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.
You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?
Receiving a federal grand jury subpoena is not something most businesses or individuals anticipate. While it can be concerning, a federal grand jury subpoena does not necessarily mean that you are being accused of wrongdoing. It does, however, mean that a federal criminal investigation is underway and that federal prosecutors believe you may possess information […]
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
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!
