It’s important to maintain accurate stock records. The ownership of your company is at stake. In the 40 years we’ve been in business, we’ve heard some sad stories about how fraudsters have gone to great lengths to steal companies right out from under the watchful eye of the real owners, because their stock records were ignored and inaccurate.
Courts sometimes believe the fraudulent records over the “real” ones when the real records are not kept properly.
However, with blockchain technology you can now, for the first time, keep stock records that will be accepted as “immutable” by the courts. This means that your stock records can be all you’ll need to prove your case, if you’ve maintained digital stock transactions with a blockchain database.
We believe StockTreasury is the first, and currently the ONLY, digital stock ledger available with blockchain security. We think you’ll find StockTreasury easy to use and extremely reasonably priced compared to Carta and other non-blockchain SaaS platforms.
A digital stock ledger is now a legal option for Delaware corporations. And blockchain technology makes it the most reliable option, preventing a host of problems plaguing paper records.
Paper is the problem. Most private corporations rely on out-of-date capital stock management methods—usually paper records, or sometimes Excel files stashed on someone's private computer. This method can work, if you’re supremely organized, trust your fellow shareholders implicitly, and make very few changes to your stock ledger. But for the rest of us, who live in the world where stuff happens, human error is inevitable.
Delaware law requires that some kind of stock ledger be kept, but it does not require changes or transfers to be filed with external parties—meaning it’s often your word against your fellow shareholders in the event of a dispute.
Many corporations, especially those with few shareholders, task one shareholder with keeping this ledger. Their system is an honor system, where one indisputable source document filed with an external party does not exist. This inevitably leads to confusion and conflict among owners. With a paper system there is sometimes disagreement about who owns what. There are double entries. There are unrecorded transactions. Stock transfers go undocumented, certificates get lost, misplaced, or even stolen.
In 2017, the Delaware General Assembly made the momentous change in their corporate laws allowing stock records to be kept digitally. The Delaware General Corporation Law (DGCL) was amended, and a digital solution to this problem permitted: blockchain technology coupled with electronic networks and databases for record keeping.
You’ve probably heard of blockchain. It’s the technology behind StockTreasury that guarantees absolute immutability. This is state-of-the-art technology that benefits your corporation and business. Data is constantly and instantly updated to the database, which is stored in multiple locations. It's an incorruptible digital ledger that eliminates the problems experienced with paper stock ledgers, and now it is available to use specifically for Delaware corporations. We at Harvard Business Services are recommending this technology in a new SaaS product called StockTreasury. No more confusion. No more arguments. Your stock ledger can now be immutable.
StockTreasury is a web and mobile platform that allows corporations to quickly and easily issue, transfer, and track capital stock. Each and every transaction is recorded and timestamped using defense-grade Guardtime KSI blockchain technology, making transactions immutable and instantly verifiable. (Guardtime KSI is the technology used to secure Europe’s e-voting and e-governance functions.)
This means potential stock challenges from investors, partners, employees, or scammers can all be countered with irrefutable proof. It’s proof that qualifies as evidence in a lawsuit and that satisfies IRS regulations. StockTreasury means one less potential headache, and the ability to re-channel your energy to areas more exciting than regulation and compliance.
Account setup is done using ultra-secure, multi-factor authentication. It is convenient too—since your corporation is registered in Delaware, and since we have access to the Delaware Corporation Database as your Agent, we will simply download your corporate information directly, assuring that your stock authorizations are accurate from the inception of your company. Once onboarding is complete and your account is ready, you can log in using an integrated authentication mobile app called PrimeSigner, so that only you and those you authorize can access your records.
Typically, when you first set up a corporation, you issue stock to yourself and perhaps a couple of co-founders. As your company grows, StockTreasury becomes more valuable, maintaining digital stock records with perfection. As the administrator, only you can issue stock, add stockholders, perform transfers of shares, and produce and distribute a list of stockholders entitled to vote. Individual stockholders may have direct access to their personal account so they can have 24/7/365 access to their investment details and, within the constraints of the stock they own, effortlessly buy or sell shares. All transfers are stored in the stock ledger and can be seen by authorized users.
We, at Harvard, are very excited about StockTreasury and believe it will become universal quickly, because it is so simple to use, so irrefutably accurate, and so inexpensive. We’ve always been early adaptors to innovative technology when it can add value to our service for our clients. We think StockTreasury fulfills this criterion perfectly. After all, what is more valuable to you than your company’s stock?
Note: The above is the review of the author, Rick Bell, the Founder and Board Chair of Harvard Business Services, Inc. and Editor-in-Chief of our Blog. All opinions expressed are his exclusively. Harvard Business Services, Inc. is not connected in any way with Stock Treasury and our reporting should not be considered as an endorsement. We bring this unique SaaS platform to our readers' attention, after a review process, because it has been very successful for many of our clients.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such sourceâ€™s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.