Legislative Proposal Addresses Use of Blockchain Technology by Delaware Corporations
The Corporate Council of The Corporation Law Section of the Delaware State Bar Association has prepared proposed amendments to the Delaware General Corporation Law to facilitate the use of block chain technology for stockholder records. Blockchain, also known as distributed ledger technology and typically associated with the use of Bitcoin currency, relies on an algorithm which can be used to track the exchange of stocks, bonds and other financial securities without a centralized ledger. Blockchain technology is based on a distributed “open ledger” using consensus-based authentication methods that depart from the current methods of securities settlement process. The technology works by storing information in blocks that record all transactions ever done through the network and allows for independent validation of both the existence of assets to be traded and ownership.
The proposed legislation addresses the differences between a distributed technology and traditional stockholder records, including that:
- Stockholder records need not be administered solely by the corporation.
- Electronic networks are a permissible method of record keeping.
- Certain notices may be given by electronic transmission.
Contact Steve Quinlivan for more information.