Katiba at 13: Entrenching constitutionalism in corporations for capital and reputational good

September 4, 2023 - Reading Time: 3 minutes - By Brian Otieno

Background

The corralling that succeeded the 4th of August 2010 referendum was a stark indication of the hopes Kenyans had in the shift in the country’s supreme law. The ecstatic roar in jubilation during the promulgation ceremony on 27th August 2010 mirrored the belief by Kenyans from all walks of life that the change in constitutional edicts would herald a strategic re-direction for the country.

As Kenyans commemorate 13 years of the Constitution, various constitutional law, governance, and policy enthusiasts have raised concerns citing gaps, others have appreciated the strides made due to the foundation laid by the Constitution. Amid all that, and surprisingly, little has been done to reiterate constitutionalism from a corporate lens. Article 2(1) reiterates the binding nature of the Constitution.

Constitutionalism and Corporate Constitutionalism

The above notwithstanding, corporates operate within an intricate web of interests. Shareholders’ interests, employee interests, company interests, customer interests and public interests all come into play. Balancing these interests might prove difficult but is still doable when approached with precision. Constitutionalism is a broad concept that appreciates all these interests. Scholars have opined that constitutionalism may be more important than the constitution itself. That indeed exemplifies the fact that constitutionalism has become as important as good governance.

In constitutional parlance, constitutionalism is best defined as the doctrine that governs the legitimacy of government action, and it implies something far more important than the idea of legality that requires official conduct to be in accordance with pre-fixed legal rules. Relating this to the corporate world, corporate institutions and entities have their own codes of conduct, policies and procedures that guide behaviour, interactions, and practices within these settings. Additionally, national laws and regulations also inform how these guidelines operate.

The fundamental question therefore begs how constitutionalism would come into play in a corporate setting. Corporate constitutionalism, so to call it, creates a presupposition that there are values and ideals either in our public political life or espoused by the Constitution for that matter, that are useful insights when considering the legal regulation of corporate governance and decision-making. Even so, these values being applied in the corporate contexts would have different formulations, applications, and consequences from the political terrain. Nonetheless, the application of constitutionalism to corporations is germane because corporations are both social actors and polities by design.

Normatively, corporate constitutionalism provides a framework upon which corporate actions or decisions need to be premised. The principles of accountability, deliberation and contestability are central to the flow of constitutionalism in corporate lenses. The Constitution gives a hint to these principles vide Article 10 which outlines the National Values and Principles. Emphasis is laid by the same Constitution when it reiterates that these values and principles are binding in nature and are to be adhered to by all persons. In legal parlance, persons include companies and corporations.

(a)   Accountability

In the ordinary sense, accountability connotes owning up to a problem or task. From a standpoint of constitutionalism, it goes beyond that. It not only embodies situational awareness, owning problems, finding solutions, and making things happen but also, more importantly, emphasises the need for separation of powers. Corporations need to have in place structures to ensure the separation of powers as a way of further entrenching constitutionalism within their operations.

(b)  Deliberation

Freedom of expression and speech is a fundamental component of human interactions. That coupled with the freedom of conscience and thought allows individuals to freely formulate their thoughts and air them without fear of being reprimanded. At the corporate level, decisions, actions or even strategies need to be subjected to broad engagements before they are settled on. The rationale behind the involvement and participation of all is to ensure the governed are involved in the governance processes.

(c)   Contestability

Perhaps one of the most contentious pillars, this component allows for decisions, operating guidelines and standards in a corporate setting to be subjected to scrutiny. During scrutiny, if these standards and decisions do not mirror the interests of the stakeholders, then they should be freely and readily contestable.

Conclusion

Corporate constitutionalism does not only dislodge the contract as the foundation of an employment contract, but it also comes in, to entrench constitutional values and principles in the governance of corporates. In doing so, it is appreciated that a company is not just a nexus of bilateral or multilateral agreements but is also a framework within which decisions are made.

Despite the noble returns of corporate constitutionalism, caution needs to be taken to ensure constitutionalism is not clumsily imposed upon corporate governance. Corporate constitutionalism has many strands emanating from the three pillars as discussed above. These strands relate to liberal constitutionalism (regard for individual rights and interests), communitarianism (the idea that, in addition to individual members, the group has significance) and republicanism (stressing, in particular, the idea of governance according to the common good)’, which all need to be part of every action in a corporate setting.

As Kenya reflects on 13 years of the Constitution, 2010, it is imperative for corporates to investigate their actions, operating guidelines, standards and decision-making process, and ensure that constitutionalism cuts through them. The pillars outlined above are fundamental in that regard. However, these pillars are merely evaluative and not explanatory. The burden therefore is on corporates to shift them from description to prescription, for their capital and reputational good. 

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