Shareholder Activism: The Impact of Blockchain on Corporate Governance

Corporate law as a subject has changed significantly in recent years. These changes have led to a thorough review of corporate stability, governance, control, and systems, norms and standards of democracy, and as an element of analysis and as a starting point for companies to create modern responses to various challenges and economic risks. Their corporate agenda.

Historically, the use of the term “corporate governance” with its meaning today, according to Sheffins, dates back to 1976 in an official report of the US Securities and Exchange Commission (SEC) and its subsequent merger became crystallized in 1978 when a report from the American Law Institute Corp. Promoted the study (Sheffins, 2012).

One of the first widely recognized definitions of corporate governance is given by the Cadbury Report (1992), where corporate governance is defined as a system by which companies are directed and regulated. Through good corporate governance, key aspects of the company and society are strengthened, such as good practice, trust, commitment, participation, communication and transparency.

Blockchain: The Future of Corporate Governance

Blockchain is an immutable, anonymous, inviolable and decentralized ledger, the underlying force behind cryptocurrencies like Bitcoin. According to Magnier (2018), Blockchain offers a revolutionary application of cryptography and information technology to many of the oldest problems of financial record keeping, where low cost, greater liquidity, more accurate record keeping and transparency of ownership create high expectations.

Haber and Stornetta (1991) initially proposed blockchain frameworks to time-stamp the creation of intellectual property as a digital document to fix ownership rights with the manufacturer before being copied by others. The first mention of this data structure as a “blockchain” comes from Nakamoto (2008), whose innovations in bitcoin include connecting the blockchain concept to a public ledger that is jointly updated by numerous participants in an open-source network.

The blockchain market is relatively small but has grown since Bitcoin gained popularity in the last decade. Globally, 40% of all enterprises and 60% of large corporations are considering implementing blockchain over the next 10 years, according to Juniper Research’s 2017 Global Market Survey (Akgire, 2019).

Services that rely on the decentralized nature of the blockchain, such as identity or voting, change the balance of power, increasing citizens’ control over the democratic process. Considering these benefits, blockchain can inspire new service delivery models for governments. At the moment, other governance structures like business or corporate also need to be considered.

One of the biggest challenges to governance over blockchain is how to design and build systems that balance the interests of each of these stakeholders and ensure the success of the network, no matter how that success is defined (De Philippi and Lovelock, 2016). Thus, blockchain governance is how decisions are made, not the decisions themselves: who chooses and how they choose, but what is chosen.

According to Yarmac (2017) and Laffer (2018), blockchain has great potential to provide efficient solutions to many of the problems that negatively affect the current corporate governance system, for example:

  • Increased transparency of ownership and change of ownership
  • Efficient and fair shareholder meeting
  • Real-time accounting

Each of these changes can greatly affect the balance of power between investors, directors and shareholders. For investors, blockchain may be able to locate ownership and reduce the chances of regulators, exchanges and listed companies seeking rent or unfair treatment. For managers, the technology could enable faster and more affordable stock acquisitions, but perhaps with much less privacy than the current system. For shareholders, blockchains can offer lower trading costs and more transparent ownership records, while allowing real-time visible monitoring of share transfers from one owner to another.

However, it should be noted that the impact of these benefits will depend on the type of blockchain used, whether public, such as in the case of Bitcoin and other digital currencies, or limited, as the model is currently being tested by several established financial institutions. And the consortium.

Latin America, Blockchain and Corporate Governance: A Long Way to Go

According to Lee (2016), the most prominent proposed use of blockchain technology in corporate finance has occurred in Australia, Estonia and the United States. In Australia, the Australian Stock Exchange expressed a desire in January 2016 to redesign its clearing and settlement systems using blockchain technology. In Estonia, the stock exchange was launched in 2016 to conduct shareholder voting on blockchain platforms. In the United States, a U.S. public company called Overstock.com began subscribing to stock rights issues in 2016 through a private blockchain.

In Latin America, the use of blockchain technology is steadily increasing and is expected to reach US $ 1,356 million by 2024, according to data from the consulting firm Frost & Sullivan and the protocol of the Vice-Presidency of Innovation and Sector Intelligence in 2019.

While the potential for blockchain may be tremendous, it cannot boost confidence without effective governance. In order for blockchain technology to have a transformative impact on financial markets and organizations, regulatory approaches must be able to adapt. Faith is essential in any aspect of social life. Blockchain-based systems can be retroactive or even dangerous if deviated from legal enforcement or regulations. Poor corporate governance can play a big role in financial scandals and crises.

On the other hand, excessive or premature application of legal obligations can also hinder innovation and thus miss the opportunity to take advantage of technology to implement policies that promote more efficient, transparent and measurable corporate governance built on trust.

Generation of trust without the need for an intermediary, a great contribution to blockchain technology, due to the immutability of blockchain records. Therefore, it is an opportunity for corporate governments to innovate and redefine their value in the market and to improve their internal processes and organizational structure. Furthermore, by incorporating blockchain into their innovation program, and establishing it as an important component of enterprise architecture, corporate governments will learn how to unleash the full potential of data-driven services.

Today the world is facing not only economic, but also social crisis, so it is relevant to establish corporate governance associated with the promotion of efficient and transparent markets in line with current law and the needs of each particular nation.

The future of the blockchain has not yet been determined, but for such a future to thrive, the technical, legal, business and political sectors of society need to work together, until each sector recognizes the potential and unique features of the other. .


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Bogota Chamber of Commerce. (2019). This is how the blockchain business works in Colombia. Available at the following link. Last accessed June 4, 2021.

Cheffins, B. (2012). History of Corporate Governance. Cambridge: European Institute for Corporate Governance.

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Haber, S. and Stornetta, S. (1991). How to time stamp digital documents, Lecture Notes in Computer Science 537, 437–455 (Advanced in Cryptology: CRYPT0 ’90).

Lafarge, A; Van der Elst, c. (2018). Blockchain technology for corporate governance and shareholder activism. ECGI Law Working Paper (390/2018)

Lee, L. (2016). New Kids in Blockchain: How Bitcoin Technology Can Rediscover the Stock Market, Hastings Business Law Journal 12, 81-132.

Magnier, V .; Barban, p. (2018). Potential Impact of Blockchain on Corporate Governance: A Survey on Shareholder Rights in the Digital Age. InterEULawEast: Journal for international and European law, economics and market integration. 189-226.

Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. Available at the following link.

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Michelle Bernier An attorney specializing in international law and commercial law. He is currently studying for a Masters in Law and International Business in Mexico with a double degree from Universidad International Iberoamericana and Universidad Europa del Atlantico. He is also part of the inaugural team of Students for Liberty Fellowship for Independence in India.

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