Estonia, Financial Services, Good for Business, Innovations, Markets and Companies, Security, Technology

Annual General Meetings (AGM) tend to be necessary high-cost events with, on average, fairly low shareholder participation. As cross-border investments grow, there is more pressure for greater investor engagement, calling for a secure, cost-effective and flexible solution that facilitates shareholder participation and voting from a distance, Nasdaq said in a progress update on the project Monday.

Nasdaq said it has engaged with various industry and regulatory stakeholders along the way in order to adapt to market demand and expectations, and has based its test project in Estonia for reasons including Nasdaq Tallinn and its Estonia central securities depository (CSD) having over 15 years of experience in providing general meeting services, Estonia's open-minded attitude towards technology and fintech innovation, and Estonia having secure digital IDs, which can be used to complete the KYC (know your customer) requirement.

"We currently have a functioning proof of concept (PoC) with four web-based user interfaces in Estonia. The PoC can now identify users based on their Estonian digital ID – either via Estonian ID card or e-Residency card," Nasdaq said.

It said that as for investors, they now have the ability to view information about meetings and vote before or during the meeting, use the system to transfer their voting rights to a proxy, monitor how the proxy voted on their behalf, and, if needed, recall the proxy, and review previous meetings and transactions based on the indelible record the system creates. Custodians can also vote on behalf of their clients or distribute voting rights to beneficial owners quickly and easily via file upload. Ownership information, vote and voting right token transfers are now recorded to the blockchain ledger.

Nadaq said that, most recently, they successfully tested the solution in cooperation with the recently listed Nasdaq Tallinn company LHV Group – an Estonian financial group that also has experience in the blockchain field with wallet app Cuber  – as well as with other stakeholders.

"We tested the prototype with several issuers of the Tallinn stock exchange, such as LHV Group, Merko Ehitus, Tallinna Kaubamaja Grupp, and are planning to continue doing it on an ongoing basis with others. In addition to the Estonian market a prototype of the system has been presented also internationally and the feedback so far has been positive," Hedi Uustalu, head of issuer service at Nasdaq Baltic, told. She said the e-votes taken so far have been conducted purely for testing purposes at enacted shareholder meetings.

Nasdaq pointed out that Estonian citizens are issued national ID cards containing RSA tokens that can be used for two factor ID authentication when combined with a PIN. Non-citizens are able to obtain an e-Residency card with the same type of ID keys as well. As expected, pilot test feedback showed that support for mobile devices and a custom mobile e-voting application would further enhance the user experience.

Nasdaq launched the pilot program in February 2016

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For Nasdaq the project in e-voting is the second solution based on blockchain technology, after the Nasdaq Linq platform for trading in shares of non-public companies successfully launched last year.