Delaware Embraces Blockchain Technology
On August 1, 2017, Delaware adopted amendments to its corporate statute to enable Delaware corporations to utilize blockchain technology to create and administer corporate records, including a corporation’s stock ledger. Corporations can use blockchain technology to reduce the costs and delays inherently resulting from the involvement of intermediaries and to maintain a real-time, secure, traceable, and authenticated list of their stockholders of record. Blockchain technology also offers a solution for simplifying the complexities of the nominee system under which most shares in publicly traded companies are legally owned by a nominee called Cede & Co. (itself a nominee of The Depository Trust Company, or DTC), and investors only indirectly own shares through DTC’s institutional participants (i.e., in “street-name”). These complexities have resulted in mistakes in the execution of voting instructions and the loss of appraisal rights for street-name stockholders, as noted by Vice Chancellor Laster of the Delaware Court of Chancery in a speech delivered to the Council of Institutional Investors in September 2016. A CLE program “How the Technology Behind Distributed Ledgers Will Impact Corporate Law and M&A Practice,” was held in September during the Annual Meeting of the ABA’s Business Law Section.