The Evolving Role of the 21st Century Corporate Secretary: Implications for Governance, Risk Management, and Compliance

The role of the Corporate Secretary has significantly evolved in the 21st century, transitioning from a primarily administrative function to a strategic governance professional. As corporate governance standards become more stringent and regulatory frameworks more complex, the Corporate Secretary now plays a pivotal role in ensuring an organization's compliance, risk management, and governance structures are robust and effective.

Corporate failures in various industries, from banking to manufacturing, have highlighted the necessity of strong governance frameworks. Poor corporate governance, inadequate risk management, and non-compliance with regulatory requirements have been cited as key contributors to financial collapses worldwide. Recognizing these challenges, Nigeria introduced the Nigeria Code of Corporate Governance (2018) to harmonize governance standards across all sectors, assigning the Corporate Secretary a central role in implementation.

This article explores the changing role of the Corporate Secretary, the implications of governance, risk management, and compliance (GRC) for organizations, and the best practices required to navigate these evolving responsibilities.

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Historical Role of the Corporate Secretary

Traditionally, the Corporate Secretary's role was clerical and administrative, mainly limited to:

• Recording minutes of meetings at board, shareholder, and annual general meetings.
• Facilitating communication between the board, management, and stakeholders.
• Providing legal and regulatory guidance in corporate affairs.

Under Common Law, the Corporate Secretary was often seen as a mere clerk with no binding authority (Ekpenyong & Nkanu, 2020). However, with the increasing complexity of corporate operations and heightened governance expectations, the role has evolved into that of a governance expert, strategic advisor, and compliance officer.

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The Modern Corporate Secretary: A Governance Professional

The Nigeria Code of Corporate Governance (2018), developed by the Financial Reporting Council of Nigeria (FRCN), has redefined the Corporate Secretary’s role as the custodian of corporate governance. The code consolidates various sectoral governance regulations, including those from the CBN (2014), SEC (2011), and Nigerian Communications Commission (2016), into a unified framework applicable to all registered companies.

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Key Responsibilities of the 21st Century Corporate Secretary

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1. Governance and Board Advisory
   • Acts as a strategic advisor to the Board of Directors, ensuring decisions align with governance best practices.
   • Guides board members on ethical decision-making, board effectiveness, and succession planning.
   • Assists in the induction and training of new directors, ensuring they understand their governance responsibilities.
2. Risk Management Oversight
   • Works closely with the Chief Risk Officer (CRO) to embed a risk-aware culture within the organization.
   • Ensures the board understands and oversees key business risks, including financial, operational, and reputational risks.
   • Advocates for the adoption of Enterprise Risk Management (ERM) frameworks, aligning risk strategy with business objectives.
3. Regulatory Compliance and Ethics
   • Ensures strict compliance with laws, regulations, and corporate governance codes.
   • Acts as the liaison between regulators and the board, keeping the company ahead of compliance risks.
   • Champions a culture of ethics, transparency, and accountability, preventing fraud and corruption.
4. Stakeholder Engagement
   • Strengthens investor relations by promoting transparency in corporate disclosures.
   • Ensures effective shareholder communication and engagement, fostering trust and long-term relationships.
   • Oversees the implementation of Corporate Social Responsibility (CSR) initiatives, aligning corporate activities with societal expectations.
5. Crisis Management and Business Continuity
   • Plays a key role in crisis response and recovery planning, particularly in cases of financial distress, reputational damage, or regulatory scrutiny.
   • Ensures organizations have robust business continuity and disaster recovery plans, particularly in the wake of global crises such as COVID-19.

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Corporate Governance Failures: Lessons and Implications

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Corporate failures globally have underscored the importance of strong governance, risk management, and compliance frameworks. Some notable governance failures include:

• Enron (2001, USA) – Fraudulent accounting practices led to the collapse of the energy giant, prompting the introduction of the Sarbanes-Oxley Act.
• Lehman Brothers (2008, USA) – Risk mismanagement and a lack of governance oversight led to the largest bankruptcy in history, triggering the global financial crisis.
• BCCI (1991, UK) – Insider fraud and weak regulatory supervision caused one of the largest banking collapses.
• Imperial Bank (2016, Kenya) – Poor corporate governance and insider dealings led to the bank’s forced closure.
• Nigerian Banking Crisis (2009, Nigeria) – The CBN intervened in several banks due to capital inadequacy, fraud, and governance failures, leading to a sector-wide restructuring.

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Common Causes of Corporate Failure

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According to Mbat et al. (2013), key factors contributing to corporate failure include:

• Ineffective Boards – Weak or inactive boards that fail to provide oversight.
• Dominant CEOs – Excessive executive power without accountability.
• Lack of Transparency – Concealing financial information and unethical conduct.
• Weak Risk Management – Ignoring or failing to assess financial, operational, and compliance risks.
• Regulatory Non-Compliance – Violating laws, leading to penalties and reputational damage.

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Governance, Risk Management, and Compliance (GRC): A Unified Approach

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Governance, risk management, and compliance (GRC) are interdependent components that determine a company’s long-term sustainability and success. The Nigeria Code of Corporate Governance (2018) recognizes this interconnectedness, requiring organizations to:

1. Develop a Governance Framework – Ensuring board independence, ethical leadership, and transparent disclosures.
2. Implement Enterprise Risk Management (ERM) – Embedding a risk culture and defining risk appetites.
3. Strengthen Compliance Systems – Establishing controls to ensure adherence to regulations and policies.

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Key Principles in the Nigeria Code of Corporate Governance (2018)

The 28 principles of the Nigeria Code of Corporate Governance are structured into six pillars:

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1. Board of Directors and Leadership – Strengthening board effectiveness and accountability.
2. Assurance Mechanisms – Implementing risk management and internal controls.
3. Shareholder Relations – Enhancing engagement and transparency.
4. Business Conduct and Ethics – Promoting integrity and compliance.
5. Sustainability and Social Responsibility – Aligning corporate activities with social and environmental objectives.
6. Transparency and Disclosure – Ensuring full and fair financial reporting.
   
   

Best Practices for Corporate Secretaries in Governance, Risk, and Compliance

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1. Proactive Governance Advisory

• Regularly update the board on governance trends, regulatory changes, and risk exposures.
• Ensure board members are properly trained on corporate governance expectations.

2. Robust Risk Management Strategies

• Foster a risk-aware corporate culture through training and awareness.
• Align risk appetite with business strategy and regulatory requirements.

3. Strengthening Compliance Frameworks

• Implement anti-money laundering (AML) and know-your-customer (KYC) controls.
• Regularly review and update policies to align with evolving regulations.

4. Enhancing Stakeholder Engagement

• Improve transparency in financial reporting and corporate disclosures.
• Develop stakeholder communication strategies to build trust and loyalty.

5. Leveraging Technology for Governance Efficiency

• Adopt governance software solutions for board meetings, risk monitoring, and compliance tracking.
• Utilize data analytics to assess corporate risks and enhance decision-making.

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The role of the Corporate Secretary has evolved from a mere record-keeper to a critical governance professional, responsible for ensuring corporate stability, regulatory compliance, and risk management. In today’s business environment, organizations that fail to recognize the strategic importance of governance, risk, and compliance will struggle with financial, legal, and reputational consequences.

To safeguard businesses and promote sustainability, Corporate Secretaries must embrace their expanded role, continuously update their knowledge, and proactively support boards in making ethical and risk-conscious decisions.