Picture: ISTOCK
Picture: ISTOCK

Strate, the central securities depository that settles stock market trades, aims to introduce a blockchain by mid-2018 that would allow e-proxy voting by shareholders of listed companies, says Tanya Knowles, managing executive of Fractal Solutions, a division of Strate.

Currently, shareholders who are unable to attend companies’ AGMs have to fill in a form to submit proxy votes on resolutions. Transfer secretaries tally these votes and submit them to the company, which on that basis adopted or rejected resolutions, Knowles explains.

"The blockchain solution would enable the shareholder to submit a vote online using an authorised login. This would be automatically processed, removing the potential for human error and giving the company voting results in real time," Knowles said.

A blockchain is a shared and replicated ledger that exists on the internet, where each block represents transactions that cannot be duplicated or erased.

Last year, cement producer PPC had to revise the voting results of its AGM after its transfer secretary, Computershare, inadvertently failed to count some shareholder proxies.

Voting by blockchain "avoids fraud, manipulation and mistakes", said director at Norton Rose Fulbright, Georg Kahle.

There were very few company secretaries who would not welcome a blockchain voting system, said Carina Wessels, group company secretary at Exxaro Resources. Even where votes were submitted electronically, such as via e-mail, there was still manual intervention in capturing the data, which introduced risks, she said.

Strate would soon propose to its board a partnership with an international vendor to deliver the blockchain, said Knowles.

A project to move the entire securities processing system onto a blockchain, if agreed to by the market, was still three to five years away, she said.

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