Gov. Phil Murphy recently signed legislation into law authorizing corporations to utilize electronic networks, including distributed electronic networks or databases that utilize blockchain technology…
Gov. Phil Murphy recently signed legislation into law authorizing corporations to utilize electronic networks, including distributed electronic networks or databases that utilize blockchain technology, administered by or on the behalf of the corporation, in order to meet recordkeeping requirements. The provisions of the legislation (A-1178/S-898) took effect immediately.
“We need to use the technology at our disposal to ensure our information is safe,” said Assemblyman Christopher DePhillips (R-40), a co-sponsor of the legislation. “Permitting companies to use blockchain not only helps protect the company’s data but allows for full transparency of that data. Large companies like Microsoft and Walmart have embraced this technology and we need to make this available to all companies, not just big box stores.”
Blockchain 101
In basic terms, blockchain is a type of database that maintains a continuously-growing list of transactions. Due to the method in which a blockchain is structured when operated in a decentralized nature, the system creates an irreversible timeline of data. Thus, it is protected against revision by publicly-verifiable open-source cryptographic algorithms and immune to data loss through distributed records sharing.
While blockchain gained notoriety as the backbone of Bitcoin, its potential uses extend to numerous financial and commercial transactions. Proponents of blockchain technology maintain that, compared to a traditional, centralized database, it can result in lower risk, decreased operational costs, and greater efficiency.
Using Blockchain to Store Corporate Records
With regard to corporate records, blockchain technology can simplify the process of storing records and managing revisions, while also protecting against the hacking of sensitive information. It also establishes a clear audit trail without the need for any intermediaries.
New Jersey is not the first state to allow corporations to take advantage of blockchain technology. Delaware was one of the first states in the country to adopt blockchain-friendly corporate laws. The state authorizes corporations to use the technology to maintain shareholder lists, as well as other corporate records. Delaware has also launched several pilot projects that are testing how to use blockchain to collect, record, and store corporate and government filings.
New Jersey’s Blockchain Law
Under New Jersey law, corporations are required to keep records containing the names and addresses of all shareholders, the number, class and series of shares held by each and the dates when they respectively became the owners of the shares. The new law provides that these corporate records of shares may be kept on an electronic network, which is defined as “one or more electronic networks or databases, including one or more distributed electronic networks or databases that utilize blockchain technology, administered by or on the behalf of the corporation.” A-1178/S-898 also provides that corporations may use electronic transmissions from electronic networks to meet with certain notice provisions of existing law.
Key Takeaway
States like New Jersey are beginning to recognize that blockchain’s utility is not restricted to cryptocurrency. However, before utilizing blockchain technology for business purposes, we encourage corporations to consult with experienced legal counsel who can help weigh all of the potential risks and benefits and legal requirements.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Zachary Klein, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
