Edited by Vanessa Mak, Eric Tjong Tjin Tai and Anna Berlee
Chapter 8: Legal tech and blockchain for corporate governance and shareholders
This chapter looks at how legal tech can offer smart solutions for classical corporate governance inefficiencies, like the agency problem and the old-fashioned Annual General Meeting of Shareholders (hereinafter: the AGM). This chapter focusses on the smart solutions of legal tech, thereby investigating and critically assessing its benefits and risks in the field of corporate governance and the AGM. The chapter provides a general introduction to the agency problem and the associated agency costs between shareholders and their corporate board members in corporate governance and introduces blockchain technology as a solution to the agency problem, thereby discussing the decentralized autonomous organization (hereinafter: The DAO). Although blockchain offers the possibility to create a decentralized peer-to-peer network, we will see that The DAO had still some governance problems. Therefore, the authors consider blockchain and smart contracting technology to decrease the monitoring and bonding costs of companies, by introducing and evaluating a blockchain based AGM.
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