The State of Delaware enacted new provisions of law effective August 1 that authorize corporations to maintain certain of their required records, including stock ledgers, on electronic networks or databases, including distributed electronic networks, such as the blockchain. However, any records kept in such manner must be able to be converted to paper form “within a reasonable time.” Moreover, in connection with stock ledgers, the electronic networks or databases must be able to be used to prepare lists of stockholders, record certain specified information and record stock transfers as otherwise specified under Delaware law. A distributed ledger refers to a consensually shared and simultaneously synchronized record across disparate users on a computer network where entries are typically irreversible. (Click here for an overview of the distributed ledger and so-called “smart contracts” in a publication by the International Swap Dealers Association published last week. Click here for the article “SEC Warns That Digital Tokens May be Securities” in the August 3, 2o17 Advisory by Katten Muchin Rosenman LLP.)
My View: The enactment of this new law is potentially a breathtaking development heralding the legal legitimatization of distributed ledger technology and smart contracts.