. Related Articles

• “Relying on others: where does the buck stop?” by Victor Yeo. (47KB)