VIRTUAL LIMITED LIABILITY COMPANY The Legal Entity Becomes Virtual. Again.
SHARED CAPITAL legal fiction of the 19th century. VALUABLE PAPERS One and only valid copy 200 years of evolution created a monopoly of trade
CAN A VALUABLE PAPER BE A DIGITAL DOCUMENT?
SHARES IN A LIMITED LIABILITY COMPANY CLOSED LLC PUBLIC LLC (2500 euro) (25 000 euro) ● Paper shares ● Record in shares account ● Record in shares account ● Accounted in depository ● Share certificate ● Publicly tradable, if listed ● FMI required
TRANSFER AND ACCOUNTING OF SHARES (closed LLC) TRANSFER: ACCOUNTING: ● Written contract ● CEO responsibility ● Priority for purchase for ● No direct control other shareholders
DAILY PROBLEMS ● Non - compliance with reporting rules ● Transfer by retrospective date ● Stealing of shares ● Dumping of shares
BLOCKCHAIN ERA PROBLEMS ● No way of issuing compliant securities on the blockchain ● No way of tokenizing assets CLASSICAL SHARED CAPITAL THEORY BECAME OUTDATED
INNOVATION DIGITAL SHARE CERTIFICATE - Exist on the blockchain - Controllable only by the owner - Easily transferable
Digital Share Certificate Public data: - Company name and code, - No of shares represented, capital, value, - Restrictions. Encrypted data: - Owner’s personal data
Digital Share Certificate OWNER COMPANY ● Has access to all his ● Knows its shareholders shares and their rights in real ● Can transfer whole/part time of DSC ● Has access to restrictions ● Can mortgage all/part of set, if any the shares
THE BENEFITS ● Transfer contracts digitally signed and time stamped ● True composition of shareholders is clear at all times ● Stealing or dumping shares made impossible ● Different/new classes of shares made possible ● New kinds of Valuable Papers could be issued (ICO)
IMPLEMENTATION ROADMAP DEFINING A SELECTION OF SANDBOX CONCEPT TECHNOLOGY TRIALS IMPLEMEN- DRAFT LAW APPROVAL TATION
MAJOR STAKEHOLDERS CENTRE OF MINISTRY OF MINISTRY OF BANK OF REGISTERS ECONOMY FINANCE LITHUANIA Management of Drafting the Drafting the Regulatory the Registry of required laws: required laws: authority for Legal entities banks and other New law/ New law/ financial Technology Amendments to Amendments to institutions provider the existing the existing regulation regulation Oversees the turnover of financial instruments
CHALLENGES ● Selection of fast, cheap and opensource technology ● Fit the legal framework (especially related to VP trade) ● International trade of DSCs - identification issues
THE END Jonas Udris jonas.udris@registrucentras.lt https://www.linkedin.com/in/jonasudris/
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