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Corporate America’s ballots are getting the blockchain treatment for the first time in a new test by proxy vote processor Broadridge Financial Solutions Inc.
The digital ledger technology will be used at a handful of U.S.-listed companies this year in tandem with Broadridge’s existing infrastructure, which underpins the vast majority of votes that investors cast on matters such as executive pay and director elections in North America.
Blockchain will allow for a shared record of the shareholder voting process, according to Lyell Dampeer, who’s leading the trials at Broadridge. The process itself won’t change, he said.
“It’s a ledger that replaces multiple recordkeeping systems by creating a single record,” Dampeer told Bloomberg Law. Information, including who can vote and how the vote turns out, will be kept in one blockchain-based record, as opposed to the multiple records now maintained by banks, brokers, and others.
“Those need to be reconciled in real time,” he said. “That’s where blockchain could add real value.”
The firm previously piloted the technology when shareholders voted at Spanish bank Banco Santander SA’s annual meeting last year. JPMorgan Chase & Co. and Northern Trust Corp. also participated as custodians of the shares being voted.
Santander will use blockchain again this year, along with five to 10 more companies based in the U.S., Dampeer said, declining to name them.
A spokesman for Santander declined to comment.
Blockchain has the potential to make voting more efficient, transparent, and secure, but only if companies, their investors, and others involved in voting all agree to use it. Until then, “it’s difficult to realize the full value,” Dampeer said, because Broadridge is still running its traditional vote process in parallel.
“That said, we strongly believe we need to continue to explore this to understand if we can create value beyond what the current system provides,” said Dampeer, who is president of Broadridge’s investor communication group.
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