Position in relation to the company - company secretary, Business Law and Ethics

Position in Relation to the Company:

In 1882 Lord Esher in Barnett, Hoares & Co v South London Tramsways Co stated that:

"A secretary is a mere servant; his position is that he is to do what he is told, and no person can assume that statements made by him are necessarily to be accepted as trustworthy without further inquiry."

Thus it was held in various cases that the secretary had no independent authority to bind the company by contract. However, in 1971 in Panorama Developments Ltd v Fidelis Furnishing Fabrics Ltd the Court of Appeal stated that in modern times the secretary is no longer a mere clerk; he is a chief administrative officer of the company and thus can make representations on behalf of the company and enter into contracts on its behalf as long as they concern the administrative side of the business such as contracts for the employment of staff, the acquisition of office equipment or the hiring of transport for visiting the company's factory, as the secretary had done in that case.

However, apart from such exceptions, the secretary still has no power and so he acts outside his authority if, for example, he borrows money in the company's behalf, or negotiates contracts other than those necessary for administrative purposes, or calls a general meeting on his own authority; of course the Articles empower the directors to delegate any of their powers to any agent they choose, they may delegate to the secretary and this is not uncommon, especially when the secretary is also a director.

Posted Date: 1/12/2013 5:10:02 AM | Location : United States

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