In a speech that was half about blockchain and a blanket invitation for for blockchain companies to re-locate to Delaware, Governor Jack Markell (D) announced his state’s intention to create a new class of corporate shares, known as distributed-ledger shares.

This is the natural progression that began when Delaware supported the ‘dematerialization’ of stock certificates in the 1980s as well as support of electronic corporate-record transmission, electronic director votes, and virtual stockholder meetings in 1990s, he said. “Our aim has always been, under corporate law, to harness the benefits of new technologies while limiting the risk for businesses.”

The Delaware State Bar’s Delaware Corporation Law Council has given strong backing to the initiative, according to Markell. “The Council has agreed to explore the need for any changes or clarification according to corporation law to address and enable the authorization of these distributed ledger shares.”

Marco Santrori, a partner at Pillsbury Winthrop Shaw Pittman and whose firm is working on the initiative, estimated that it would take a year before any necessary change would be concrete in the minds of the state legislature.

The rather quick legislative turnaround is due to the state’s practice of reviewing an updating its corporate statutes annually.

One immediate benefit for corporations, and other Delaware entities, that adopt distribute ledger share could be simplified management of their capitalization tables and share registries by implementing blockchain, according to Markell. “Many companies are staying private longer and longer and keeping track of shareholder rights after 10 rounds of financing, each with their own terms and conditions, can be like solving a logic problem.”

Whether Delaware plans for investors to trade the new share class on or off exchange remains unclear as Markell touts blockchain’s benefits to the middle and back office while Santrori said that the new share class would be more liquid than existing share classes.

“They are going to have greater efficiency of settlement and clearance,” he said. “This is something that investors want.”

In the meantime, the state government has no immediate plans to enact laws or issue regulations regarding licensing of virtual currency or blockchain businesses, he added. “We want to actively observe. If and when an appropriate time comes we will work with the industry and consumers groups to describe best practices.”

Featured image via Natalia Merzlyakova/Dollar Photo Club