As much as the combination of a chair and CEO role provokes concerns amongst investors, at an operational level Manifest has had concerns over the combination of the roles of Company Secretary and Finance Director for some years now. Firstly there is the potential for compromising of the independence of the Company Secretary with respect to their governance responsibilities to the Board and the Chairman. Secondly, the specialist knoweldge of the Company Secretary can protect the company, and therefore shareholders, from potentially damaging liability claims.

It is only human to err, however all too often we find that most of the Companies Acts and other regulatory non-compliance issues can be found at companies where role of CoSec is a combined function.

Another example of this came to our attention today. AIM-traded Real Estate Investors plc has not identified the resolution to dis-apply section 95 of the Companies Act at its forthcoming AGM as a special resolution; the resolution at the AGM is therefore void. Not only that, but the same resolution was incorrectly notified at the two prior AGMs also. Fortunately the Company has avoided the need to propose resolutions to ratify these two faulty resolutions as no shares were issued under the authorities. The company is now assessing the issue and an update will be included in our meeting business report for the AGM when a response is forthcoming.

Unfortunately this is the second instance of poor agenda drafting at an AIM company this month. Fortunately, Telford Homes plc had enough time to convene an EGM for the same day as its AGM to propose the resolution in the correct fashion.

When companies come to the public markets they pay a hefty premium for their professional advice – sadly it does look as if some of it is not “fit for purpose”.

Last Updated: 13 July 2009