HomeLegislativeMinnesota Legislature Considering a Bill to Allow for “Tokenized” Shares of Stock

Minnesota Legislature Considering a Bill to Allow for “Tokenized” Shares of Stock

Summary:

On June 25th, 2021 a bill was introduced (by Munson, Bahr and Mortensen) to the Commerce Finance and Policy committee to allow Certificate Tokens to be issued in place of stock shares.  The following is the most recent version being considered.

The Current Version – as introduced

                                                        A bill for an act
relating to corporations; allowing certificate tokens to be issued in place of shares
of stock; amending Minnesota Statutes 2020, sections 302A.011, by adding
subdivisions; 302A.111, subdivision 4; 302A.401, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2020, section 302A.011, is amended by adding a subdivision
to read:

Subd. 4a.

Blockchain.

“Blockchain” means a digital ledger or database that is
chronological, consensus based, decentralized, and mathematically verified in nature.

Sec. 2.

Minnesota Statutes 2020, section 302A.011, is amended by adding a subdivision
to read:

Subd. 5a.

Certificate token.

“Certificate token” means a representation of shares that
is (1) stored in electronic format, (2) able to be transmitted electronically to the issuing
corporation, the person to whom the certificate token was issued, and any transferee, and
(3) either:

(i) entered into a blockchain or other secure, auditable database; or

(ii) linked to or associated with the certificate token.

Sec. 3.

Minnesota Statutes 2020, section 302A.111, subdivision 4, is amended to read:

Subd. 4.

Optional provisions; specific subjects.

The provisions in paragraphs (a), (g),
(q), (r), and (u) may be included in the articles.

The provisions in paragraphs (b) to (f), (h) to (p), (s), and (t), and (v) may be included
either in the articles or the bylaws:

(a) the members of the first board may be named in the articles (section 302A.201,
subdivision 1
);

(b) a manner for increasing or decreasing the number of directors may be provided
(section 302A.203);

(c) additional qualifications for directors may be imposed (section 302A.205);

(d) directors may be classified (section 302A.213);

(e) the day or date, time, and place of board meetings may be fixed (section 302A.231,
subdivision 1
);

(f) absent directors may be permitted to give written consent or opposition to a proposal
(section 302A.233);

(g) a larger than majority vote may be required for board action (section 302A.237);

(h) authority to sign and deliver certain documents may be delegated to an officer or
agent of the corporation other than the chief executive officer (section 302A.305, subdivision
2
);

(i) additional officers may be designated (section 302A.311);

(j) additional powers, rights, duties, and responsibilities may be given to officers (section
302A.311);

(k) a method for filling vacant offices may be specified (section 302A.341, subdivision
3
);

(l) a certain officer or agent may be authorized to sign share certificates (section
302A.417, subdivision 2);

(m) the transfer or registration of transfer of securities may be restricted (section
302A.429);

(n) the day or date, time, and place of regular shareholder meetings may be fixed (section
302A.431, subdivision 3);

(o) certain persons may be authorized to call special meetings of shareholders (section
302A.433, subdivision 1);

(p) notices of shareholder meetings may be required to contain certain information
(section 302A.435, subdivision 3);

(q) a larger than majority vote may be required for shareholder action (section 302A.437);

(r) voting rights may be granted in or pursuant to the articles to persons who are not
shareholders (section 302A.445, subdivision 4);

(s) corporate actions giving rise to dissenter rights may be designated (section 302A.471,
subdivision 1
, clause (g));

(t) the rights and priorities of persons to receive distributions may be established (section
302A.551); and

(u) a director’s personal liability to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director may be eliminated or limited in the articles
(section 302A.251, subdivision 4).; and

(v) the representation of share certificates in the form of certificate tokens (section
302A.401, subdivision 5).

Nothing in this subdivision limits the right of the board, by resolution, to take an action
that may be included in the bylaws under this subdivision without including it in the bylaws,
unless it is required to be included in the bylaws by another provision of this chapter. Nothing
in this subdivision limits the permissible scope of a shareholder control agreement under
section 302A.457.

Sec. 4.

Minnesota Statutes 2020, section 302A.401, is amended by adding a subdivision
to read:

Subd. 5.

Certificate tokens.

A corporation may issue all or a portion of the corporation’s
shares as certificate tokens. The electronic message, command, or transaction that transmits
the certificate tokens to the data address to which a certificate token was issued must be
authorized at the time of issuance by a message, command, or transaction that is signed
with the network signatures of two officers designated in the bylaws or by the board of
directors of the corporation.

 

 

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