In February 2016, Nasdaq announced that they would introduce a blockchain-based program in Estonia to help improve the country’s e-Residency shareholder participation. This platform would allow shareholders of companies listed on the Tallinn Stock Exchange to cast votes digitally, without requiring their physical presence at a meeting. The program’s initial launch in Estonia was meant to be a pilot and proof of concept.
During early 2017, Nasdaq heralded the pilot program as an overwhelming success and said that it would continue to explore potential applications of their blockchain-based e-voting platform.
More than ten months after that announcement, on 22 November, 2017, Nasdaq revealed their agreement with Strate Ltd., the South African Central Securities Depository (CSD), to bring their electronic voting platform to the country. This move marks the first true implementation of Nasdaq’s platform and could signal a worldwide shift to blockchain-based shareholder voting.
Key shareholders of a particular company sometimes have to express their votes on certain issues or resolutions. Under such circumstances, a postal ballot would have to be issued to all shareholders. They would then have to approve or reject the company’s proposition via a return post. This process dates back several decades and at one point, is how every country mandated the casting of votes for governance or otherwise.
The postal ballot system is not only time-consuming but also requires massive amounts of company resources and expenditure. As a direct result of these limitations, many countries around the world have been attempting to digitize their voting infrastructure. Electronic voting automates a large amount of the vote casting process and makes ballot collection effortless for both, shareholders and companies. One of the primary concerns with this paradigm shift is security and is something that Nasdaq’s blockchain-based solution is trying to address.
In addition to replacing a now-antiquated system, companies are also seeing increased investment from foreign shareholders. Electronic voting transcends the problem of borders and facilitates shareholder votes from abroad, as long as an internet connection is available. Nasdaq hopes that its blockchain technology will encourage even more foreign investment in countries that it is introduced in.
Nasdaq’s official press release cites a myriad of potential benefits to shareholders, CSDs, exchanges and other players who would be involved in the voting process. The company believes that given enough time, their e-voting system will effectively transform the entire process.
With the massive influx of new cryptocurrencies and the success of existing ones in 2017, startups and governments are taking a second look at blockchain technology that happens to underline the existence of these currencies. Companies that added the word “blockchain” to their names have seen their stock rise in price almost overnight. Governments have also expressed heavy interest in implementing blockchain technology in everything from nationwide financial infrastructure to urban utility programs.
Other implementations of electronic voting already exist in some nations, albeit without blockchain integration. For instance, India forced companies to offer e-voting facilities to its shareholders in 2014. It remains to be seen whether more countries will follow suit and adopt the blockchain, either Nasdaq’s or otherwise, to increase shareholder participation in company voting.