The Emerging Role of Blockchain in Corporate Governance Emily V. Burton Corporate Counseling and Litigation Group December 15, 2017

Problems To Be Solved: Corporate Governance Corporations’ capital structures must be indisputably delineated The requirements for corporate actions involving the capital structure or governing documents are stringent Even mere foot-faults in corporate governance changes can result in ambiguity or corporate acts unexpectedly discovered to be voidable or void

Problems To Be Solved: Numerous Stockholders Complexity in recording stock transfers Difficulty in verifying stockholding Burden surrounding exercise of the stockholder franchise

Problems To Be Solved: Real World Example Dole Food Company, Inc. Class Action Settlement 36,793,758 shares in the class Facially valid claims were submitted for 49,164,415 shares 33% more Dole common stock than existed

How can Blockchain Help? Corporate Governance Smart contracts can make corporate formalities self-enforcing Distributed ledgers eliminate potential record disputes Blockchain provides an immutable record of past compliance with corporate formalities

How can Blockchain Help? Numerous Stockholders Lowered barriers to direct record stockholding Lowered barriers to individual stockholder voting Lowered transaction costs for dividend distribution Automated, confidential access to key documents or information Realtime voting power measurements Transparency traceability, and pseudonymity of blockchain streamlines class or group measurement

Blockchain in Delaware Why does Delaware matter? Delaware is the corporate capital of the world Only jurisdiction explicitly embracing distributed ledger technology for corporate governance to date

Blockchain in Delaware: Changes in the Law DGCL Sections 219 and 224 enable Delaware Corporations to implement and rely on blockchain or distributed ledger stock ledgers for corporate governance and records DGCL Sections 151, 202, and 364 permit notices to be distributed through blockchain

Blockchain in Delaware: Enabling Technology Secretary of State developing a distributed ledger network with private vender symbiont Allows automation of Secretary of State functions, including: Good standing certificates Certificate of incorporation amendments Routine Filings Allows smart contracts to interact directly with the Secretary of State’s Office

Possible Future Roles for Blockchain in Corporate Governance Immutable storage and automated filing and amendment of governing documents Automated distributions of disclosures and other stockholder communications Lower costs for proxy materials for individual stockholders or insurgent ballots Smart contract enforced compliance with statutory requirements for corporate governance Self-enforcing stockholders’ agreements Digital joinders to stockholders’ agreements Capital table management in real time Self-enforcing preferred stock voting and approval rights Automatic quorum calculations Facilitation of action by stockholder written consent Automated conversion of convertible stock and securities Individual share tracing White list/black list transfer restrictions Real-time stockholder voting modeling or waterfall calculation End to end confirmation of consent delivery Proxy authorization verification Fluid tender/exchange offers Improved franchise tax calculations