Delaware’s Senate has cleared a bill legalizing stock registries held on a distributed ledger system or blockchain. Legislation is expected to move through the State’s General Assembly over the next week or so, and then on to Governor Carney for his signature.
Delaware attorney Matt O’Toole, a partner at Potter Anderson & Corroon LLP, chairs the Council of the Corporation Law Section of the Delaware State Bar Association, which is responsible for reviewing, recommending, and developing changes to the Delaware General Corporation Law. He offers these thoughts on the pending legislation and what it means for Delaware companies:
Which are the key innovations introduced into Delaware’s corporate law implementing blockchain technology?
The amendments provide explicit statutory authority for Delaware corporations to use blockchain technology in creating and keeping internal corporate records (including most importantly the corporation’s stock ledger) and in communicating with stockholders.
So Delaware law will provide clarity and certainty that blockchain records, including specifically a stock ledger maintained on a blockchain, are valid. The corporate statute also now will provide explicit requirements for the content of the stock ledger, again promoting clarity and certainty. The amendments effectively allow for the creation of so-called “blockchain shares.”
How do you expect the changes to Delaware’s corporate law to strengthen Delaware’s position in the U.S. and foreign corporate legal markets?
At a high level, the changes reinforce the forward-looking posture of Delaware’s state government when it comes to business matters, including technological innovation and our corporation law. Business people can remain confident that Delaware law will continue to evolve in response to business needs and market developments. More specifically, Delaware should be recognized as a jurisdiction that enables and fosters the issuance and trading of blockchain shares. These general and particular results serve to further solidify Delaware’s preeminence as a corporate domicile.
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