Book Review: Hand book on Company Secretarial Practices and Corporate Law by Jazri Magdon Ismail
Author
Jazri is a fellow Chartered Accountant by profession. He is also a member of Certified Management Accountants of Australia and a fellow member of AAT Sri Lanka. He is the President of the Association of Accounting Technicians (AAT). He has extensive experience as a member of senior management of reputed companies and later on as a member of the Boards. The author has a reputation for his excellent oratory skills and his ability to put things in a simple yet convincing manner.
Case for authoring the book
It is my observation that most of the individuals who get invitations to join the boards accept such invitations without fully realizing the risks and legal implications arising out of it. Risks would come in much more handy manner with respect to corporates where there is a stake owned by the state. I have noted on so many occasions that the board of directors becomes aware of their obligations and liabilities once they have to face legal issues. Directors would be held liable for offences and non-compliances with respect to certain statutes. However it is important for any director to have at least a fair understanding about important provisions of the Companies Act No.07 of 2007 as well as corporate governance best practices. Some of the offences as per the Companies Act are on issue of shares, company name, articles, of association, management and administration of the company, annual returns, meeting and proceedings, minutes and other records, annual reports, appointment of auditors, winding up etc…
Jazri has covered almost all areas in a simple and concise manner. Most importantly he has blended his experiences gained as a Chartered Accountant and by serving on boards in different companies. What prompted the author to write this book is quoted below from the preface to the book: “It is a product of various clarifications I required in executing my role as director in different capacities in different companies. It is meant to be brief and does not claim to the exhaustive.”
However it is a quick guide for any of the use of matters that could arise during serious course of discussion at the board level. The book has a foreword by President’s Counsel Harsha Amarasekara and he commends the author for bringing a wealth of practical experience into his writing. In his message, KPMG Managing Partner, Reyaz Mihular commends the author for avoiding the tendency to slip into legal jargon when dealing with some of the complex issues.
Fish rots from the head
Before going to the nitty-gritty of the Companies Act, the author has shared some of his initial thoughts under the following four headlines:
- Characteristics of a good board.
- Why did no one notice the crisis on its way
- Culture of an organisation.
- Building a board career.
At the beginning the author has briefly given some corporate governance best practices, in terms of characteristics of a good board. However it is not an exhaustive list but an insight.
Then, the author has quoted from a speech delivered at London School of Economics (LSE) by Queen Elizabeth on the global financial crisis in 2008. She has asked scholars of the LSE: “Why did no one notice the crisis on its way?” The author has raised this in terms of best practices to avoid financial crisis of a company from a board’s perspective.
The author has stressed the importance of “Tone at the Top” in setting the culture of a corporate. He has emphasised the importance by giving reference to the Chinese proverb, “The fish rots from the head”. I think the proverb clearly gives the message to the Tone at the Top.
Guidance for prospective Board Members
There is a section that would be useful for professionals, who are aspiring to be board members. If I put it in other words, it’s some career guidance for prospective board members. The author has structured the contents in 46 chapters supported with four annexures. Most of the chapters cover the salient section of the Companies Act. However, there are certain chapters where the author has gone beyond the Act and given useful information. Chapter 31 contains information on the structure and content of a good annual report. The author has exposed the reader to new annual reporting conventions such as sustainability and integrated reporting.
Chapter 37 is also of practical importance since it carries specimens of terms of reference for the audit committee and related party transaction review committee. I’m also particularly attracted to the chapter where the director and board’s collective self-evaluation formats are given. The latter part of the book gives an insight to Colombo Stock Exchange (CSE)-related reporting and other requirements. This chapter would be useful for those who have plans to list shares on the CSE in future appendices consisting model articles of association, a check list on statutory forms and returns, specimen of prescribed important forms and guidance on incorporating a company limited by guarantee.
Conclusion
Overall the book would be useful for company secretaries and board members. The book in fact can be used as a hand book for board directors because of its simplicity and absence of technical jargon. The author has well presented the book and I’m looking forward to read his second book soon.