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Back to the FruithomeThe Corporate Secretary, as the name implies, does not just type, take notes, and polish her nails. The job entails some serious and extremely important responsibilities, so much so that many companies dispense with the word "secretary" completely and refer to a "Corporate Executive Officer."
However, as K-Business uses this position, the term "Corporate Secretary" adequately summarizes the nature of the job. It combines some of the traditional functions of a secretary, recording, noting, and communicating, with the more executive needs of the corporation. In effect, the corporate secretary acts as secretary for the entire enterprise in some very important ways.
The CS needs to perform two disparate functions, the recording of stock ownership and that of acting as Secretary for the Board. Possibly, the CS will perform some of the former functions outside the normal Company meetings. Thus, during a typical meeting, the CS may have nothing to do other than (a) produce notes from previous Board meetings or (b) simply join the manufacturing team. The exception to this lies in the meeting immediately before the monthly Board meetings when the President may engage all or most of the CS's time in preparing for the meeting.
In the K-Business model, the primary responsibility for tracking sales and ownership of Corporate Stock lies with the CS. As soon as the company elects its officers, the CS must do some very careful work prior to the following meeting. Since the CS should issue stock certificates at the second meeting if not sooner, the CS needs to act quickly.
After election of officers, the CS needs to prepare the stock certificates. On disc, the Company has four templates listed as "StockG," "StockR," "StockY," and "StockB." The CS needs to open one of these files and alter the name of the company from "CompanyG" or whatever to the chosen name of the Company. Also, the CS may wish to change the slots marked "President's signature" to reflect the name of the president and must add his/her email to the bottom of the certificates.
After showing the updated certificates to the President for approval, the CS needs to run exactly 100 of these certificates. In 2005, CS's took responsibility for running and making the certificates themselves. This particular paradigm did not work too well. Therefore, the new procedure will go as follows:
(1) The CS will give the names of the company officers to the Dr. Dan (2) Dr. Dan will print the certificates using high quality cardboard stock. (3) The CS will number and sign all of the certificates and secure the CEO's signature. (4) Dr. Dan will laminated the 100 certificates.
In addition, the CS needs to run 100 copies of the Prospectus for the shares. He may choose to laminate these as well, running them back-to-back, but this is optional. The CS must make his/her best effort to maintain that a prospectus accompanies every sold share to eliminate any possible confusion.
With these steps done, the CS is ready to issue stock, a process detailed in the section for forms below.
The following appears in the corporate code:
By October 5th a company must
(1) Issue at least 30 shares of IPO stock with a prospectus for each shareholder such that. (a) each prospectus includes the CS and CEO's email address; (b) each company member owns at least one share of stock; (c) at least 1/3 of the IPO shares sell to non-company members. (2) Assemble and turn submit to the sponsor on disk: (a) a list of all IPO stockholders including email addresses; (3) Provide its sponsor the equivalent of KD50 either through either (a) cash; (b) the equivalent of KD50 in shares of company stock according to IPO value.
While the CS does not conduct sales, he must convey to the other company members the importance of selling thirty shares. This will allow for the company to start with KD150 in cash. The requirement that each member own a share remains the same. As before, the CS needs to assemble a lost of stockholders' names and email addresses from the initial sale, but the new code specifically requires that the sponsor receive a copy on disk. This may seem an intrusive requirement, but one company in 2005 nearly lost its stockholder records.
The new requirement calls for at least 1/3 of the stocks to sell to outsiders, non-company members. Obviously, this can include relatives. Further, the company sponsors can choose to take up to half of their salary in shares of stock, and probably many will elect to do this. However, note that the more shares of stock sold, obviously, the greater the number the company must sell to outsiders. Note that this requirement only pertains to October 5th. The company members may choose to later repurchase these IPO shares.
Note that, unlike other shareholders, the company sponsors and the program director (Dr. Daniel R. Fruit) can vote their shares just like other company members.
All stock initially sells at a given price of KD5, the "par value" of the stock. Once the company finishes its initial sale (IPO), further sales of the stock may occur at any price. Ownership of the stock remains the concern of the Corporate Secretary. In the presence of a Market Manager, he will report on sales to the CS who can update his records with the assistance of the Market Manager.
The rise or fall of the stock price does not directly concern the CS except as member of the Marketing Team.
Starting in 2006, K-Business, rather than using the "Virtual Market" will include an actual market which will open on the following days:
K-Market Days 2005-2006
Sep 21 Oct 19 Nov 23 Feb 01 Mar 01 Apr 19
On the 21st shares will sell at the IPO price. At every subsequent market day, shares will sell at the market price, i.e., whatever price anyone wishes to pay. The company CS does not need to attend these market sessions provided he/she provides a working email address. During the market day, buyers and sellers, at the conclusion of their transaction, will approach Dr. Dan and/or the market manager. Shares will physically change hands, and an email message will go to the CS recording the sale. Should this email message generate an error, the CS will attend the following sessions.
After the IPO, the Company will have as many as "100 owners," and it remains a primary responsibility of the CEO to update these Shareholders as to the progress of the Company and its viability. In reality, the President will communicate through the Corporate Secretary. For that reason, the CS needs to keep an updated email list of all shareholders. Some computer programs, such as Hotmail will allow for emailing to shareholders as a list, but others, such as Eudora, have a practical limit of about 20 recipients. Thus, the CS may need to have 5 lists.
Typically, the CEO will initiate these kinds of contacts. He may say, "Please email a copy of our Board's minutes to the Shareholders." He may ask a CS to turn a set of outline notes into sentences. The CS should comply but not do "all the writing" for the President.
If Shareholders' email addresses no longer work, have viruses, etc., the problem lies with them, not the CS. The CS need not worry about directly communicating with everyone.
In the event that the Company decides to use a CIO, he may assist the CS in stockholder communication, but the CS must keep accurate records of the Stockholders and their contact information.
The following sections of the Company Code specifically affect the Corporate Secretary.
By December 3rd, A K-Business company must
Both of these requirements speak to stockholder communication. The CS, with the CEO, should assemble the midterm and final report. Both need submission to the company sponsor who will, in turn, give them to the program director to post on the K-Business website. The CIO may wish to post another copy on the company's website.
In addition, each company must hold one "open" board meeting to which it invites all stockholders per semester. Most companies will choose to have one in November and a second in March or April. The CS needs to email all stockholders and to invite them including, of course, company members. A company may wish to have this meeting at night in a more formal situation. This does NOT mean, of course, that all stockholders can or will attend, but they have the right, as stockholders, to periodically confront those using their funds. A proactive company can make these memorable occasions by providing refreshments, music, and "selling their concept." Again, note that many stockholders simply will not find the time to attend.
These last two requirements attempt to treat stockholders fairly and openly.
The CS will take notes at each monthly Board Meeting. Most Presidents will reasonably expect that CSs will take notes in outline form, not in complete sentences or in shorthand. The CS needs to faithfully record the events of the meeting, not the CFO's version of the same events. The following Board meeting will begin with the CS reading the notes from the previous meeting, so the CS must take these notes.
A proactive president will often ask the CS to do two further things. (1) Make a copy of the previous month's notes for each member and (2) prepare an agenda for the next meeting. The first step will allow a quick vote on accepting or rejecting these minutes and, again, one need not expect the CS to turn those notes into sentences or paragraphs. Thus the president can skip the CS's reading of the minutes.
In terms of preparing an agenda, the CS need not THINK of the agenda but should help the President put his agenda on paper. In either of these instances, the CS should arrange for actual printing as the President will run the meeting in person.
Given the short time span of K-Business, each company should hold about 5 board meetings, two in the fall and three in the spring, roughly monthly. This should include the two open board meetings.
As indicated previously, the CS has several tasks to perform at the Monthly Board meeting. First he/she must either read out the minutes or, if called upon, pass them out to Board members for a quick approval. He may also have to distribute copies of the Presidential agenda. The Meetings form contains sample agendas for each meeting, but a company may vary from that agenda as the President and Board see fit.
The CS needs to immediately take roll at any Board meeting. He may do this by asking the VPoHR for any absences. These he needs to "scratch" from the meeting form. Before the meeting, he/she needs to record the number of proxy votes accorded to each member. Since this will not vary from meeting to meeting unless a member quits, the CS should copy this to each agenda and then simply "scratch" absent members. This will allow for quick votes. For example, if the VPoS and Purchasing Agent are absent and "scratched," the CS can cross them out and more quickly total the proxy votes.
Two items need further comment. While the President will run the meeting according to "Robert's Rules of Order," the CS has several special responsibilities. First, in the case of ANY motion, he should record the person who makes the motion. Properly said, that person will state,
"I propose that....."
The CS will record that as "X proposed that." The motion must get a "second," but the CS need not record the second person's name. If the motion obtains no second, it "dies." The President CANNOT propose or second a motion if he runs the meeting. Occasionally, a President will yield the Chair to someone else and then propose, but otherwise someone else needs to propose.
If the Board comes to a vote, the Secretary needs to record. According to Robert's Rules, a binding vote CANNOT take place without a "quorum" usually defined as 1/2 of the members present. Usually in the absence of this "quorum," the President will reschedule the meeting and return to a production meeting. In the presence of a "quorum," the CS needs to record the results of each vote in terms of numbers and proxy votes. The proxy vote, not the numerical vote, carries. Thus, if a motion fails 10-15, but 51 shares vote for it and 49 against, the motion passes. Remember that the program director and company sponsors vote their share(s).
A CS should want to construct a "proxy vote" worksheet and record the names on each side and announce the initial (numerical) result while figuring the proxy results. This will allow the meeting to proceed while he figures the proxy results. Again, the proxy results carry because, in the end, the Shareholders own the Company and the proxies act as their representatives.
Remember that whoever records the IPO sale of a share retains the proxy voting rights no matter how many sales subsequently occur. Thus the CS does not need to update the proxy records.
Finally, stockholders at the open meetings get to vote their shares. This actually happens in real companies. Therefore, for that particular meeting the CS needs to print out the stock records as well as consulting his/her proxy records.
As indicated above, the CS no longer needs to run 100 stock certificates but must run that many prospecti prior to issuing the stock. This needs completion before the third meeting so that members can start selling shares.
After issuance of the IPO, some stock certificates may remain. The President and CS should decide the fate of these. They may decide to simply destroy them. Alternately, they may decide to lock them away. Ultimately, though, they need proper accounting or this can cause havoc with the value of the stock.
The Stock Record records the initial and any subsequent record of the stock. The CS must keep these two functions clear and differentiated in his mind, and for that reason the record puts them on two totally different pages.
The IPO (initial public offering) goes on the first page of the record. The CS should limit sales of the 100 shares to the first five weeks of the year. For each particular share, he needs to align the number of the share on the certificate with that on the record. He writes the name or office of the person to whom he gives the stock. The person receiving should initial the stock record for receiving it. The default suggested issuance on the record gives each officer about 4 shares and each non-officer about 2 shares. Those quickly selling their shares can get more from either the higher numbered shared or from those returned. Each member of the Board (i.e., each student) MUST get one share. This share entitles him to voting on the Board, and the K-Business model requires every student to vote, if even with only 1 share.
However, remember that 1/3 of the shares must go to outsiders, non-company members. In addition, the company MUST sell thirty shares.
During the three weeks subsequent to the IPO, the CS should go through his share list in numerical order, proceeding from share 1 to 100, accounting for every share. Each person issued a share will either give the name of the purchaser or return the physical certificate. In the former case, the CS should very carefully write the name, phone number, and email address of the IPO shareholder in the space provided and receive the KD5. The CS should NOT accept the share as "sold" without the KD5. If the Board member returns the physical share, the CS needs to change the name on the form to either (a) the second person attempting the sale or (b) NA (for not sold).
After he enters the evening's results, the CS enters the evening's totals in the columns below for the weekly summary. The cash totals for each evening MUST equal that of the cash on hand. In addition, the summary of sales of the week's so far MUST equal that of the share-by-share summary. When this occurs, the CS gives all of cash to the CFO as one large piece of cash, not share by share.
The CS should not let the IPO "drag on" for months. At the end of four weeks, he should demand either the physical share or the cash from Company members. If someone "loses" a certificate, the CS can simply write, "destroyed," and it has the same effect as including it as one of the "retained shares." If members spend forever selling the shares, the Company should simply start with fewer Shareholders.
Once the IPO ends, the CS should print a list of the IPO stockholders. It may make sense prior to that, insert a couple of hundred blank lines into the spreadsheet and recopy the list below the original accounting. Then, the CS can sort the second list according to proxy holders. This will help because the CS needs to determine the proxy rights of each shareholder. He can do this by simply counting every instance, but a list resorted according to proxy would simplify this task. He should copy this proxy list to ALL monthly meeting forms. Thus, he'll have one list according to shares and another according to proxyholders. The latter, he can copy to the "Meetings" list for each month.
At this point, the CS needs to print out a copy of the first two pages of the Stock Record and no longer needs to change any part of it. In fact he/she should NOT CHANGE any part of the record other than the last two pages subsequent to the end of the IPO.
The bottom portion of the Stock Record form refers to the CURRENT owner of the shares. Initially, these will correspond to the IPO owners. That's why, with each IPO sale, the CS should simply cut and paste from the top portion of the record to the bottom.
At some point, however, resales will start to occur. As the Prospectus clearly states, the new owner MUST contact the Corporate Secretary or, in lieu of that, Dr. Dan. The Corporate Secretary should create a folder on his/her computer of every email relating to these transactions. A suggested idea would be to make multiple folders, corresponding to the a range of shares, i.e., "01_10," "11_20", etc. and then name each message according to its share, i.e. "10a" would be the first resale of share 10, "10b" the second, etc.. Using some system, the CS should track these messages. If K-Business uses a Market Manager, they may come pre-organized.
When a sale occurs, the CS needs to change the information on the bottom form and ONLY the bottom form of the stock record. Each time a new sale occurs, he can delete the previous information and replace it with the new contact information.
At the very last line, the CS needs to report the most RECENT sale of the shares. If he processes several messages at once, he can consider the LAST he works with as most recent, no matter when mailed.
After the IPO, this secondary recording of ownership should not occur during meeting times. Indeed, the CS can best accomplish this in the quiet of home. Remember that recording the wrong information on the form can cause all kinds of problems.
The Meeting form documents all of the Year's Board meetings. It should not take the CS a lot of effort to figure out the details other than the procedural points noted above.
If the Company President decides on a beforehand agenda, the CS should alter his Meeting notes accordingly, correcting any alphabetical errors.
In addition, the President may call an "emergency meeting," with little more than an injunction to the CS to "come on and bring paper!" The CS should ask the President whether to include these in the yearly summary. Some Presidents will say "sure" while others will consider these informal meetings more "off the record." A given president may opt to have a separate set of officers' meetings with a separate set of records.
The CS must write a yearly report. Such a report he should append to the end of the Meeting form or go to the Stockholders separately.
After the issuance of stock, the CS typically takes a quieter role in Company, more like that of a traditional secretary. However, many CSs may take this relative freedom as an opportunity to become more of a "minister without portfolio," commenting on issues without the necessity of making a particular report.
During the CS's report, he/she may want to comment on the "market value" of the stock. Also, he/she may particular insights into Shareholders concerns as complaints will likely come to him/her.
Presidents can take two approaches towards the CS which can cause danger. First, they may come to see the CS as their "personal secretary" and ask them to make coffee, shine their shoes, etc. On the other hand, the President may become very distant from the CS and consider his entire office as not very important. Either way, the CS needs to maintain his independence and his particular closeness to the Stockholders. In the end, typically though more important than, say, the Purchasing Director or Merchandise Agent, the CS works closely with the President and as part of his personal decision-making team more than that of the entire Company.
Other officers may tend to look down on the CS. To the VPoM and VPoS, the "big spender" and the "revenue guy," the CS's job may seem very boring, even silly. To these fellow officers, the CS will needs to assert his importance as not only a "human recorder" but as a thinking part of the decision-making team.