Blockchain and Smart Contracting for the Shareholder Community

32 Pages Posted: 26 Jul 2018

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; Tilburg Law School, Business Law Department

Date Written: July 24, 2018


Current shareholder engagement systems face large classical inefficiencies. First, due to the large chains of intermediaries in the current securities models, transaction costs are high and shareholder votes and other information are not always correctly transmitted between shareholders and issuers. Recent cases including DNick Holding and T Rowe Price show the ‘absurdness’ of the current systems. The Shareholder Rights Directive II addresses these problems and the draft Regulation already hints at modern technologies to increase the transparency and verifiability of shareholder engagement. Next, the current shareholder engagement system enables different opportunities for different types of shareholders, creating inequalities and hindering shareholder democracy. The solution to these substantial problems, lies in a state-of-the-art technology: in this contribution we argue that blockchain technology can solve these current inefficiencies shareholders and companies face. Using a permissioned blockchain, information can be stored in a verifiable and immutable way, with a consensus mechanism tailored to its purpose. The large amount of initiatives and prototypes of blockchain proxy voting and trading, including the legislative initiatives that were initiated in the past two years show the merits of using this state-of-the-art technology. The Europe Union should incorporate this technology in its legislation, like the CSD regulation, for staying technologically proof in this globalized market.

Keywords: Shareholders, shareholder information, blockchain, distributed ledger technology, Central Security Depository (CSD), proxy voting, general meeting

JEL Classification: G32, G34, G38, K22, K24, O16

Suggested Citation

Van der Elst, Christoph and Lafarre, Anne and Lafarre, Anne, Blockchain and Smart Contracting for the Shareholder Community (July 24, 2018). European Corporate Governance Institute (ECGI) - Law Working Paper No. 412/2018, Available at SSRN: or

Christoph Van der Elst (Contact Author)

Tilburg Law School ( email )

Tilburg, 5000 LE

Ghent University - Department of Business Law ( email )

Universiteitstraat 4
Gent, B-9000

European Corporate Governance Institute (ECGI) ( email )

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

Anne Lafarre

Tilburg Law School, Business Law Department ( email )

Tilburg, 5000 LE

Tilburg Law School ( email )

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

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