Artificial Intelligence and Company Secretary:
Substantial Impact and Vision

Backdrop:

World has always been a better place to live in, when each aspect of respective innovation conveys the philosophy of inclusive development and sustainable practices. Technology is not left spared with this relative influence i.e. any technology in the human space and environment has always shaped lives based on the predictable patterns in its near term set by its wide array of application and awareness. 21^st century bears the responsibility of treatment of ‘Data’ in its absolute manner summarizing every data based interactive mechanisms into reverberations of application design and policy decisions. Every portrayal of such revolutionary challenges are potential platforms in understanding the horizons of its social and economic reach and an opportunity which could profoundly transform human lives to the best of its natural ability in the coming years.

 

 

Computer systems has always been successful in delivering an organized communication by the means of deployment and understanding of the data subjecting it to analytics process of data modeling, interpretation and evaluation. Currently this seems to be the most prescriptive and successful mode of analytics process because of its characteristics features like active data driven sequence, programmatic approach, user cases observations and recurring data models. Computer systems lined in such a manner to perform tasks of what human intelligence can do by the virtue of latter characteristics features, exhibits the tangible momentum of Artificial Intelligence. So-forth it is evident that because of its extensive utility and functionality this altogether has led to penetration of such models of communication mechanisms in every dimensions of human professional lives possible. One such application user case being, into the profession of Company Secretaries.

Corporate governance professionals viz. Company Secretaries are centrally preoccupied with the fundamental component of vetting statutes, rules and regulations thereon reasoning it logically and to draw inferences appropriate to the circumstances arrived at. Synthesis of man and machine has always increased work efficiency and AI will radically alter how work gets done and who does it, the technology’s larger impact will be in complementing and augmenting human capabilities, not replacing them. AI has three components- speedy computation, abundant quality data and advanced algorithms. Core components of Artificial Intelligence provide speedy data computation and accuracy, stability in day to day processes with advanced algorithm. Collaboration of company secretary and artificial intelligence provides strength to the entities by enhancing the speed, scalability, and quantitative capabilities of the former.

Evaluation of Company Secretarial functions in reach of AI systems:

Company Secretary has been recognized as Key Managerial Personnel along with the Chief Executive Officer/managing director/manager, whole-time director and Chief Financial Officer and acts as conscience seeker of the company. The Responsibilities of the Company Secretary are diverse and comprises both administrative and technical aspect. The Company Secretary, is nothing but master teacher of corporate governance, regulations and law within the company. As discussed above, Company Secretary is the central element of any communication mechanism of the company between the board management of the company and other stakeholders in relation to that company. Apart from filing returns and ensuring the documentary requirements according to the statutes, the Company Secretary guides to the directors to complete their duties within give time framework, to seek proper arrangement of induction of new director which ensure communication about required and expected duties from him as a director.

The Company Secretary also advises directors on issues related to laws, regulations and recommended governance practices based on company’s state of affairs. The Company Secretary stands responsible for overall management and monitoring of meetings by preparing agenda, records the minutes and supervise the voting procedure. Company Secretary prepares and certifies the annual integrated report and vets company’s financial statements. He also liable to send the copies to all entitled person of the company. He ensures the about the payment of the dividends and interests and also involved in drafting and execution of agreement s and resolutions. Without being confined to the above he is also seen as strategic business manager, advisor into public issue, listing and securities management and also into performing representation services before the quasi-judicial bodies.

AI and Company Secretary

Company secretary must possess and have essential knowledge and experience in relevant laws. Here question arises whether a robot would have essential knowledge and experience in relevant laws to fully discharge the Company Secretary’s role. It can be justified in a manner being more optimistically that, Artificial Intelligence can reduce repetitive and administrative tasks, which still do exist in role of Company Secretary. Artificial Intelligence also reduces the manual workload and will abolish lower level function of Company Secretary, providing support with diligence processes. Artificial Intelligence should not be considered as threat while must be considered as opportunity to improve knowledge and skill set to manage the Company. Artificial Intelligence can substitute sorting and diligence functions of Company Secretary.

Artificial Intelligence will assist the Company Secretary to research on various issues like confirming that new directors are not conflicted on any other platform prior to appointing them to the board by running extensive research throughout various social platforms. Companies offer training and up-skilling program to junior CS which add values other than mere processing. An understanding of blockchain and robotics will be imperative for Company Secretary. This doesn’t mean the Company Secretaries will need to become technology specialists but would need to be competent in the field to make use of AI to their advantage and to work efficiently alongside AI as a whole.

Application Cases:

• Risk Management: AI systems can be helpful in detecting risk factors like determining the negative trends of shareholders value at an early stage thereby indicating help the board to take the right diversion and initialing the appropriate measures. These AI systems could help company secretary in advising the rightful steps to the board in taking management decisions through the process of due diligence and necessary checks. Periodical reviews is one of the key features of the risk management functions of the company secretary which can be automated by the AI systems. It is important that robust governance arrangements are in place to assess the risks factors on timely basis, which should be clearly documented and communicated to the organization. The position of the company secretary enables them to have a holistic view of the governance framework and as a result they are generally tasked with the responsibility of ensuring that this framework and any supporting policies and procedures are clearly documented. This can be substituted by the AI systems in supervising any changes happening to the framework and clearing reporting the same.

• Optimizing search process: AI systems could go through gigabytes of information and data in seconds of time. Under the purview of preparation of memorandum/petition, this would help company secretaries to search for a particular and most suitable case to the given situation out of all the historical cases pertaining to that subject matter. This in a manner can help save lot of time and rather concentrate on judgment and assessment of the case. Similarly this kind of automation can also help company secretary to search for a relevant section/rules and provisions out of ocean of statutes in a seconds of time for a given situation at the time of case study or in a board meeting to correlate and get the empirical understanding of the derivatives possible.

• Returns filing: This is a fact based process and which could be easily automated by the help of AI machines which understands the facts and figures at a variable range. AI machines could fill up the form according to the understanding of the particulars given there and keep it ready for signatures and attachments. This can also further call up for the mandatory attachments required in respect of that particular eforms and send it for review. This kind of repetitive and administrative task could be very helpful for the company secretaries so that can concentrate on other business aspect which requires their involvement. This kind of automation will also be helpful in XBRL filing as required for prescribed companies where the AI systems could reconcile and integrate the values and measures from different softwares understandable to a computer system. This doesn’t requires any kind of supervision and there is so much of manpower-time utilized for other areas of work.

• Managing administrative works of company secretary: AI systems can be developed to an extent that it could manage the attendance of the meetings by facial recognition technology and scheduling statutory events according to the deadlines as prescribed like board meetings and Annual General Meetings. AI systems can also assist in handling the vote responses received from the members of the company against any specific agenda item of the meeting which has been put to circulation for voting in the manner as specified. This kind of AI assistance could lead the company secretary to have extra time in researching more and acute information development for the effectiveness and success of every meetings.

• Improving stakeholder communication: AI systems could complement company secretaries in submitting and making available all the relevant disclosures and documents which is ought to be available over a public domain in just a click of request. These AI systems could help in assessing the needs of the respective shareholder and provide the exact kind of response in providing such statistical results or any management reports. Any request placed by the shareholder in terms of any grievance can be attended by the AI systems and accordingly provide the most suitable result and further convey and divert the grievance to the respective manager/Company secretary if it falls out of its scope of algorithm/understanding. In this manner there is chance of occurring harmonious relationship between the company and other stakeholders of that company.

• Time-bound Management: AI systems can assist in reminding the company secretaries and other manages of the respective departments in following and not missing the events/tasks ought to be performed within a given a timeline. This in turn would reduce the burden of the company secretary to maintain a separate register for this purpose and rather spend time in intellectual based activities.

• Eliminating statistical mistakes: AI systems are computer systems enabled to do all arithmetical and mathematical based complex calculations very easily in no time. Hence if this could be supplemental to company secretary functions then it can help derive indexes helpful for the board to take decisions in terms of shareholders measures, valuation reports, and other cost/finance aspects of the subject matter and can help reduce time involved for these kind of calculations by the human experts.

• Circulation of notices and minutes and resolutions: According to the statute requirement of Companies act and SEBI regulations, there is a need to circulate the notices and resolutions to the members and other stakeholders of the company and therefore AI systems can perform these kind of administrative work without any involvement of human actions as once the particular details of the receiver of those respective document are fed accordingly then the system would read and send the documents through electronic mode automatically keeping in record of its tasks performed for further validation.

AI and the Boardroom

The dynamics of the boardroom are changing and chairmen and directors are realizing that they need specialist skills and technical knowledge in this area and they are looking to company secretaries to provide this expertise. AI is already used in boardrooms to help director to take decisions. Accenture use Hologram technology to allow presentations to be made in the board room that would previously have been made by video streaming. Google’s ‘Trusted Face’ (Facial recognition technology) will raise an alert of anyone entering a room that is not authorized to be there, it could verify the identity of attendees in meeting. Google’s Pixel Buds are wireless headphones can translate 40 languages in real time, with your phone or other speaker translating your words as you speak and response being translated through the headphones. 

 

 

There are various AI applications available for use by company secretaries and their boards like:

•  Audio/visual capability allows participants to take a part in meeting without physical presence.

•  Facial recognition technology checks and verifies the identity of board members.

•  Virtual reality headsets are also used in boardroom to provide full engagement in presentation.

•  Yammer and Trello (Social networking tool) allow colleagues to share data and presentation and to give feedback on a common platform which in turn allows shareholder to access information any time.

•  Translating technology is available to allow meeting to be held seamlessly with those from different culture, speaking different language.

•   A potential disruptor is available as minute-taking device using algorithm and machine learning.

Challenges:

• Lack of knowledge: It is difficult to expect the board members or in that case company secretary to be enabled tech savy in handling the AI systems and servicing the AI systems at regular intervals. Being the out of scope area to the board members and company secretary, the top management has to rely upon the different set of human resource experts to everytime to fix AI systems in cases of breach or updation. Every company has to manage different set of human resource for the purpose of looking after the AI systems installed which could be worrisome for the companies in terms of cost factor and organization factor.

• Lack of infrastructure: AI systems need their own kind of infrastructure for their setup and operations which cannot be pocket-friendly to most of the companies in the current scenario. Bearing the huge cost in its setup and operations at an testing stage and again bearing separate cost for the final installation would not be feasible for many companies.

• Possibility of lack of interest by existing human resource: AI systems installed may lead to demotivation of the existing employees in terms of their downsized attention by the board members and could acutely effect the employees who were employed for specific administrative process or skilled specially in an area which is now to be substituted by AI systems

• Lack of legal coverage in identifying the liability extent: AI systems do not hold themselves liable for any consequences rather it would still be hovering around the human experts who builds and services the AI systems. There is no law which calls for the AI systems as legal person and be sued in its name. Lack of legal remedy to the mistakes performed by AI systems is also one of the severe challenge which could lead to non-acceptance of AI systems to be installed at their companies.

• Training: Training of the AI systems at a level of top management of the company requires a sophisticated training setup for providing every methodological and analytical training to the AI systems which could not be possible by the existing IT advancement in the region and such scarcity of training experts leading to borrowing the foreign assistance every time could gear up a crying a cost every time.

• Cyber-crime: AI systems are nothing but blockchain of data stored for the derivative purpose in the manner of algorithm designed, which could lead to exposure of cyber threats in losing or manipulation of data which could finally cost the company irreparable and may put all the stakeholders interest in danger. Awareness of cyber-crime threats and remedy to fix it periodically through the process of diagnosis would also demand the company to head a separate supervising department for this purpose.

• Lack of awareness by stakeholders: Shareholders may not be able to understand the technicalities of the modern AI systems being operationalized by the company and the shareholder and other stakeholders of the company unless being complete aware of the mechanisms of AI systems would not be comfortable in dealing with the subject matters being handled by the AI systems. Conventional practices by the company could be the preferable options for such kind of stakeholders and this could lead the company to lose its goodwill in terms of satisfaction of the stakeholders and in their feedback reports.

• Lack of value Judgment: AI systems though be trained at performing the complex actions in a short frame of time, but it could not be able to make up with the situations to react when there is an element of human behaviors and ethical standards. Code of conduct which is not in full-fledged expected to be fed into the data of the AI system sas there can be many other probabilities of human psychological impact which are still rare to be discovered and experienced which AI systems can never be able to interpret in the manner as humans do.

Potential futures of AI in place of Company Secretary:

• Representations before quasi-judicial bodies: In the near future of the company secretarial functions, AI systems can make itself able in their advocacy skills and court crafts so that it becomes possible for them to represent the clients before the quasi-judicial bodies in supplementing the company secretaries by providing the facts and figures of the case at the request of the judicial officer.

• Investment decisions: Valuation based decisions which are usually seen at the spark of company secretaries advising the board can also be at some point of time be substituted by AI systems due to their capability of interpreting the market figures in correlation to their investment decisions or other management decisions by evaluating thousands of illustrations and by the virtue of their accuracy in dealing statistical trends.

Conclusion:

Artificial Intelligence can’t replace the Company Secretaries any time soon. Expert System has been developed for the purpose of providing expert knowledge based decision and right now these systems are not sufficient enough to replace corporate governance experts. These systems contains knowledge accumulated by interviewing experts having a set of rules for implementation of this knowledge at the given situation. Since these systems are very expensive to maintain and develop and have a limited application it would be difficult for most of the companies to facilitate it’s given utility at the actual cost in complete convenience.  Another important thing to be considered is these AI systems cannot learn on its own & its validation is difficult, and henceforth companies cannot dig it’s cost every time a minute replacement or updation needs to be performed.  Like the more complex clauses of a contract, which are requested by parties to an agreement and which require thought and precision to avoid liability, would still need to be drafted by qualified humans who possess the requisite intellect. Sometimes these systems are overrated and it is upto the human behavior to understand its evolution into the human purview. It can be supplemental in utility rather replacement of experts.

 

 

Spontaneity of people (making a joke, for example) can’t be substituted by machine and Spontaneity of machine (analyzing gigabytes of data) can’t be replaced by people. Lastly common sense is not that common as pursued by human creature alone which stands to be the most appreciable asset which can never be matched with any AI expert systems.

Many companies are using AI in present scenario, but those that deploy it mainly to displace employees will see only short-term productivity gains. Many studies say that firm may achieve its quality and quantity standards when human and machine work together. AI and automation has definitely discovered inroads to legal arena but it is more likely to be appreciated at the phase of service delivery and of role check honors.

References:

• CSSA Best Practice guide, September 2018
•  Deloitte report on changing role of company secretaries
•  AI – 100 year study – Stanford university
•  EY study of new age of artificial intelligence
• Artificial Intelligence in HR; Research paper by Dr.Owais Ahmed, University of Kashmir