When the Company Secretary Goes Silent: Risks When the CS Fails to Speak Up

In many businesses, the Company Secretary (CS) is the quiet linchpin between board, management, regulators, and stakeholders. But silence is often misleading. When the CS becomes passive, detached, or disengaged, the company becomes vulnerable to risks. Missed deadlines, gaps in oversight, or flawed decision-making can snowball into legal, financial, or reputational crises.

The Crucial Role of the Company Secretary

Under the Kenyan Companies Act, a Company Secretary is responsible for maintaining statutory registers, coordinating board meetings, filing returns, ensuring that company records are available to regulators, and advising on compliance issues. A good CS ensures decisions are documented, legal changes are communicated, and governance functions run smoothly.

Beyond the formal tasks, the CS is often the first to spot regulatory changes, compliance gaps, or stakeholder concerns. The CS should not merely execute tasks - they must inform, add perspective, and flag risk.

When that voice goes quiet, risks multiply.

What Happens When the CS Remains Silent?

Here are typical manifestations of a “silent CS”:

·         Statutory registers not updated (directors, shareholders, beneficial ownership).

·         Delays in filing or missing regulatory returns (annual returns, changes in directors).

·         Board packs, agendas, and minutes are not shared or are prepared late.

·         Lack of updates to the board about regulatory or legal changes.

·         Internal processes become opaque - board decisions are made without full information.

These issues lead to serious consequences.

Real-Life Kenyan Precedents & Legal Consequences

1.      Non-compliance notices by the Registrar

In April 2025, the Registrar of Companies in Kenya issued a notice requiring that all private companies submit outstanding statutory documents, including annual returns and beneficial ownership registers, within 30 days. Failure to comply risked such companies being struck off the register or facing fines.
A CS who does not monitor these compliance demands or communicate them is putting the company at high risk.

2.      CS Negligence & Duty of Care

Legal commentary on “Opinion for Cosec” points out that a CS owes a duty of care to the company. If they fail to accept service of legal documents, neglect statutory obligations, or miss filings, they can be held liable for damages if the company suffers loss.
This underscores that silence or negligence is not just an omission; it can be actionable.

Impacts When the CS Stays Silent

1.      Regulatory/Legal Liabilities
Failing to file required returns, maintain statutory books, or furnish documents when demanded can lead to fines, strike-off, or court enforcement.

2.      Erosion of Trust & Reputation
Stakeholders (shareholders, investors, and customers) expect transparency. If reports, disclosures, or communications are inconsistent or missing, confidence erodes.

3.      Poor Board Decisions & Groupthink
Without the guiding voice of a CS, boards may make decisions on incomplete information, fail to consider legal/regulatory risk, or fall prey to consensus thinking without challenge.

4.      Loss of Strategic Agility
A CS often tracks new legislation, regulatory shifts, and compliance trends. If that role is muted, the organization is slower to respond to change.

5.      Potential Personal Liability
In serious cases, the CS (or other officers) may be held personally liable if negligence can be proven and losses are substantial.

How to Prevent a “Silent CS” in Your Organization

·         Clarify Role & Authority
Include a detailed CS mandate in your board charter or company constitution, defining what the CS must report, escalate, and advise on.

·         Regular Reporting & Communication Protocols
Establish a governance dashboard, compliance log, statutory calendar, and regularly written updates.

·         Performance Evaluation
Conduct periodic reviews of the CS role (via board evaluation) to see whether their communication and advisory duties are being fulfilled.

·         Training & Resources
Provide access to legal, compliance, and governance training, and offer support to keep the CS up to date.

·         Checks & Oversight
Use internal audits, external reviews, or governance audits to validate that the CS's work and communications are effective and timely.

How Azali Can Help

At Azali Certified Public Secretaries LLP, we ensure your Company Secretary does not lose their voice. We help businesses by: