Volume 6, Iussue 2, 2020

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Table of Contents
Covid 19. Towards a turning point in the EU integration process.........................6
Angela Troisi
Picking up the gauntlet – Europe’s answer to the ‘pension problem’: the
PEPP..........................................................................................................................23
Hans van Meerten, Andrea Minto and Jorik van Zanden
Company law during the blockchain revolution. The rise of
“CorpTech”...............................................................................................................33
Raffaele Lener and Salvatore L. Furnari
“Size & fit” of piecemeal liquidation processes. Aggravating circumstances and
side effects..................................................................................................................53
Rosa Cocozza and Rainer Masera
Monetary policy in the face of the Covid-19 crisis: the interesting case of the
Uunited Kingdom......................................................................................................87
Marco Bodellini and Dalvinder Singh

33
Open Review of Management, Banking
and Finance
«They say things are happening at the border, but nobody knows which border» (Mark Strand)
Company law during the blockchain revolution. The rise
of “CorpTech”
by Raffaele Lener and Salvatore L. Furnari
Abstract: In recent times we have seen cases where business and corporate needs have required the
presence in the same place of a crowd of people made up of many shareholders of a well-known bank.
This was necessary so they could vote on a capital increase that would have determined its rescue
from bankruptcy. At the same time, in these days, health emergencies require that certain corporate
actions (such as the shareholder meetings for the approval of the financial statements or for the
election of the corporate boards) take place without the physical presence of the shareholders, who are
required to remain distant from each other.
These two examples show how different historical moments create new needs which, in many cases,
must be satisfied by applying “old” rules. Indeed, although new technologies allowing the exercise of
voting rights in innovative ways exists, our legal system requires times to regulate these new
technologies before they could be largely adopted.
This constant pursuit between the old and the new, whose speed is increasing in today’s globalized
world, requires scholars, on the one hand, to contribute to the elaboration of new rules to allow a safe
use of the new technologies. On the other, while waiting for new rules to be introduced, scholars have
also the important role to interpret and coordinate (when possible) the old rules with the adoption of
such new technologies.
Regarding company law, the reference is to DLT and blockchain technologies and their derivatives
(tokens and smart contracts). Here, the neologism “CorpTech” has been created to synthesize the new
technological solutions which can allow, in theory, a safer and more effective exercise of corporate
rights by shareholder.
For example, some scholars have “theorized” the registration of company shares on a public
blockchain to make their transfer easier or to make companies’ ownership structure more
transparent. Others have suggested to incorporate the rights (or some of them) deriving from the
possession of shares within tokens (so-called tokenisation), in order to make their transfer faster,
reducing the related formalities. Furthermore, someone else has discussed the possibility of holding
shareholders’ meetings at distance, exercising the right to vote through special smart contracts.

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Beyond the easy enthusiasm that new technologies inevitably arouse, it is necessary to question the
compatibility of the new solutions with the regulations in force in our system. And before that, it is
necessary to question the risks and advantages of these new technologies.
Summary: 1. Introduction. – 2. DLT and its derivatives: blockchain, smart contracts and tokens – 3.
Representation and circulation of shares and quotas using equity token. Is tokenization of company’s
participations possible under Italian law? – 3.1 Not “issuing” share to issue equity token. – 3.2 Equity
tokens, quotas and the Alternative Regime. – 3.2.1 (How to avoid) the “centralized” figure of the
Register of Company. – 3.2.2 A DLT solution in the Alternative Regime. – 4. The exercise of rights
through DLT systems. – 4.1 Economic rights. – 4.2. Intervention and voting rights – 4.2.1 Voting rights
and DLT. – 4.2.2 Solutions to improve the exercise of intervention rights. – 4.2.3 Technological limits of
DLT. – 5. DLT system as solution for personal identification. Perils of deepfake technology. – 6.
Conclusion. The CorpTech myth can be concrete?
1. In recent times we have seen cases where business and corporate needs have required the presence in
the same place of a crowd of people made up of many shareholders of a well-known bank. This was
necessary so they could vote on a capital increase that would have determined its rescue from
bankruptcy. At the same time, in these days, health emergencies require that certain corporate actions
(such as the shareholder meetings for the approval of the financial statements or for the election of the
corporate boards) take place without the physical presence of the shareholders, who are required to
remain distant from each other.
These two examples show how different historical moments create new needs which, in many cases,
must be satisfied by applying “old” rules. Indeed, although new technologies allowing the exercise of
voting rights in innovative ways exists, our legal system requires times to regulate these technologies
before they could be largely adopted.
This constant pursuit between the old and the new, whose speed is increasing in today’s globalized
world, requires scholars, on the one hand, to contribute to the elaboration of new rules to allow a safe
use of new technologies. On the other, scholars have also the important role of interpreting and
coordinating (when possible) the old rules with the adoption of such new technologies, while waiting for
new rules to be introduced.
Regarding company law, the reference is to Distributed Ledger Technology (DLT) and its derivatives
(blockchain, tokens and smart contracts). Here, the neologism “CorpTech” has been created [1] to
synthesize the group of new technological solutions which can allow, in theory, a safer and more
effective exercise of corporate rights by shareholders.
For example, Yermack (2016) has theorized the registration of company shares on a public blockchain
to make their transfer easier or to make companies’ ownership structure more transparent. He has also
suggested the incorporation of rights (or some of them) deriving from the possession of shares within
tokens (so-called tokenisation), in order to make their transfer faster, reducing the related costs and

35
formalities [2]. Van der Elst and Lafarre (2017) have discussed the possibility of holding shareholders’
meetings at distance, exercising the right to vote using blockchain [3]. Yermack (2016) has also
proposed its use also with reference to corporate elections [4].
Beyond the easy enthusiasm that new technologies inevitably arouse, it is necessary to question the
compatibility of this new solutions with the regulations in force. New technologies embody the risk that
not everything of what could be theorized can, at the end of the day, became true. This is truer from a
legal perspective, considering how high is the number of cases of conflict between “traditional law” and
“innovation”.
In the following pages the implementation of DLT systems within the whole life of a company would be
discussed. In section 2, characteristics of DLT will be described, with a specific focus on blockchain,
smart contracts and tokens. Section 3 presents the legal problems of representing company’s
participations using tokens, dealing with the legal possibility of making the dynamics of purchasing and
exchanging shares more efficient through DLT. Section 4 deals about the exercise of voting and
administrative rights through tokens. Here, in addition to provide practical suggestions for the
implementation of DLT systems while respecting the current regulation, we will also study their
application limits, highlighting how these limits exist more from a technological point of view than from
a legal one. Section 5 shows how DLT can solve identification problems during a company meeting. In
particular, the section deals about the perils of technologies that can reproduce in real time the face or
the voice of a legitimate participants of those meetings (so-called deepfake video) and how blockchain
can be the solution against it. Finally, section 6 concludes the paper, discussing in which terms the
“myth” of CorpTech can be considered concrete.
2. A discussion on the compatibility between company law and DLT requires a brief recap of the
functioning of blockchain, smart contracts and tokens.
To simplify, we define blockchain a derivative of DLT. Blockchain is, indeed, a particular form of DLT
and can be described as a system in which information and data are stored using cryptography. The
peculiarity of this innovative database is its decentralization, that is the fact that this “register” is under
the control of a peer-to-peer network of participants. A blockchain database can record the transactions
made by the system’s participants without the need of a unique and central authority that manage it.
DLT allows full disintermediation, since each participant of the network, called “node”, possess a full
copy of the information stored therein. Decentralization is the first but not the only important
characteristic of a blockchain.
The second one is transparency. Indeed, to reach the best level of decentralization there is the need to
let everyone became a node of this database. This implies the power given to everyone to see (and make
a copy) of the information stored in this register using specific tools.
Decentralization and transparency make the use of a DLT a cyber-secure choice to store information.
Indeed, who desires to modify the information stored in the distributed register needs a power that is

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higher of the 51% of the computational power given by the participants to the system. This means also
the approval of (or to attack the PC of) the nodes offering such amount of power.
The innovative functionality of DLT lies in the peculiar kind of things that can be stored in its registers.
The firs one is called token. A token is nothing more than a record of information that results in favour
of a participant. A token lets his possessor (that is the person that has the power to transfer its
transcript in favour of another one) to be recognized by the entity who released the token as the holder
of a precise amount and/or kind of rights. So, if from a technical point of view, a token is nothing more
than a simple registration, from a functional point of view it can be considered as an informatic
instrument that lets participants exercise a precise kind of rights towards the releasing company. Those
rights are, often, the subject of an offering to the public in exchange of money to develop an
entrepreneurial project (Initial Coin Offering or ICO). The rights conferred by a token includes: the
simple right to exchange the token itself (cryptocurrencies); the access to a service provided by the
platform (utility token); administrative or economic rights toward the company that offered them
(investment token). Hence, tokens are adaptable tools which let almost everything to be represented by
them (so-called tokenization process). They are very useful because they can easily be sent to or
exchanged with other participants and, notwithstanding their virtual nature, they do not need
intermediary to be custodied or transferred.
Token are created by the blockchain protocols in which they are register or by a smart contract. The
latter being the last of the DLT derivatives described hereby. Smart contracts were born when some
blockchain protocol, such as the Ethereum one, started to use the power of calculation of its participants
to run a virtual machine. A virtual machine can be imagined as a big (phantom) computer using the
power given by all the computer of the participants to elaborate softwares. Therefore, smart contracts
are not contracts, but simply algorithmic sequences elaborated by computer created with the calculation
power of the nodes. Being the virtual machine – as every information recorded on the blockchain –
under the control of nobody, smart contracts acquire the two following characteristics: unstoppable
self-execution and autonomation [5].
As every software, smart contracts are self-executing. If a smart contract is programmed to perform a
determined action, it will work until the action is completed. This means also that if a precise
mechanism to stop its functioning has not being “programmed” by the party who launched it, nobody
can stop its functioning without taking the control of the 51% of all the calculation power alimenting the
blockchain.
Autonomation means that smart contracts lack human interaction for their execution. So, above all,
they can be used to perform obligations deriving from a real contract that can be written within the
smart contract it-self [6]. A contract of this kind could help the managing of a contractual execution
since there is no need for interpretation of its terms. At these conditions, parties do not need to trust
each other before the conclusion of the agreement since the execution its fully automated. For instance,
this principle applies particularly for the collection of money through the launch of an ICO. If the
collection of money is managed using a smart contract, this program will automatically deliver the
token in exchange of the money received.

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In light of all the above considerations, smart contracts can strongly grant the right attached to a
specific token. If a token grants the access to a specific service of the issuer, the buyer of the token could
be sure that he will enjoy the service he paid for.
To sum up the informatic landscape exposed in brief above, it is possible to describe DLT and its
derivatives as follow. Blockchain is the infrastructure on which tokens are placed and interact with
other participants using smart contracts without any need for intermediaries.
3. Having described DLT essentials, it possible to see if the law permits those to be exploited by
companies.
The first way in which DLT can innovate corporate functioning regards the procedures by which
companies shares and quotas are represented and circulates. The possibility for tokens to represent
companies’ shares (equity token) would represent an incredible opportunity for their shareholders.
Indeed, they could enjoy the possibility of exercising the rights tokenized without any intermediation.
Within the list of rights that could be exercised, the first is the possibility to trade the shares acquired.
Here the lack of intermediation makes the system less costly and not exposed to third party risk.
Practically, each shareholder may exercise on its share the same control he has on a physical object.
Before creating too much expectation on what it is possible to do with an equity token, it is necessary to
verify if the law consents its creation. To do so, Italian company law will be taken in consideration,
focusing on the rules governing the way companies’ shares can be represented or can circulate.
The results of the proposed analysis will vary on the basis of the circulatory regime adopted by the
company. Within this paper we will consider just two different circulatory regimes for participations of
Companies Limited by Shares (società per azioni or SPA) [7] and two other regimes for Limited Liability
Companies (società a responsabilità limitata or SRL).
3.1 SPA are the legal structures that suite most the possibility to issue equity token. The procedures
regulating creation and circulation of their shares (azioni) seems to be adaptable to a DLT ecosystem.
Shares are the result of an abstract division of the company’s authorized capital. They can be
incorporated in physical documents to facilitate their circulation. In this case, share certificates are
issued and it means that shares are incorporated in a physical document (azioni cartolarizzate). This
regime of circulation is referred to as securitization (cartolarizzazione) and it is not mandatory.
In this regime, shares need to be incorporated within a physical “object” to circulate. This fact
represents (involuntarily) a formality that can impede the application of a DLT system. Indeed, the
difficulty to consider a token as something “physical” seems non compatible with the rules of circulation
of nominative shares [8]. Circulation of shares in this regime requires the exchange of something
physical. There is strong doubt about the possibility of including in the definition of “physical” a
computer program such as a smart contract or, even less, a mere registration such as a token. Indeed,

38
even admitting that the material support on which shares need to be represented can be different from
paper, the possibility to consider a token or a smart contract as a “material” support in which shares can
be incorporated has been excluded by their “virtual” nature [9]. Therefore, it is very difficult that in this
regime, shares could be tokenized.
As anticipated, being this regime not mandatory, pursuant to Article 2346, paragraph 1, of the Italian
Civil Code, a company can decide to not incorporate shares in physical documents (azioni non
cartolarizzate). So, share certificates are not issued and their circulation is controlled only by
registrations made by the company in the Shareholder Book.
This second regime appears to be more in favour to the adoption of a DLT system. The transfer of non-
securitized shares is effective simply when parties agree on it [10] and their consensus does not even
need to be formalized in writing [11]. The transfer needs to be registered in the Shareholder Book and
this registration seems to require just specific formalities that are considered not necessary for the
transfer to be effective [12].
In this circulatory regime a central role is played by the Shareholder Book kept by the company. This
book is very similar to a DLT register and can be kept through informatic tools, according to art. 2215-
bis of the Italian Civil Code. Among these tools it is possible to include smart contracts.
In light of the above, we can conclude that adopting this circulatory regime it is possible for a company
to issue equity tokens. This is true both from a technical and a legal point of view. In order to do that,
after having decided to not issue share (i.e. to not incorporate them in physical documents), the
Shareholder Book should be created using a smart contract. Then equity tokens representing company’s
share can be issued. A shareholder will have to connect with a specific section of the company website to
transfer his equity tokens. There he could interact with a smart contract programmed with the task of
intermediating the circulation of the equity tokens issued. In doing so, this smart contract (being itself
the Shareholder Book) could be updated with the information of the new shareholder to whom shares
are transferred.
The solution illustrated seems the only legal possibility for a SPA to distribute to the public crypto-
assets representing its shares in the form of equity token. However, what is true is that the equity tokens
will not really represent the shares of the company. Legally speaking, without a specific intervention of
the legislator, this system will only let equity tokens to be a tool whose alienation would activate the
mechanism for the updating of the Shareholder Book.
3.2 Equity tokens, quotas and the Alternative Regime.
3.2.1 A completely different analysis needs to be done considering Limited Liability Companies.
SRL participations are represented by quotas. Differently from shares, quotas cannot be incorporated in
physical instruments to facilitate their circulation. They can be transferred as effect of the reaching of
the consensus between the parties but, to be effective vis-à-vis third parties, the transfer must be

39
notified to the Register of Companies. The notification must follow precise and mandatory formalities,
requiring the intervention of a specific “intermediary” such as a notary or a chartered accountant.
From this quick overview, two are the major obstacles impeding tokenization of quotas.
First, the role played by the Register of Company cannot be avoided. Without the transcription of the
transfer within the Register, circulation of quotas has no external effect. This means that a single quota
could potentially be sold to more than one person to the damage of the first acquirer. So, the Register of
Company has the important task to avoid double spending problems.
In this regard, someone could say that the implementation of equity token can nullify this danger.
Indeed, it is known that DLT systems eliminates the double spending problem and that tokens can be
transferred just once, notwithstanding its virtual nature.
However, from a legal point of view, these technological guarantees given by DLT are not enough. This
because tokenization of quotas has no effect versus the Register of Company. This is also a consequence
of the fact that quotas cannot be securitized. Therefore, the quota-holder resulting from the Register of
Company will always maintain the right (and the power) to transfer the quotas he owns. For instance,
although a quota-holder gives his equity token to the Person A, he could still sell his quotas, through a
public notary, to Person B. Holding the equity token, Person A may be the owner of the transferred
quotas only for the “token community”, but for the law, after this double-transfer, only Person B is the
real quota-holder, being his name the only one resulting from the Register of Company.
The obstacle for Person A to record his purchase on the Register of Company represents the second of
the two problems mentioned above. It consists in the fact that the communication did not came from a
notary or a chartered accountant. This law provision precludes the possibility of having these
communications managed solely by a computerized system. Indeed, their presence introduced within
the system a certain decree of centralization that is not fully compatible with the characteristic of DLT.
The mentioned problem does not make the creation of technological solutions for quotas tokenization
impossible at all, although its implementation could be quite difficult and will require the necessary
participation of a notary or of a chartered accountant.
Similarly, to the one described in paragraph 3.1, a solution could consist in the implementation of a
smart contract with the task of intermediating equity token. In addition, here the smart contract should
also send the communication to the Register of Company. In doing so, the smart contract should exploit
the authorization of a notary or of a charted accountant for communicating with the Register.
Considering that today those communications are send using electronic tools, it not possible to exclude
that a solution of this kind could be adopted without amending any law regulating these aspects of
Italian company law, although with the mentioned difficulties.

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3.2.2 According to the above example, without a specific reform of Italian Company Law, it is quite
difficult (but not impossible, as we have explained) for SRL quotas to be transferred “using” equity
tokens.
The difficulties of transferring quotas between parties are known to the Italian legislator. SRL quotas
was not regulated to be offered to the public or traded in regulated markets. Notwithstanding this, SRL
is still the cheaper legal form for companies and so the most adopted by start-ups. To foster the
development of a secondary market for quotas, Italian legislator created in 2015 a new method for
transferring them. The so-called alternative regime [13] was introduced with the clear intention of
favouring the development of a secondary market of a specific “kind” of quotas. These are the ones
distributed following the conclusion of an equity crowdfunding [14] campaign, an alternative financing
instrument with the peculiarity of being very illiquid [15]. In that period, the illiquidity of this financing
instrument was caused by the difficulties of secondary market for quotas to develop, due to the
mentioned inadequacy of quotas to circulate.
The alternative regime for quotas was introduced with art. 100-ter, paragraph 2-bis of Legislative
Decree no. 58/1998 (Testo Unico della Finanza or TUF) [16]. This article provides a solution to the need
of communicate each transfer to the Register of Companies using a notary or a charted accountant. The
solution consists in the participation to the system of an intermediary authorized to provide investment
services. Its role is to acquire the shares offered during the equity crowdfunding campaign in the
interest of the investors but not in their name. This implies that, after the conclusion of the funding
campaign on the equity crowdfunding platform, the intermediary will notify a request for registration to
the Register of Companies for all the quotas subscribed by the investors that decided to opt for this
circulatory regime. This intermediary will so become the only quota-holder resulting from the Register
of Companies although the quotas are held by him but in the interest of each participant to the equity
crowdfunding campaign.
For the alternative regime to function, the intermediary is required to keep a register with the
information of the quota-holder he is working for. This mechanism let quota-holder to transfer their
participation through a simple communication to the intermediary. When the communication is
received, he will only change the name of the investors contained in its register [17]. In this way, there
will be no need to notify each transfer to the Register of Companies, considering that the intermediary is
the only quota-holder register therein in the place of the investors.
The alternative regime is less formal than the traditional one applicable to participations of SRL. This
informality makes it possible to be re-created using DLT in order to “issue” equity tokens. The issuance
of equity token in this circulatory regime, however, do not depend only by the will of the company. It is,
indeed, necessary the participation of the mentioned intermediary. It is him that should adopt a DLT
solution to let companies that concluded an equity crowdfunding campaign have their participations be
represented by equity tokens.
In this regard, the intermediary is free (as a private entity) to choose the technological systems that he
prefers to manage both the receipt of the transfer communications and the same register in which the

41
transfer must be recorded. It is so possible to imagine a solution in which there is an agreement
between the intermediary and the company to assign to each new investor a token representative of
what is written in its own registers. For instance, as already suggested, it could be imposed to quota-
holders that the transfers of equity tokens take place exclusively through the interaction with a smart
contract (accessible through a simple website) with the task to keep the register and automatically
update the records of each quota-holder.
The result would be the creation of a mechanism that allows the transfer of quotas based on the
exchange of tokens on a DLT [18].
4. The potential associated with the use of DLT systems is not limited to the mere representation of
company participations. Indeed, it can be extended to the exercise of the rights guaranteed by their
possession. Having ascertained the possibility, under certain conditions, of issuing equity tokens, there
is the need to assess whether, under current legislation, those tokens can be used to exercise the rights
associated with such holdings (economic and voting rights) [19].
4.1 Adopting DLT for the exercise of voting rights does not present problems of compatibility with
Italian legislation. The regulation does not prevent shareholders to use DLT systems to request the
amount of money they have right to. Nor it prevents companies from distributing the profits generated
automatically to their shareholders.
The only laws that a DLT solution should respect are the ones regulating when and which amount of
money could be distributed. For instance, article 2433 of Italian Civil Code provides that dividends may
be distributed only when profits are really achieved, and they result from an approved balance sheet. If
profits are distributed in violation of these rules, the assets distributed can be requested back. Rules of
the same tone can be found in bankruptcy law. Here the main scope of the regulation is to avoid the
alteration of the so-called par condicio creditorum. In brief, when the company enters in a bankruptcy
procedure, a precise order should be respected in the division of the remain assets of the company. In
addition, specific provisions of bankruptcy law permit, in the interest of creditors, to nullify the effects
of money distributions to shareholders, even if the distribution has been made before the bankruptcy
declaration.
In light of the above, companies can introduce DLT systems that automatically distributes profits to
their shareholders. It will suffice, in fact, to respect the substantive rules governing the conditions for
the distribution of sums to shareholders. Indeed, the mentioned rules remind that in some case a
company may request back money distributed to shareholders. Its importance it is clearer since
mechanisms involving DLT systems are usually irreversible. A company must have clear that automatic
distributions of its assets could not be obtained back, not even through the intervention of public
authorities.
This means that a system that automatically distributes profits to shareholders could be considered
“unlawful” to the extent that the code of the smart contract does not provide for an informatic solution

42
to comply with the mentioned rules. Differently, its implementation may result in the responsibility of
the director and of who has received the task of programming the relevant smart contract.
Considering the possibility that a mechanism compliant with those laws has been implemented, a
solution for the automatic distribution of profits to shareholder may consist in a smart contract with the
task of collecting the countervalue in cryptocurrencies of the profits available for distribution, so that
those sums can be made available to shareholders, subject to the condition of obtaining a precise
amount of votes. The greatest advantage of a mechanism of this kind would be its independency from
the administrative body, which would be deprived of the possibility of materially influencing
distributions already decided. Attributing greater powers of control over the actions of the directors
means eliminating at the root the need to request the intervention of the Court in the event of a dispute.
This is true considering that within the time a judge reaches a decision, the amount of money to which a
shareholder might have right could have disappeared.
However, there is a second important aspect that should be taken into due consideration before
implementing the discussed solution: the need to create a strong link between what happens on the DLT
networks (on-chain) and what happens outside (off-chain). This link is not provided by the law.
Indeed, a DLT system is not able to manage what “does not exist” on the DLT network. This means that
a smart contract cannot control cash flows that are in fiat currency and in a company’s bank account.
Shareholders may effectively control what a director do with the money of the company only by creating
a secure conversion mechanism between on-chain assets (e.g., money in a current account) and off-
chain assets (e.g., a precise cryptocurrency). Otherwise, to foster the automatic right granted to
shareholders it will be sufficient to intervene on the mechanism that mediates between the different
networks. Corrupting this “bridge” will be as if such system has never been implemented [20].
4.2 Intervention and voting rights.
4.2.1 Great attention must be paid also to the compatibility of DLT applications and the exercise of
administrative rights. There is no doubt that exercising voting through electronic means can increase
shareholder participation. This is true with reference to companies with a particularly widespread
shareholder base or in emergency situations. Electronic voting allows the reduction of the costs that the
voters (whether investors, shareholders or members of another corporate body) must bear to exercise
the rights they have towards the company. Therefore, it can increase voting participation. The
implementation of electronic voting has also important benefits for the company. First, it allows a better
recording of the votes received. Secondly, electronic vote simplifies the organization costs related to the
physical placement of the voters within the same location, especially when the right to vote is granted to
many people.
Notwithstanding these advantages, electronic voting systems can be implemented but not in total
freedom. On the one hand, article 2370 of the Italian Civil Code makes possible to participate in
shareholders’ meetings through “telecommunication means” and to “express the vote by
correspondence or electronically” [21]. From a technological point of view, this rule is deliberately broad
when it refers generically to “means of telecommunications” or “voting electronically“. The use of

43
generic terms responds to a precise choice: by not defining which precise electronic means can be used,
the company has the possibility to implement the technical solution that from time to time will be more
updated and suitable. This is a correct regulatory choice, considering the speed with which new
technologies evolve and create new means that allow the interaction of people in real time. It is precisely
this sort of “blank proxy” that can allow the implementation of DLT systems for the exercise of voting
rights.
As mentioned before, the use of these systems is permitted under one specific condition.
Implementation of telecommunications means to participate and vote in the shareholders’ meeting
must be provided within company’s by-laws. Implicitly, shareholders must have accepted this
possibility when they decided to be part of the company. Therefore, it is not the “normality” for
shareholder meetings to be held at distance. This fact could be explained identifying a certain distrust
towards systems over which it is not possible to exercise total control. This is true given the ease with
which electronic voting systems can be altered by the majority, by the directors or by the person who
owns the technological voting infrastructure. Those system can be also hacked by third parties that may
have some evil interest in distorting the voting results.
If the major concern that prevents the spread of remote voting mechanisms is the danger of a
fraudulent modification of the voting results, the implementation of a DLT systems would eliminate this
risk. The combined use of cryptography and decentralization makes the results of the data processing
unalterable. Voting results recorded in a DLT infrastructure cannot be changed. Its inalterability is
inherent also to the fact that decentralization makes this system under the control of no-one.
Therefore, a solution for the implementation of voting system using DLT could easily be find out. Voting
right could be exercised through a smart contract that, interacting with voting tokens distributed to the
shareholders, allow them to express their vote from whatever place they are, granting that the vote is
expressed personally by the token holder.
4.2.2 DLT systems could be also implemented to foster the right of participation, that is the possibility
to make a statement during the shareholder meeting and having it recorder within its minute.
There are no technological problems in the possibility of implementing a messaging function to deliver
a single intervention. This would be recorded in its entirety and without possibility of alteration. In
addition, each intervention could be sent together with a time stamp that would ensure when the
message is sent and when it is received. This kind of system could be implemented to require the
verbalization of specific interventions or to manage the meeting discussion in real time [22] without any
fear that a single intervention could be changed after the meeting [23]. DLT systems could help
verbalization operation so to ensure that the intervention of each shareholder in the meeting is not
altered during the drafting of the minutes and to avoid disputes on its content.
4.2.3 We have described how a DLT systems could help managing both the right to vote and the right to
participate in a shareholder meeting.

44
However, there is an important issue underlying the implementation of any DLT system in corporate
contexts. It concerns the publicity of the information that are recorded within the network; a problem
that is related to the specific type of DLT that is adopted by the company.
In particular, the use of DLT permissionless [24] will make information recorded available to everybody
[25]. This grade of publicity is in contrast with the secrecy instances of some documents formed during
a shareholder meeting. Indeed, the minutes of these meetings are not public documents and cannot be
transposed within a DLT permissionless without putting at risk company business strategies.
Those problems could not be solved simply with the adoption of permissioned DLT. Indeed, its
adoption, if on the one hand may solve the mentioned privacy problems, brings to the table other
problems. These are related to the difficulty of identifying the subjects that could be entrusted with the
role of node on a company level [26].
Privacy problems of DLT permissionless could be still solved implementing specific technological
solutions. In this regard, it should be enough to introduce a method to encrypt all shareholder’s
interventions before they are registered on a DLT permissionless. In this way, third parties will not
know the content of the company minutes. Only the company or the subjects with an interest in reading
the document should have the possibility to decode its content using a password.
However, this solution may still give rise to concerns. These regards who should have the power to have
or to give others the password to de-crypt stored information. This, specially, in case of a public control
or in case an order of exhibition is made to the company by the Court. Without that password, indeed,
those documents would become too much secret and without any possibility to be read.
In order to avoid the introduction of a fully encrypted system (in which information are available only if
a password is known), it would be possible to suggest a different solution, adopting a “mixed” system. In
order to do so, it would be required to store on the DLT only the encrypted copy of the data exchanged.
This would work as a system of ex post verification against possible alterations. The solution of making
public only the encrypted “trace” of the minutes, would protect company’s needs for secrecy while, at
the same time, guaranteeing the interested parties from possible alterations of their interventions made
during the meeting. Indeed, by applying the same cryptographic function to the result of the vote or to a
certain intervention, they will be able to evaluate the conformity between the vote expressed or the
intervention sent and what has been recorded within the DLT. In this way DLT transparency would
guarantee from alterations of the results of a meeting in the full respect of the company privacy.
5. At the base of the exercise of the administrative rights, there is the need to correctly identify their
owners. For this reason, it seems useful to focus on the importance of a correct identification of those
entitled to participate in companies meetings (both shareholder or director meetings), especially when
they are held using tools that facilitate the remote participation through audio or video conferencing
systems.

45
Usually the possibility of seeing a person or of hearing its voice guarantees a certain level of security in
relation to the fact that the person appearing on the screen or whose voice is heard is actually the one
holding the power of decision in a given meeting.
Unfortunately, recent technological developments have put the validity of this guarantee to the test. The
reference is to technologies, known as “deepfake”.
Deepfake softwares make possible to replace, even in real time, one person’s face or voice with those of
another. Those softwares uses artificial intelligence to faithfully reproduce the characters and voice of
someone as if he were in front of the camera, even if he is not there in the reality. To do so, it is
sufficient to provide the algorithm with images or videos of the person’s face to be replaced. Images that
today are easily available on the internet or through social media. Uploaded those photos on the
software, the system will gain the power to replace the face of the person really present in front of the
camera with that of the subject whose data has been collected. The possibility to create not a simple
image but completely new video material constitutes a serious danger, less dystopian than one can
imagine. This fact leads to rethink the instruments used to participate in a meeting at distance.
Therefore, there is a real need to introduce non-alterable systems that guarantee the identity of a
participant. As highlighted, “non alterability” is a guarantee of the adoption of a DLT systems. The
dangers of a technology that can reproduce and imitate virtual sounds or images can be contrasted only
with the adoption of a technology characterized by creating “objects” that cannot be reproduced.
A solution to the danger of deepfake technology could be the use of a crypto-asset with identifying
function. For instance, with reference to board meetings, identification tokens could be given to board
members at the time of their election. To be safer, it would be possible to connect the given crypto-asset
to its holder memorizing biometrical data to prevent its alienation. In this way, before participating in a
meeting, a member of the board could just make his token interact with a smart contract with the role of
confirming the possessor identity.
A similar solution could be implemented for identification of participants in a shareholder meeting.
This is true with reference to those company with a small shareholder base, in which the solutions
described in the paragraph 4.2 cannot be adopted.
The exposed solutions are the only ways, in which it could be possible to create a secure and
incorruptible system to ensure that the person who is interacting by phone or video call is the actual
holder of the right to vote and speak.
6. Under Italian company law, today CorpTech myth seems not real yet. As we have seen, representing
company participations through equity tokens is possible, but only under precise circumstances. The
exercise of economic and voting rights using DLT systems do not find legal obstacles but only some
technological ones that require the company to comply ex post with the law (in case of distribution of
assets) or to safeguards company privacy (in case of adoption of DLT permissionless). With regards to

46
identification issues, DLT systems provides an effective solution against the perils of deepfake
technology.
Analysing the relationship between DLT and the law, we find out the following results. On some
occasion we have seen that is the law to impede the introduction of DLT innovations (i.e. representation
and transfer of company’s participations). On others, it is DLT that is not enough “technological” (i.e.
exercise of administrative and voting rights). Finally, in other occasions, DLT helps law enforcement,
having the power of solving real problems (i.e. against perils of deepfake technology).
Therefore, CorpTech myth is not too far to be realized. However, in order to make the myth concrete,
technology (or maybe just people behaviour) need to slightly evolve. For instance, the problems of the
missing link between what happen on and off chain could be solved: or (i) by discovering new
technologies that could let upload money of a banking account on a blockchain or (ii) more simply, by
the adoption of Bitcoin for every day payments.
In conclusion, not always we have to wait the law or the technology to intervene to solve “our”
problems. Sometimes, we could just change our habits.

47
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[1] The term CorpTech seems to be used for the first time in L. Enriques and D. Zetzsche, Corporate
technologies and the Tech Nirvana Fallacy, European Corporate Governance Institute (ECGI) – Law

49
Working Paper No. 457/2019, 2019, p. 9-10 and it has been referred to all technological solution applied
to corporate governance systems, not only to those based on DLT.
[2] D. Yermack, Corporate Governance and Blockchains. Review of Finance, Oxford University Press,
2016, p. 17 ss.
[3] C. Van Der Elst and A. Lafarre, Bringing the AGM to the 21st Century: Blockchain and Smart
Contracting Tech for Shareholder Involvement. European Corporate Governance Institute (ECGI) –
Law Working Paper No. 358/2017, 2017, p. 16-20;
[4] D. Yermack, supra note 2, 2016, p. 23-24
[5] Those characteristics make smart contract suitable to be used for the execution of contracts. It is
from this fact that they took their name. For more information on the history, functioning and possible
applications of smart contract, please see S.L. Furnari, Validità e caratteristiche degli smart contract e
possibili usi nel settore bancario finanziario, in E. Corapi and R. Lener, I diversi settori del fintech,
Padova, 2019, p. 89 – 110. See also F. Sarzana Di S. Ippolito and F. M. Nicotra, Diritto della Blockchain,
Intelligenza Artificiale e IoT, Milano, 2018, p. 90-114, M. Raskin, The Law and Legality of Smart
Contracts, in Georgetown Law Technology Review 1:304, 2017, p. 306 ss, available at:
https://ssrn.com/abstract=2959166 and K. Werbach and N. Cornell, Contracts Ex Machina, in Duke
Law Journal 67:313, 2017, p. 102 ss. available at: https://ssrn.com/abstract=2936294
[6] To highlight their basic functioning, smart contract has been described as “online vending
machines”. Indeed, within the blockchain, they appear as autonomous agents who perform
predetermined actions in response of a precise input. See N. Szabo, Formalizing and Securing
Relationship on Public Networks, 1997, p. 1
[7] In this paper we will not consider the dematerializationregime, in which the physical document (or
just its circulation) is suppressed in favour of communications made by specific intermediaries. Its
functioning is very similar to a DLT system. Indeed, the transferring of shares are made possible
through the updating of a series of registers kept by the market management company. However, the
system works thanks to the inevitable interaction of financial intermediaries (some of them similar to
public entities, being their functioning subject to a precise regulation) whose participation is required
by the law. This fact makes this system inevitably “centralized” and unsuitable to the adoption of DLT
solutions by companies’ will. For more details on the dematerialization regime, please see R. Lener and
E. M. Musumeci, La gestione accentrata di valori mobiliari in Montetitoli, Mercati Finanziari, Giuffrè,
1994, p. 10 ss., and R. Lener, La «dematerializzazione» dei titoli azionari e il sistema Monte Titoli, in Il
diritto della banca e borsa. Studi e dibattiti, Giuffrè, 1989, p. 6 ss..
As already proposed by some scholars, the offer of tokens representing dematerialized shares is
abstractly possible, although it will involve a specific decision in this sense of the market management
company. Please see P. Lucantoni, Distributed Ledger Technology e infrastrutture di negoziazione e
port-trading, in R. Lener, Fintech: Diritto, Tecnologia e Finanza, Minerva Bancaria, 2018, p. 97 ss; A.

50
Pinna and W. Ruttenberg, Distributed ledger technologies in securities post-trading. Revolution or
evolution?, European Central Bank Occasional Paper Series 172, 2016, p. 1 ss; P. Paech, Securities,
intermediation and the blockchain: an inevitable choice between liquidity and legal certainty?, in
Uniform Law Review, 21 (4), 2016, p. 612 ss.
[8] See N. de Luca, Documentazione crittografica e circolazione della ricchezza assente, Rivista di
Diritto Civile, 2020. p. 124.
[9] N. de Luca, supra note 8, 2020, p. 110
[10] I. Kutufà, Azioni non emesse e autonomia nella circolazione, in Diritto Commerciale Interno e
Internazionale, G. Giappichelli Editore, Torino, 2013, 13 ss.
[11] N. de Luca, Circolazione delle azioni e legittimazione dei soci, in Diritto Commerciale Interno e
Internazionale, G. Giappichelli Editore, Torino, 2007, p. 283 ss.
[12] On this opinion, please see N. de Luca, supra note 8, 2020, p. 127-130.
[13] For further deatails on the alternative regime, please see N. de Luca, Crowdfunding e quote
«dematerializzate» di s.r.l.? Prime considerazioni (art. 100 ter, 2º co. bis e 2º co. quinquies, t.u.f.
introdotti dall’art. 4, 10° co., d. l. 24 gennaio 2015 n. 3, conv. dalla l. 24 marzo 2015 n. 33), NLCC, 2016,
1.
[14] Equity crowdfunding is an innovative financing instrument that let an entrepreneur to offer shares
of its company of the on the market in exchange for money to develop its entrepreneurial project. For
further details, please see N. de Luca, S. L. Furnari and A. Gentile, Equity Crowdfunding, in Digesto
delle Discipline Civilistiche: Sezione Commerciale, Utet Giuridica, 2017, p. 159-169.
[15] Illiquidity is one of the most relevant risk associated with an equity crowdfunding investment. This
is caused by the lack of an appropriate secondary market. For a precise list of pros and cons of equity
crowdfunding, please see S. L. Furnari, Market analysis, economics and success drivers of equity
crowdfunding, in M. G. Colombo and G. Giudici, Proceedings of the 3rd Entrepreneurial Finance
Conference, 2018, p. 8-9.
[16] Despite the apparent limitation of applicability of this circulatory regime, it seems still useful to
analyse its functioning and its possible application to DLT, considering how similar is equity
crowdfunding to an ICO. For the possibility to launch an ICO using the legal regime of equity
crowdfunding, please see S.L. Furnari, ICO in Italia: applicabilità della disciplina sull’equity
crowdfunding e suoi potenziali benefici, inR., Lener, Fintech: Diritto, Tecnologia e Finanza, Minerva
Bancaria, 2018, p. 145
[17] Article 100-ter, paragraph 2-quater, TUF

51
[18] To be more precise, the token released will not represent a participation of the company. This
because, according to article 100-ter, paragraph 2-bis, lett. b), no. 2, TUF, the intermediary can release
to participants a mere certificate whose transfer has no effect on the transfer of the property of the
quota. For this reason, the tokenreleased should be considered just as a part of the communication
mechanism that let the intermediary (and only him) to transfer the property of the quotas with the
recording on the register he keeps.
[19] See D. Yermack, Corporate Governance and Blokchains, in Review of Finance, Oxford University
Press, e da S. T. Howell, M. Niesser and D. Yermack, Initial Coin Offerings: Financing Growth with
Cryptocurrency Token Sales, in Finance Working Paper 564/2018, European Corporate Governance
Institute (ECGI), 2018.
[20] This is a widely known problem that limits blockchain potentiality. For instance, in blockchain
applications to food traceability, the linking role between what is on and off the chain is usually played
by certifying agents. While this solution may solve the problem, on the other hand it introduces new
intermediaries in a system that professes itself to be disintermediated, not solving another issue
consisting in the possible corruption of those intermediaries. Therefore, in those solutions, the
traditional principal-agent problem is just shifted on other subjects.
[21] For more information, please see R. Lener and A. Tucci, L’assemblea nelle società di capitali,
Giappichelli, 2000
[22] In this case it will be necessary to choose carefully the DLT most suitable for the concrete needs.
This is because each DLT has its own time rules about the recording of information. These rules may
require seconds or minutes before votes or interventions are recorded on the database. This is because,
like any transaction to be recorded on this infrastructure, all information must be validated by the
nodes. The order in which the nodes proceed with the validation depends on the amount of fee the
person who sends the transaction is willing to pay.
However, nothing prohibits that these problems can be solved using more performant DLT. This is not a
utopia. In this regard it sufficient to consider the improvement in terms of speed of recording
information that has been made by Ethereum blockchain in respect to Bitcoin. Here, Bitcoin time of 10
minutes for the addition of a new block (i.e. to record a transaction) has been overcome by Ethereum 15
seconds to perform the same activity.
[23] These systems could be implemented thanks to article 2215-bis c.c., already mentioned, which
allows to keep company’s books electronically.
[24] Permissionless DLTs can ensure a higher level of security than permissioned DLTs. This is true on
the assumption that the more are the nodes, the less is the danger of a takeover of its majority that
could alter the information contained therein. In brief, permissionless DLT offer a great level of
decentralization. On the other hand, by definition their content is potentially “transparent” and
therefore open to public consultation.

52
[25] For more information with regards to the compatibility between privacy and DLT, please see F.
Bassan, Innovazione tecnologica e regolazione nell’Unione Europea. I mercati dell’algoritmo tra
concorrenza e protezione dei dati, in S. Dominelli e G. L. Greco, I Mercati dei servizi fra regolazione e
governance, Giappichelli, 2019, p. 19-20
[26] As briefly explained in section 2, nodes are those who will have the powers of detention, validation
and (potentially) modification of the copy of the register they held. On a company level, it is easy to note
that whatever category of subjects will be selected, it is not possible to identify a solution that has not
weak points. For instance, in the case in which the holders of the nodes are chosen in all the employees
of the company, it is evident how the economic subordination to other company figures involves a
serious danger to the independence of the nodes so chosen. A similar problem could arise considering
the category of the shareholders. Here the biggest issue concerns the choice on how to divide the
“decisional weight” to be given to each node. If, indeed, all shareholders have equal powers in holding
the DLT register, it is not difficult to imagine the possibility that the minority, where numerically
greater than the majority, could technologically overturn the corporate balance. Similar reasoning, but
in the opposite sense, in the event that the majority shareholder also holds the majority of the decision-
making power attributed in the possession of the nodes. In this scenario, the majority will be provided
with an additional tool to prevail even more easily over the minority. Finally, even the decision to
entrust the holding of the nodes to an even wider circle of subjects, i.e. the stakeholders of the company,
if on the one hand allows to solve some of the problems raised above, on the other would leave the field
open to further uncertainties. The first and most important problem would regard precisely the criteria
with which identifying the stakeholders, combining their role (e.g. bondholders, creditors, suppliers)
with the existence of the current interest in obtaining access to important and non-public documents
that will be chosen to be kept on the DLT register.
Author
Raffaele Lener is full professor of law and economics at University Tor Vergata of Rome
Salvatore L. Furnari is Ph.D. candidate at University Tor Vergata of Rome