Te Tiriti and corporate democracy

Opinion: Recently announced moves by the newly elected Government to introduce a bill to clarify the principles of Te Tiriti and to put these to a national referendum have understandably resulted in considerable disquiet among Māori as well as many others.

Constitutions – such as Te Tiriti which, for better or worse is our founding constitutional charter – are, after all, intended to prevent untrammelled majorities from riding roughshod over the rights of minorities. However, as Act ostensibly purports to promote the business sector, it is instructive to also consider the prevailing paradigm where corporate democracy is concerned in New Zealand.

The rules governing companies in New Zealand are set out in the Companies Act. Those using this business form are free to adopt their own constitutions in which they set out, for example, the respective rights and liabilities of classes of shareholders.

Even without a constitution, certain actions by the board – such as major transactions that involve disposing of more than half the assets of the company – require the approval of shareholders through higher thresholds (usually 75 percent) than the normal 50 percent required for ordinary matters such as the election of directors.

Crucially, any action or proposal by management that affects the rights of specific classes or groups of shareholders is defined to be one involving an interest group and needs the agreement of that interest group; in other words, a simple majority or even an extraordinary majority of the shareholders cannot simply change the entitlements of the interest group without their consent. Any such attempt is deemed to be prejudicial triggering likely buy-out rights or, in extreme instances, even dissolution of the company. Thus, it may be seen that status issues within companies – as opposed to those involving ordinary business decisions – are not capable of being resolved by majority vote.

How might such comparisons with corporate democracy inform Te Tiriti issues? In the first place it could be seen that where interests have accrued through application of Te Tiriti to specific groups – such as treaty settlements and countless cases outlining application of treaty principles – any attempts to amend or recant these would be assaulting the rights of the interest group concerned. A referendum would be permitted but, in this case, it would have to be only for Māori, or the specific sub-set of Māori affected by the modification.

There is another, even more fundamental, difficulty with Act’s proposal to set out, once and for all, principles of Te Tiriti. In 50 years of jurisprudence, since enactment of the Treaty of Waitangi Act 1975, the courts and Waitangi Tribunal as well as government agencies have articulated a set of principles that have gained general acceptance through facilitating resolution of disputes and grievances, both historical and current.

These include principles such as requiring both sides to act in good faith, the Crown’s duty to consult Māori in matters affecting them, active protection of Māori interests and the Crown’s right to govern the country (for example to enact laws governing commerce). This safety valve has seen scores of successful treaty settlements concluded and is viewed with envy by many other nations with less congenial race relations.

Key strengths of our approach have been both that the principles are not set in stone but are flexible tools, much like New Zealand’s unwritten constitution generally with its conventions governing expectations of the way our politicians behave, and therefore able to change as needs require. New principles may also develop in time and existing ones fall into disuse. Act’s proposal would turn this on its head and replace them with what would amount to a legislative straitjacket.

The Government would be wise to be cognisant of lessons drawn from corporate governance. To paraphrase the famous whakatauki: the differently coloured threads of the tapestry must pass through the eye of the same needle and we unravel them at our peril.