Consider the functions of directors,company secretaries, auditors and shareholders. In what ways do they contribute to the operation of both private and public limited companies - Essay Example

Functions of Directors, Company Secretaries, Auditors and Shareholders Functions of Directors, Company Secretaries, Auditors and Shareholders Both public and private limited companies consist of these three important bodies for success in business activities. It is frightening that most investors fail to understand the roles of these employees, yet they still go ahead in paying them for services in their companies. For protection of shareholders, directors are very much important. For proper strategic organization of the company’s activities, company secretaries are very much useful.

The auditors are there primarily for making of reports. Generally, for a limited company to run smoothly shareholders have their major role which is quite much vital, otherwise the company could not be complete. Directors in companies are most importantly there to guide the owners of the company, who have come together with an aim of achieving a common goal. These directors in limited companies have their major roles. These roles include offering strategic guidance towards the direction of success and accomplishment of the specific main objective.

Directors set up goals that help to set the pace for other employees towards achieving and getting to higher levels as far as business success is concerned (Ingram, n.d). Directors also help in building a good representation of the company. A company with a successful director has an image well portrayed to its competitors. When the director is very well known for his success, it transfers this kind of image to the outsiders making it competition perfect. Directors also play a big role in decision making.

Other members of a company will in most cases give their suggestions, but the directors will determine which suggestions will be used and implemented. They are therefore responsible the decision making in a company, which is a very much important role as it determines how the company will perform. Directors are also responsible for hiring of senior managers, who take over in hiring the rest of the junior employees. This is also a very vital role as the productivity of the managers that will be hired will play part in determining the how the business shall fair in the market.

This means that the director plays part in ensuring that all employees hired are qualified and can be trusted as far as production increment is concerned. Directors are also associated with policy making in the companies they work for. This means they deal with financial responsibilities, issues of equal employment chances, compliance with the legal guidelines and more. Directors also actively take part in financial roles such as budgeting of the business projects (Kennon, n.d). Company secretaries too play important roles in the running of limited companies.

Secretaries have a duty to keep safely important documents of the company such as, the member registers, director registers, secretaries and managers, and so on. This means without them, the storage of these documents would be problem, as the presence of a secretary gives assurance to the company officials that all records are safely kept free from theft, alterations and are neatly preserved for future references. At some levels, some returns required are always submitted by these company secretaries (Hero Ventures, 2005).

When there is a change in any of the documents taken care of by the secretary for example, returns showing that the change was made may be required by the registrar of companies. This will be the duty of the company secretary to ensure that the change was made and submitted to the relevant authorities. The company secretary also has the authority to allow or reject inspection of statutory books by members of the company. Whenever a member wants to go through the important records in some of these books, they may have to see the secretary who may later choose to permit or deny the permission for security purposes.

The company secretary also helps in keeping a record of the employees that report to work during office hours. This helps a lot in following up of the attendance and activeness of the employees in the company (Bansal, 2011). Some notices may also be sent to the company and delivered to the registered office. It is part of the duties of a company secretary to receive these notices on behalf of the company and then transfer them to the relevant offices. This makes it easier in terms of circulation of information and notices for that matter.

This therefore shows how important company secretaries are in making the running of the company easier (Role of Company Secretary, 2015). In both private and public limited companies, auditors have different roles depending on the terms of the article and the statutory provisions. The principal duty of the company’s auditor is to make a report to the members on the account status of the company. They inform members on whether the status is stable, or unstable, whether the company is in a position to make progress, or not.

All reports on finance balances are to be from not any other person but the company’s auditor (American Institute of Certified Public Accountants, Inc., 2002). Currently, the company auditor is also required to make enquiries on whether the loans and other advancements made by the company are legally made, and whether they favour the company’s progress. The auditor is also expected to go through the transactions represented in the books of entry and evaluate their possible impacts on the progress of the company.

They are to find out whether these transactions are in favour of the objectives of the company or not. The auditor is also expected to evaluate the progress of the company and indicate where the company does not act as an investment company and instead happens to make frequent losses. It is also the duty of the auditor to inspect how records have been made, whether they are accurately made or wrongly made (Balbir, 2012). Shareholders too happen to play a great role in enhancing the progress of the company.

This is not recognised by many as their impacts are quite indirect. Shareholders to some extent act as the owners of the companies. They have this power through the ownership of the stock in the company. In most cases they happen to be the main source of capital, where capital is raised through contributions by shareholders. These shareholders also exercise some degree of control of the company by electing the directors of these companies. This means that they choose who to lead the company which sequentially means that they choose how to be managed.

The so chosen directors are also shareholders. This makes it easier to comprehend that shareholders are basically everything in the company and they determine how the company should run. Shareholders also have a function of adopting and amending the laws made by directors. They have the right to question the actions of the directors, making it easier for them to contribute in decision making and the way the company should be managed and controlled by the leaders. This makes the leaders in the company.

Shareholders also have the purpose of attending and contributing in meetings where they plan the progress of the company and in most cases fogging the way forward. In most of these meetings, the problems and challenges facing the company may be discussed and the shareholders contribute their possible solutions which are later implemented (Rights of Shareholders, n.d). In conclusion therefore, all the four members of the private and public limited companies are very much important in completion of these companies.

It is very much important to recognise their functions in these companies and offer them due respect as they carry out their duties. Most importantly, it is good for each and every one of them to recognize what their functions are so as to submit to them effectively. References American Institute of Certified Public Accountants, Inc. 2002, Responsibilities and Functions of the Independent Auditor, [Online] Available at< http://pcaobus.org/Standards/Auditing/Pages/AU110.aspx> [Accessed 11 May 2015]. Balbir. 2012, What are the duties assigned to a company auditor?

[Online] Available at < http://www.preservearticles.com/201104065044/what-are-the-duties-assigned-to-a-company-auditor.html> [Accessed 11 May 2015]. Bansal, R. 2011, Functions of Company Secretary. [Online] Available at [Accessed 11 May 2015]. Hero Ventures. 2005, Duties and Responsibilities of Company Secretary. [Online] Available at< http://www.readycompanies.com/Secretary-Responsibility.htm> [Accessed 11 May 2015]. Ingram, D. n.d, What Are the Functions of the Board of Directors in a Cooperative?

[Online] Available at< http://smallbusiness.chron.com/functions-board-directors-cooperative-15704.html> [Accessed 11 May 2015]. Kennon, J. n.d, The Board of Directors. [Online] Available at< http://beginnersinvest.about.com/cs/a/aa2203a.htm> [Accessed 11 May 2015]. Rights of Shareholders. n.d, [Online] Available at < http://2012books.lardbucket.org/books/the-law-corporate-finance-and-management/s19-02-rights-of-shareholders.

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