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Delaware Law Amendments Would Facilitate Blockchain Maintenance of Corporate Records

Last Updated March 4, 2021 4:55 PM
Rebecca Campbell
Last Updated March 4, 2021 4:55 PM

Delaware Law Amendments approved by the Corporation Law Section of the Delaware State Bar Association (DSBA) are intended to deliver specific statutory authority for Delaware businesses to utilize the blockchain to maintain corporate records.

In 2015, the then-Governor Jack Markell announced an initiative to embrace blockchain technology, which eventually saw the DSBA Corporation Law Council undertake a study into the use of blockchain technologies by Delaware corporations.

According to a report from Skadden, Arps, Slate, Meagher & Flom LLP [PDF], a firm’s records would be maintained through the blockchain to record stock issuances and transfers, to maintain a list of record holders and other matters.

It states:

Section 224 would be amended to permit corporations to rely on the contents of an electronic network as the corporate records, provided the records so kept can be converted into clearly legible paper form within a reasonable time.

According to the firm, the amendments would mean that any type of stock ledger, even electronic ones, would serve three functions: enable the corporation to prepare the list of stockholders entitled to vote; record the information required by the DGCL to be maintained in a stock ledger; and record transfers of stock.

Pushing the Blockchain Agenda

Over the past year, Delaware has been pushing the blockchain agenda as it realizes the benefits of the technology.

So much so, that in November of last year a Delaware judge urged institutional investors to utilize the blockchain as a way of protecting their voting rights.

According to Vice Chancellor J. Travis Laster, the blockchain could help to remove the middleman when it comes to how shares are held and voted, as at present they are operating on an outdated system that is too complex to determine who owns a share and how it’s used in decision making.

Delaware is just one state in the U.S. that is showing an increased interest in the distributed ledger. Only recently, the Senate in the state of New Hampshire considered a blockchain bill that would deregulate digital currency transactions such as bitcoin from money transmitter regulations in the state.

By doing so, the bill is designed to protect consumers when using digital currencies such as bitcoin instead of making them register with money transmitter regulators. It would also mean that companies in the state of New Hampshire would be able to operate without following strict KYC and AML regulations that are required of them at present.

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