Posted on Categories blockchain, changes in law

Blockchain and outsourcing

The Polish regulations directly referring to blockchain will be joined on 19 September 2020 by the Regulation of the Council of Ministers of 9 March 2020 on Documents Connected with Banking Activities on IT Data Carriers. It expressly permits banks to store documents connected with banking activities on blockchain.

Under §5(2) of the new regulation, “A document may be stored in the form of a distributed and decentralised database. The bank shall operate the database in a manner ensuring the security and integrity of the documents contained in the database.” The phrase “distributed and decentralised database” used in this provision refers to blockchain, as is expressly stated in the justification to the draft of the regulation. Moreover, the identical phrase is used in other legal acts to refer to blockchain technology (e.g. in the provisions of the Commercial Companies Code devoted to the ledger of stockholders).

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Posted on Categories changes in law, electronic identification

Expanded legal significance of electronic seals

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.

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Posted on Categories changes in law

Websites of private joint-stock company or joint-stock limited partnership

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.

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Posted on Categories blockchain, changes in law

Dematerialisation of securities in Poland: Chaos or a brilliant plan?

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.

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Posted on Categories blockchain, changes in law

Can PSA shares be tokenised?

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.

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Posted on Categories changes in law

Another attempt to capture the essence of digital money

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.

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