Bringing the AGM to the 21st Century: Blockchain and Smart Contracting Tech for Shareholder Involvement

31 Pages Posted: 28 Jun 2017

See all articles by Christoph Van der Elst

Christoph Van der Elst

Tilburg Law School; Ghent University - Department of Business Law; European Corporate Governance Institute (ECGI)

Anne Lafarre

Tilburg Law School, Business Law Department; Tilburg Law School

Date Written: June 2017

Abstract

The AGM is often considered to play an important role in direct shareholder monitoring of directors and corporate blockholders. However, its practical functioning suffers from large obstacles. In this research we outline the AGM’s flaws and argue that blockchain technology can bring this yearly classical gathering to the 21st century. Using a blockchain that records shareholder voting on a private ledger, shareholder decision-making can be faster and cheaper. Once a voting item is placed in the blockchain, shareholders are notified and can exercise their tokenized voting rights. When a majority is reached, the voting outcome becomes immutable and verifiable. This state-of-the-art decentralized form of ‘meetings of and with shareholders’ offers large advantages: faster decision-making in a decentral environment and substantially reduced voting and meeting organizing costs, which can enhance shareholders’ willingness to participate.

Keywords: Annual general meeting, corporate voting, blockchain, smart contracts, corporate governance, innovation

JEL Classification: K12, K20, K22, G34, L22

Suggested Citation

Van der Elst, Christoph and Lafarre, Anne, Bringing the AGM to the 21st Century: Blockchain and Smart Contracting Tech for Shareholder Involvement (June 2017). European Corporate Governance Institute (ECGI) - Law Working Paper No. 358/2017, Available at SSRN: https://ssrn.com/abstract=2992804 or http://dx.doi.org/10.2139/ssrn.2992804

Christoph Van der Elst (Contact Author)

Tilburg Law School ( email )

Tilburg, 5000 LE
Netherlands

Ghent University - Department of Business Law ( email )

Universiteitstraat 4
Gent, B-9000
Belgium

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Anne Lafarre

Tilburg Law School, Business Law Department ( email )

Tilburg, 5000 LE
Netherlands

Tilburg Law School ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

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