VIRTUAL LIMITED LIABILITY COMPANY The Legal Entity Becomes Virtual. - PowerPoint PPT Presentation

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of issuing compliant securities on the blockchain ● No way of tokenizing assets CLASSICAL SHARED CAPITAL THEORY BECAME OUTDATED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/