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Corporate Governance
and Blockchain Technology (DLT)
Prof. dr. Christoph Van der Elst
Corporate Governance and Blockchain Technology
Agenda
1. New framework
2. Current practices
3. DLT & alternatives
4. The law?
5. Looking into the future
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Corporate Governance and Blockchain Technology
New framework
3
Article 3 a
Article 3 c Article 3 g
Corporate Governance and Blockchain Technology Currrent practices
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Major shareholdings, Consob, 27 November 2018
Corporate Governance and Blockchain Technology
Currrent practices
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Belgian list
Corporate Governance and Blockchain Technology Currrent practices
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Net Short Positions, Consob, 27 November 2018
Corporate Governance and Blockchain Technology Current practices
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Corporate Governance and Blockchain Technology Current practices
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Mistakes/
contradiction
Dispersed
actions
Insider
risks
Corporate Governance and Blockchain Technology : DLT & alternatives
‘Distributed ledger technology can record information and
transactions in a verifiable and immutable way’ and has in the mean
time many applications
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Corporate Governance and Blockchain Technology DLT & alternatives
‘Distributed ledger technology that can record transactions in a
verifiable and immutable way’
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Corporate Governance and Blockchain Technology DLT & alternatives
Deutsche Börse Group
Nasdaq and Estonian Government
Russian CSD
TMX Group
Broadridge
Central
Securities
Depository of
Poland
and IBM
AST Financial
Strate
KAS Bank
ASX
Banco
Santander
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Corporate Governance and Blockchain Technology DLT & alternatives
’Permissioned’ blockchain technology:
shareholder
shareholder
shareholder
company
permissioner
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Corporate Governance and Blockchain Technology DLT & alternatives
The advantages:
Shareholder and corporate information:
Blockchain gets rid of scattered ledgers and long delays
Chains of intermediaries and remote voting:
Blockchain adds transparency, security and verification (‘feedback’)
Shareholder voting transaction costs and ‘shareholder democracy’:
Blockchain offers cheap and fast decision-making in a harmonized way
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Corporate Governance and Blockchain Technology DLT & alternatives
Process Flow of the
CSD Working Group on
DLT Source: Adapted from the
table on p.10 of the CSD
Working Group on DLT
report, using information
from pp. 9-17 of this
report.
8. Post-Meeting Actions
7. Meeting Management
6. Voting
5. Proxy Assignment
4. Voting Party Authentication
3. Voting Right Allocation
2. Ownership Record Loading
1. Meeting Initialization and Notification
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Corporate Governance and Blockchain Technology
The Law?
Delaware Blockchain Initiative § 224 Form of records.
• Any records administered by or on behalf of the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time, and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in §§ 219 and 220 of this title, (ii) record the information specified in §§ 156, 159, 217(a) and 218 of this title, and (iii) record transfers of stock as governed by Article 8 of subtitle I of Title 6. Any corporation shall convert any records so kept into clearly legible paper form upon the request of any person entitled to inspect such records pursuant to any provision of this chapter. When records are kept in such manner, a clearly legible paper form prepared from or by means of the information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases) shall be valid and admissible in evidence, and accepted for all other purposes, to the same extent as an original paper record of the same information would have been, provided the paper form accurately portrays the record.
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Corporate Governance and Blockchain Technology
The Law?
Delaware Blockchain Initiative § 224 Form of records.
• Any records administered by or on behalf of the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time, and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in §§ 219 and 220 of this title, (ii) record the information specified in §§ 156, 159, 217(a) and 218 of this title, and (iii) record transfers of stock as governed by Article 8 of subtitle I of Title 6. Any corporation shall convert any records so kept into clearly legible paper form upon the request of any person entitled to inspect such records pursuant to any provision of this chapter. When records are kept in such manner, a clearly legible paper form prepared from or by means of the information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases) shall be valid and admissible in evidence, and accepted for all other purposes, to the same extent as an original paper record of the same information would have been, provided the paper form accurately portrays the record.
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Corporate Governance and Blockchain Technology DLT & alternatives
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Corporate Governance and Blockchain Technology
The Law?
French Law Sapin II (9 December 2016):
le Gouvernement est autorisé […], à prendre les mesures […] de permettre la représentation et la transmission, au moyen d’un dispositif d’enregistrement électronique partagé, des titres financiers […]
Ordonnance Blockchain 9 December 2017: Un décret en Conseil d’Etat fixe les conditions (mid 2018)
The government is authorized to take action for facilitating the issuance and transmission through a blockchain of financial instruments.
The executive instrument of 9 December 2017 provides that a decree will set the conditions (mid 2018)
Bill nr. 997 to ratify the executive instrument of 9 December 2017 of 30 May 2018 (currently in discussion in French Parliament)
Council of State mentions it in its advice for a law related to the growth and transformation of companies (June 2018) to the decree
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Corporate Governance and Blockchain Technology
Looking in the Future?
Share trading
Shareholder
voting Shareholder
Engagement
and… modernization
company law, division
of powers
Share issue
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Corporate Governance and Blockchain Technology
Thank you!
Questions:
See for our latest papers upon which the presentation is based (with A. Lafarre):
‘Blockchain and Smart Contracting for the Shareholder Community’
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3219146
‘Blockchain Technology for Corporate Governance and Shareholder Activism’
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3135209
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