Future of Company Secretaries in an AI-Driven World.

Future of Company Secretaries in an AI-Driven World.

blog

Jul 29

2019

Posted by: CS Shilpi Thapar

“Everything we love about civilization is a product of intelligence, so amplifying our human intelligence with artificial intelligence has the potential of helping a civilization flourish like never before – as long as we manage to keep the technology beneficial.“-Max Tegmark, MIT Professor, President of the Future of Life Institute.

 Artificial Intelligence (AI) is growing exponentially in the past few years and has an enormous impact on our lives affecting how we live, work and entertain ourselves.  It is one of the biggest scientific breakthroughs in the 21st century. It has huge potential to change humanity. Most of us think AI as robots doing daily chores but the truth is AI has found its way in our daily lives and used daily in some or other forms.

So what exactly AI is?

The term Artificial Intelligence(AI) was first coined by John McCarthy in 1956 when he held the first academic conference on the subject. AI is defined as “the science and engineering of making intelligent machines.”

The objective was to explore ways to make a machine that could reason like a human, was capable of abstract thought, problem-solving and self-improvement.

As per reports, Artificial intelligence (AI) is an area of computer science that emphasizes the creation of intelligent machines that work and react like humans and learn on its own. Some of the activities computers with artificial intelligence are designed to include:

  • Speech recognition
  • Learning
  • Planning
  • Problem-solving

 Machine and Deep learning aids AI by providing a set of algorithms and neutral networks to solve data-driven problems. Machine learning is a subset of AI that focus on getting machines to make decisions by feeding them with data. On another hand deep learning is a subset of machine learning that uses the concept of natural networks to solve complex problems. It covers a vast range of fields like object detection, natural language processing, and expert system and robotics. Algorithms are already outperforming humans on tasks that matter in a more immediate way.

There are basically three types of AI:

1.Artificial Narrow Intelligence(ANI)/Weak AI– It is capable of doing specific narrow tasks and focused on one narrow task. Calculator, Spell check, MS-Word, Netflix and Self driving cars with all its sensors/manuals/maps are good examples of ANI. Many currently existing systems that claim to use “artificial intelligence” are likely operating as a weak AI focused on a narrowly defined specific problem.

2.Artificial General Intelligence(AGI)- It is also called as Human-Level AI or Strong AI and can perform any intellectual task which humans can do but with a limitation of not capable enough of thinking and reasoning like humans. These are basically machines that can think and act like ‘humans’. General AI is the goal of all ‘Voice Assistants’ like Siri, Amazon Alexa, OK Google, Cortana and the like.

3. Artificial Super Intelligence(ASI)-It  is a term referring to the time when the capability of computers will surpass humans by 2040 as reported. It is the intelligence beyond what we are capable of. All robots that we see in movies which do not exists in real life are good examples of it. It can also be termed as “7th sense”.

How AI is used in Real World?

AI is progressing and covering all possible domains in the market. It is used in day to day activities such as email communications, social media, web services, and offline activities.  Some of the noteworthy examples are :

  1. Email filters in Gmail for sorting email in different categories i.e Primary, Social, Spam, updates, etc. Smart Replies Phrases i.e “ Thank you”,” Let’s do it.”
  2. In Linkedin, AI helps match candidates to jobs for better prospects.
  3. Google Predictive searches -Google search famous AI application search engine attempts to find what you are looking for.
  4. Face book uses AI to detect facial features and suggests to tag your friends.
  5. Twitter uses AI to identify hate speech, offensive material, and terrorist language and prevents its usage or deletes it.
  6. JP Morgan chase contract intelligence (CoiN) Platform uses AI machine learning and image recognition software for Contract Intelligence to analyze legal documents/contracts and extract important data points in a matter of seconds whereas manual reviewing may take hundreds of hours.
  7. From monitoring and diagnosis of chronic diseases to robotic surgeries, AI is reimaging the health care sector too. IBM -Watson technology for medical diagnosis is using cognitive technology to process and analyze the vast data,  can review and store far more medical information – every medical journal, symptom, and case study of treatment and response around the world – exponentially faster than any human and all is evidence-based.
  8. Google’s DeepMind Health platform is working with clinics and health institutes across the world to implement Artificial Intelligence. Google AI Eye Doctor is popular to examine retinal scans of the eye.
  9. Tesla Self driving car detects data and drives without human intervention.
  10. AI beats human pathologists at predicting patient survival times for certain kinds of cancerous tumors.
  11. AI algorithms “read” a series of Wikipedia entries on things and then answered a series of questions about them more accurately than humans do.

Does the rise of AI mean the downfall of human civilization?

AI is a threat or not is still debatable. According to Tesla and SpaceX CEO Elon Musk, AI is a fundamental risk to the existence of human civilization, whereas Mark Zuckerberg, founder – facebook welcomes AI. AI created machine and robots are used in a wide range of fields including health care, robotics, marketing, business analytics and more. There are two views to this debate– one is that AI when reaches its full potential will make people redundant and create a gross imbalance in employment and second AI will completely and efficiently transform the ability of human-professionals, companies to get things done.

There are mixed views and opinions on the benefits AI have within our everyday lives, particularly our workspaces and which tasks would become the function of AI. According to research done by the International Federation of Robotics (IFR), AI will have an overall positive effect on our lives, both personally and professionally.

Due to advancement in AI and robotics, machines will efficiently and quickly perform more mundane and time-consuming tasks, thus allowing professionals to take up more innovative job roles. Companies would hire more highly skilled people to invent, develop, and maintain allied and complementary products. Further, AI can predict and only provide evidence, facts and perform highly repetitive tasks but not judgements and it is difficult for a human to rely on their judgements for making decisions. Tasks demanding high degrees of creativity, empathy, persuasion, an understanding of which knowledge to apply in which situation to reach a productive decision would be difficult to automate. Hence, it doesn’t seem possible to replace human brains.

Future of Company Secretary in AI-Driven Companies:

Due to innovative developments in Governance ecosystem and legal technology, the role of a company secretary is undergoing a major transformation. It is certain that things will be different in the future than they are now. We should not be unsettled by technological innovation, rather, plunge in and learn as much as possible about expanding technologies. We should learn about algorithms, artificial intelligence (AI), quantum computing, blockchain, or augmented reality and remain updated. Always be a student of your profession. Technological changes shall allow company secretaries to spend fewer time data processing and more time on creative thinking and problem-solving.

A company secretary is a vital link between the company and its Board of Directors, shareholders, government and regulatory authorities. He ensures that Board procedures are both followed and regularly reviewed. He is key managerial personnel and commands senior position in the value chain and acts as conscience seeker of the company. He advises on good governance practices to the board and compliance of Corporate Governance norms as prescribed under Company, Securities and Other Business Laws and regulations and guidelines made thereunder.

 As per section 203 of The Companies Act,2013 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. Being Key Managerial Personnel, Company Secretary is required to be mandatorily appointed in every company belonging to such class or classes of companies as may be prescribed. As per the Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, such prescribed class is every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel. Also as per Rule 8A, i.e. Appointment of Company Secretaries in companies not covered under rule 8 i.e a company other than a company covered under rule 8 which has a paid-up share capital of five crore rupees or more shall have a whole-time company secretary who is having  the requisite knowledge of, or experience in, relevant laws”. So pertinent question arises whether a robot would have the necessary experience in law to fully discharge the Company Secretary’s role.

 As per CSSA best practices guide issued by Chartered Secretaries, Southern Africa in 2018 on AI and impact on Company Secretary, the company secretary can use AI in the following roles:

  1. AI has a capacity of handling routine and administrative tasks which still occupies major portion in Company Secretary work profile and which will enable company secretary to focus more on challenging and complex tasks within their specific roles and review the correctness of documents.
  2. AI can assist in speedy outcomes with cognitive processes.
  3. AI can eliminate mistakes to a greater extent.
  4. AI will reduce manual overload thereby improving due diligence process and increases assistance with compliance procedures.
  5. AI will assist company secretary to expedite research in various topics/issues such as confirming that the possible new directors are not conflicted on any other platform prior to appointing them to the board by running extensive research throughout various social platforms and many other similar tasks.
  6. Documents can be lodged with regulatory authorities which are repetitive in nature if automated.
  7. Filing and distributing documents such as annual financial statements of the company which is again a repetitive and automated task. The robot will simply learn the date required for submission and the manner in which the financials would be submitted and can be done with minimal supervision.
  8. Distribution of minutes via email to directors and committee members for their comments by a certain date can be automated.
  9. Drafting of the agenda of meeting as well as the notice of the meetings and distributing to relevant same persons in the same format can be automated with the input of company secretary.
  10. Robots can assist Company Secretary in meetings in providing data and statistics to directors when needed. Further, minutes cannot be recorded by robots as it needs judgement as to what to include from meetings verbatim.
  11. AI can assist in drafting and reviewing of repetitive clauses in contracts and company policies more accurately. Standard clauses can be automated with the same or similar wordings. Complex clauses would need human intellect to avoid liabilities.
  12. The formulation of board evaluation questionnaires could be subject to automation quite easily but director’s interviews, induction cannot be conducted by robots as it involves human elements of judgement.
  13. The use of automated machines is already started in meetings which are conducted via Skype so as to track facial expressions, which may be missed by the other participants. Facial expressions go a long way in identifying a participant’s mood, hostility, and cooperation – this is useful when conducting board evaluations to assess the performance of directors in relation to the tone that they set in meetings and how this affects the overall functioning of the board.

Human relations are founded on trust and human interaction would be difficult to automate. Emotional Intelligence is an important trait of the company secretary to ensure a harmonious and cooperative environment where many great personalities often clash and have a conflict of interest, which is again difficult to automate. Robots presently lack such an important trait.

Further, the advisory role of the company secretary is complex and challenging which requires knowledge, opinion and judgement, critical analysis of the situation and these human traits are difficult to automate as it depends on the expertise of professionals. Further, role to judge which information is confidential or not and way of dealing with such confidential information cannot be handled by a robot. Advisers are there to stop people from making poor decisions, and a robo-advisor presently doesn’t have the capacity to do that.

Presently, a company secretary is performing the task of collection of right data and information to place before the board but now it is observed that directors prefer to do their own research using any means at their disposal to arrive at right decisions instead of relying upon and waiting for such information.

In coming years, I believe that company secretaries have to focus on assessment and judgment/opinion-oriented work and provide valuable insight into complex and critical board issues rather than collecting and controlling information flow. The information should flow with or without their help to the right person at the right time for taking a decision and in this AI can be helpful to the greater extent.

 Company Secretaries are required to take training in AI to be able to function effectively in a technological environment. Introduction of AI in the legal sector will never replace company secretaries but will alter the manner in which they provide services to their companies and clients. Company Secretaries are the face of corporate governance and this can never be automated as a whole. Due to the rapid progress of AI, we as company secretaries should look at it as great opportunity to enhance judgment/opinion/decision making/leadership skills and emotional intelligence rather than devoting much time on administrative and repetitive tasks.

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This is a research-based article purely for an educational discussion and contains general information publicly available from online sources.

 

 

 

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