Verify shareholder proxy votes digitally
Sector: Quaternary sector · Industry: Risk management and corporate governance · Organisation: Banco Santander, Broadridge Financial Solutions · Maturity level: Pilot
In May 2018, Banco Santander and Broadridge Financial Solutions piloted a distributed ledger solution to record shareholder votes at an annual general meeting. During the meeting, a digital shadow register ran in parallel to track proxy voting transparently. This initiative demonstrated the potential of digital ledgers to enhance traceability and operational efficiency in corporate governance.
Documentation status
- Project status: Pilot (as of 17 May 2018) — The pilot project was successfully completed in May 2018 alongside the annual general meeting.
- Evidence: Evidence medium
- Editorial review: pending
Description
Banco Santander and Broadridge Financial Solutions demonstrated in May 2018 the practical applicability of distributed ledger technology in proxy voting at a general meeting. In traditional proxy voting processes, votes pass through complex chains of custodian banks, central securities depositories and brokers, often leading to a lack of transparency and delays. The pilot showed that distributed ledger technology can act as a digital shadow register to significantly increase transparency and efficiency in voting processes.
The joint project by Banco Santander and Broadridge Financial Solutions was implemented during Santander’s ordinary general meeting in Spain. Broadridge provided a DLT solution for which the company had previously obtained a US patent for proxy voting. The system ran in parallel to the conventional systems of the meeting and recorded shareholders’ votes in an immutable digital shadow register. The aim was to verify whether a blockchain-based architecture can ensure data integrity in proxy voting and reduce the manual reconciliation required between financial intermediaries. The successful completion of the pilot demonstrated that voting rights can be processed efficiently, promptly and verifiably via a distributed ledger.
Perspectives
B2B — organisations perspective
For issuers, custodian banks and brokers, the solution provides a consistent data basis for counting shareholder votes. Intermediaries can track votes in real time and avoid discrepancies between different systems.
B2C — consumers perspective
Private investors indirectly benefit from more reliable confirmation that their votes cast at the general meeting were properly counted and recorded.
Employees perspective
Employees in back office and clearing units are relieved from manual reconciliation tasks. Instead of manually checking lists, they monitor automated data flows in the ledger.
Benefits
General
- Increased transparency in the voting process
- Immutable documentation of all proxy votes
- Faster processing of voting rights notifications
B2B — organisations
- Reduction of reconciliation efforts between financial intermediaries
- Near real-time insight into voting rights status for the issuer
- Lower risk of errors in complex voting rights chains
B2C — consumers
- Greater certainty about the actual counting of one’s own vote
Employees
- Relief from manual list management and validation
- Automated protocol creation for audit purposes
Challenges
General
- Harmonisation with national stock corporation law requirements
- Interface connection to historically grown legacy systems
B2B — organisations
- Willingness of all involved intermediaries to jointly use the ledger
- Regulatory recognition of purely digital shadow registers
Employees
- Need for technical training in ledger management
Technology foundation
Permissioned Distributed Ledger Technology (DLT) based on a proprietary Broadridge prototype for proxy voting, enabling tamper-proof and auditable recording of voting rights data.
Implementation examples
Piloting a DLT shadow register for general meeting voting
The traditional processing of proxy voting rights through multi-tier custody chains is time-consuming, prone to errors, and offers little end-to-end transparency for issuers and shareholders.
Banco Santander conducted a DLT pilot project together with Broadridge Financial Solutions alongside their Annual General Meeting. The system created a digital shadow register to record and validate proxy votes.
In May 2018, Banco Santander used a Distributed Ledger Technology developed by Broadridge at their Annual General Meeting. The pilot application ran alongside the official voting channels to map the voting behaviour and proxies of institutional investors as a digital shadow register. It tested how transparency and speed of vote counting could be improved through DLT without jeopardising the legally required AGM processes. The project confirmed the technical feasibility of blockchain-supported proxy voting processing in live operation.
Avoidance of data inconsistencies and elimination of non-transparent reporting paths in proxy voting representation.
Tags
Proxy Voting, Corporate Governance, Distributed Ledger, General Meeting, Shareholder Rights