Are Belgian Organizations Ready For Blockchain And DAO?

Published date22 February 2023
Subject MatterCorporate/Commercial Law, Technology, Corporate and Company Law, Contracts and Commercial Law, Fin Tech
Law FirmAgio Legal
AuthorMr Steven De Schrijver and Maxim Vlerick

Are Belgian organizations ready for blockchain and DAO?


The Internet and its numerous technological applications have become the backbone of our society by facilitating the exchange of information and data. Blockchain adds another layer by allowing parties to conclude drafted contracts when predetermined terms and conditions are met and thus without the intervention of a central, trusted third party. But is Belgium ready for this technology and how can it help a Belgian organization? In this article, we review the regulatory framework of smart contracts in Belgium, and more specifically Decentralized Autonomous Organizations (DAO), and highlight how a Belgian organization can become more digital.

In essence, a smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein are stored and replicated on a blockchain network. Smart contracts allow for the automation of the contracting processes, as well as the enforcement of the terms of the contract. They can be used to facilitate, verify, and enforce the negotiation or performance of a contract. Blockchain implemented applications save time and money, reduce fraud and increase efficiency in the process since the data of the register is maintained by each user of the system.

A Decentralized Autonomous Organization (DAO) is one of the most anticipated applications of blockchain technology, where the rules of governance and decision-making (the articles of association or bylaws) of an organization are laid down in smart contracts. In principle, they cannot be violated once these are in force. This guarantees a better management of rights within and internal and external supervision of the organization. In addition, DAOs allow for the involvement of a wide range of stakeholders - whether or not they know each other - in the governance of the organization.

In its most simplistic form, companies can be seen as an amalgam of commitments to various stakeholders such as shareholders, employees, consumers, suppliers, etc. These commitments could be executed automatically, thereby reducing the need for human intervention. Smart contracts enable us to coordinate in a trustless, decentralized and anonymous way to make collective decisions for a certain cause. Trust is needed, but this trust is based on the code in the smart contract. But is the Belgian corporate (governance) landscape ready to become digital?

The digital wind of change

The platform economy backed up by our project culture has disrupted the traditional governance model of a centralized and hierarchical organization. Organizations are increasingly opting for a flat rather than a hierarchical approach. For example, the Agile & Lean method advocates granting smaller teams the necessary autonomy and responsibility to carry out decisions and tasks. Eliminating (superfluous) intermediate levels leads to faster and more qualitative decisions. The digital transformation trend in which many companies are fundamentally changing their existing business and governance model by applying new technologies is already taking place. This paradigm shift of decentralization can be taken to new levels by blockchain technology and smart contracts. DAO principles such as transparency, a collaborative mindset and increasing stakeholder participation could bridge the gap between the current digital transformation landscape and a fully operational DAO implementation.

Digitalization is also (slowly) on the rise within the Belgian corporate world. The new Companies and Associations Code makes it possible in certain procedures to communicate validly through e-mail and most importantly allows limited liability companies to keep their shareholder register electronically. Smart contracts that are cryptographically-secured on the blockchain can play a very important role to make an...

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