changes in law - legal aspects of new technologies

The Regulation of the Council of Ministers of
9 March 2020 on Documents Connected with Banking Activities on IT Data
Carriers enters into force on 19 September 2020. This is a good occasion
to discuss the expanded legal significance of the electronic seal.

The new regulation supersedes the prior executive
regulation under Art. 7 of the Polish Banking Law. The noteworthy features
of the new regulation include the systemic consolidation of the terminology
through introduction of concepts consistent with the EU’s eIDAS Regulation (910/2014)
and a direct reference to distributed ledger technology. (I will address the
treatment of this technology in a separate article.)

It appears that inclusion in the new Polish regulation of terminology consistent with the eIDAS Regulation is more than a mere technicality. A closer analysis of the provisions raises the question of whether the regulation in fact expands the legal significance of the electronic seal.

Does a company or limited partnership have to
have its own website? Does it have to operate the site itself? What information
must be posted there? Practical pointers under the amended Commercial Companies
Code

An amendment to the Commercial Companies Code entered into force at the start of 2020, imposing on joint-stock companies and joint-stock limited partnerships an obligation to operate a website and to post certain information there for stockholders (as we previously reported here).

Although
the new regulation applies to all joint-stock companies, in practice it changes
little for public companies, which were already subject to much more extensive
requirements, and thus we do not discuss public companies further in this
article.

The new regulation should be examined more closely, as it has generated (probably unintentionally) certain doubts as to what the new obligation entails.

Across all fields of life we witness groundbreaking changes brought by new technologies. Progressive digitalisation is not sparing the financial markets, which are indeed perceived as an area that will be shifted almost entirely into the digital world. The goods traded on financial markets rarely take material form, but are typically some type of abstract right.

The basic and most obvious challenge for digitalisation of financial markets is to eliminate paper where entries in IT systems prove to work better. Traditionally and historically, securities have taken paper form, but that clearly does not meet the requirements of contemporary trading on financial markets studded with state-of-the-art technologies.

On 1 March 2020, the regulations on the simple stock company (PSA) will come into force. They will make it possible to keep a register of shareholders of such companies using blockchain technology. For some, this is a minor technical regulation, while for others it is a truly revolutionary breakthrough in the legal system, enabling tokenisation of shares in Polish companies. How will it really be?

In the summer of 2018, we had the opportunity to participate in the analysis of the draft PSA regulations by the Coalition for Polish Innovation. The provision on the possibility of maintaining a PSA’s register of shareholders using a dispersed and decentralised database was unexpectedly included in the draft and immediately met with considerable interest. It was a complete novelty in the Polish legal system. The surprise was all the greater as, at the same time, we observed the first activities of regulators aimed at limiting uncontrolled development of blockchain technology.

The provision allowing a register of PSA shareholders to be maintained on blockchain is not as revolutionary as it seems. We are a long way from full tokenisation and decentralisation of PSAs. This is determined by other PSA provisions showing much more attachment to traditional legal institutions. Nevertheless, this provision opens up a lot of new possibilities and creates space for interesting legal experimentation with blockchain technology. It is worth taking advantage of this opportunity to create solutions that in the future will encourage regulators and lawmakers to open up the legal system more courageously to the technology of decentralised registers.

The bill to amend the Criminal Code currently being processed (Sejm print no. 3451) is generating lots of controversies. For persons involved in FinTech, the draft of the proposed new Art. 279a of the Criminal Code is particularly interesting. It is another attempt to define new forms of commission of offences on financial markets for purposes of the criminal law. This attempt once again demonstrates what a difficult task faces lawmakers.

The problem is not new. Progress in digitalisation is accompanied by dynamic growth in various types of digital assets. The law does not keep pace with this development, and consequently is unable to ensure adequate protection to participants in digital economic exchange. This makes it necessary to adapt the existing regulations to suit the realities of the new economy.

The Principality of Liechtenstein will become one of the first countries with its own act on trusted technologies, approved by the Liechtenstein parliament at the first reading on 6 June 2019.

As reported by local newspapers Volksblatt and Liechtensteiner Vaterland, the parliament of this small Alpine state approved a new act on trusted technologies, and Prime Minister Adrian Hasler and his team thus achieved their aim. For nearly two years the government of Liechtenstein has been working on ensuring that the country becomes a global pioneer in blockchain technologies.