Corporate Secretary

The new Prakas No. 117 issued by the Ministry of Commerce and effective from 9 December 2025, was intended to simplify the business registration procedure.The Prakas however introduced numerous

new aspects of corporate governance which were unusual to businesses in the region. More specifically, Articles 24 and 27, which govern the mandatory appointment, training and responsibility of a ‘Company Secretary’, which have introduced new regulatory burdens and legal uncertainties that undermine the Prakas objective.

Under Article 24, the Prakas requires a business to provide US$1,000 deposit for the registration of a Company Secretary. The same Article also grants the Company Secretary authority to sign documents or contracts on behalf of the company, even without the company seal. This automatic empowerment can override internal governance structures and may conflict with a company’s Articles of Association, as signing authority is typically reserved for directors, the chairman, or the CEO. In addition, Article 27 requires Company Secretaries to complete training and certification administered by the Ministry of Commerce. This places a significant operational responsibility on the Ministry itself, as it would need to establish the curriculum, training infrastructure, examination procedures, and certification system necessary to implement this requirement.

Moreover, the Prakas assigns the Company Secretary responsibilities that go beyond administrative duties, including reviewing financial statements, providing accounting records, and ensuring company compliance and corporate governance. Since a Company Secretary may not be a licensed accounting or tax professional, these obligations create operational challenges and expose both the individual and the company to potential legal liability.

Articles 24 and 27 of the Prakas increase the cost and administrative burden of establishing a company. By granting Company Secretaries broad signing authority and assigning responsibilities beyond typical administrative duties, the provisions may conflict with existing corporate governance structures and expose both the company and the individual to potential legal and compliance risks.

Following several consultations with the Ministry of Commerce through a coalition of business chambers, clarifications and concessions were provided by the Secretary of State, notably regarding the adjustment of standards and certification requirements for Company Secretaries, the understanding that companies may appoint a secretary of their choosing, and the clarification that the financial requirement relates to maintaining US$1,000 in a company bank account rather than a separate deposit mechanism.

We also took note of the Press Release issued on 25 February 2026, which confirmed elements of this approach and the intention to reflect these clarifications in the forthcoming Handbook on Business Registration and Lawful Business Operations (SOP), intended to supplement Prakas No. 117.

While we recognise these efforts to help ease the registration process for companies, a matter of legal coherence remains. As drafted, the binding provisions of Prakas No. 117 remain unchanged. Should the Handbook introduce language or interpretations that differ from, or soften, the Prakas, this may create a hierarchy issue whereby the legally binding instrument prevails. In practice, this could generate uncertainty over applicable standards, divergent interpretation and enforcement, increased compliance burdens, and a legal grey area where the Handbook and the Prakas are not fully aligned.

Articles 24 and 27 of the Prakas increase the cost and administrative burden of establishing a company. By granting Company Secretaries broad signing authority and assigning responsibilities beyond typical administrative duties, the provisions may conflict with existing corporate governance structures and expose both the company and the individual to potential legal and compliance risks.

Following several consultations with the Ministry of Commerce through a coalition of business chambers, clarifications and concessions were provided by the Secretary of State, notably regarding the adjustment of standards and certification requirements for Company Secretaries, the understanding that companies may appoint a secretary of their choosing, and the clarification that the financial requirement relates to maintaining US$1,000 in a company bank account rather than a separate deposit mechanism.

We also took note of the Press Release issued on 25 February 2026, which confirmed elements of this approach and the intention to reflect these clarifications in the forthcoming Handbook on Business Registration and Lawful Business Operations (SOP), intended to supplement Prakas No. 117.

While we recognise these efforts to help ease the registration process for companies, a matter of legal coherence remains. As drafted, the binding provisions of Prakas No. 117 remain unchanged. Should the Handbook introduce language or interpretations that differ from, or soften, the Prakas, this may create a hierarchy issue whereby the legally binding instrument prevails. In practice, this could generate uncertainty over applicable standards, divergent interpretation and enforcement, increased compliance burdens, and a legal grey area where the Handbook and the Prakas are not fully aligned.