Maryland a Leader In Embracing Blockchain Technology

By on December 30, 2019

Executive Summary of an article written by
Tracy Bacigalupo, Morrison & Foerster

In April 2019, Governor Hogan signed a bill providing explicit statutory authority for Maryland companies to use electronic networks or databases, including distributed ledgers and blockchain technology, for the creation and maintenance of corporate records.

The new legislation recognizes that a stock ledger does not need to be maintained directly by a company through an individual, but may be administered “on its behalf,” creating a path forward to use blockchain technology for corporate records.

Many companies are harnessing this new technology in small, incremental steps by first working to develop and use blockchain technology internally. Recording shares on a blockchain would also enable stockholders and corporations to interact directly, thereby decreasing and even eliminating the need for intermediaries, including brokers, custodians and clearinghouses.

Blockchains are structured to be public, permissioned or private, as determined by a given project’s objectives. In today’s environment of chronic data security attacks, blockchain technology’s trusted system allows companies to share, store and record sensitive data through a protected, participant-visible and unchangeable network. Blockchain is thus a valuable and necessary tool, especially with respect to corporate record keeping and stockholder notices.

Given the quickly evolving use of blockchain for corporate record keeping, stockholder communications and share transfers, it is recommended that newly formed companies include authorization to use blockchain technology in their governing documents. This will preserve the opportunity to adopt this technology.

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