(To) Prorogue

By Kevin-James Fenech

The author is the founder and owner of JOB Search - jobsearch.mt

Don’t you just love the English language? Prorogue. What a glorious word.

I think business people and corporate lawyers should adopt this word and we should add it to our business lexicon.

To set the records straight from the onset: Prorogation (noun) is normally a standard procedure in the calendar of the UK’s Parliament, although Boris Johnson is being slated by the British press/media and accused of exploiting this mechanism to mischievously circumvent or muzzle parliament. This is not my mission today; I just love the word ‘prorogue’ see an opportunity for the business world to adopt it.

I think there are many instances at work when it might be opportune to discontinue something without dissolving it; to prorogue.

Meetings for instance. When uninformed members of a meeting are about to take an ill-informed decision, it might be suitable to prorogue the same meeting.

Same applies to recruitment. When you are looking to fill a vacancy and for whatever reason, the candidates applying just don’t tick all the boxes. You might need to prorogue the recruitment process.

Or material Board decisions; especially high impact ones. It might be appropriate for companies to have inserted in their Memorandum & Articles (M&A) prorogation decision rights. After all, companies are increasingly expected to play a positive role in society and take responsibility for the broader effects of their actions and products but when they don’t, there might scope for prorogation rights of interested parties.

For example, if a company buys from a supplier that subsequently turns out to use materials that are harmful to the environment; or exploits cheap labour; or has been involved in bribery to win a high-value contract; to mention but a few appropriate trigger points; this could be an opportunity for one to invoke prorogation rights.

Another example could be a situation when top-management is determined to be pursuing an active policy of profit maximisation and taking decisions exclusively for short term benefit and/or for a narrow group of ‘stakeholders’. Perhaps, in such instances, there should exist the right of shareholders to prorogue top-management decisions with a view to influencing a more long-term sustainable business model?

My point is that there are scope and opportunity for prorogation of key decisions in the business world. Granted this concept is purely my own invention (sprinkled with a bit of wishful thinking) and it definitely still needs to be defined at law and developed further but I do believe it offers us a lot.

My suggestion is that by suspending something rather than outright dissolving it (prorogation) and doing so in a structured manner based on transparent rules, does have its benefits, especially in the business world. Maybe the opportunity of proroguing business decisions or actions lies in the space somewhere between the ‘Letter of the Law’ and the ‘Spirit of Law’. Very often, especially in Malta, business decisions are taken in accordance to the ‘Letter of the Law’ even though sometimes business leaders/owners/managers know that these same decisions run against the ‘Spirit of the Law’.

This is commonly referred to as ‘gamming the system’. I think it is intrinsically wrong and we need to add another dimension to how high-impact decisions are sometimes taken by high-level people in business. Prorogation perhaps provides this new dimension and allows us to give corporate responsibility more bite.

I have written about it before and what I am about to say will be seen as controversial in some quarters but ultimately a business does not exist to maximise profits or exploit resources (capital, human, natural or any other type of resources). To my mind, the bigger the business the more impact it has on its key stakeholders (customers, employees, shareholders, etc) and therefore its decisions must always balance the interests of some key stakeholders. This is why prorogation might be a useful tool.

A good example is perhaps the Town Square property development project in the heart of Sliema. Yes, the owners of the site have a right to develop their land; yes, the owners have a right to make a healthy profit; but this should be balanced with the interests of the key stakeholders directly impacted by this large-scale project.

In fact, the narrative of this project has seen common sense prevail and I applaud all involved since they re-defined / re-dimensioned the project and achieved as best they could a balance of interests. My point is that if you were to rewind to a couple of years ago, the ability to prorogue certain decisions (by owners, the Planning Authority, etc), in a structured and transparent manner, might have saved all involved a lot of pain, money and precious time.

With this in mind, maybe it’s high time for corporate law to incorporate prorogation decision rights for certain companies such as Public Interest Entities (PIEs) as well as others of a certain scale and impact. I see plenty of scope and opportunity for this especially in corporate responsibility and sustainability; an area where our law has lagged behind and maybe the time has come to move from a completely voluntary position to a ‘Comply or Explain’ legal framework. If we create a legal framework which guarantees the prorogation of certain corporate decisions we might make certain big entities more socially responsible.