An `ERC-20` compatible token that conforms to [Delaware State Senate, 149th General Assembly, Senate Bill No. 69: An act to Amend Title 8 of the Delaware Code Relating to the General Corporation Law](https://legis.delaware.gov/json/BillDetail/GenerateHtmlDocument?legislationId=25730&legislationTypeId=1&docTypeId=2&legislationName=SB69), henceforth referred to as 'The Act'.
The recently amended 'Title 8 of the Delaware Code Relating to the General Corporation Law' now explicitly allows for the use of blockchains to maintain corporate share registries. This means it is now possible to create a tradable `ERC-20` token where each token represents a share issued by a Delaware corporation. Such a token must conform to the following principles over and above the `ERC-20` standard.
3. Each token MUST correspond to a single share, each of which would be paid for in full, so there is no need to record information concerning partly paid shares, and there are no partial tokens.
4. There must be a mechanism to allow a shareholder who has lost their private key, or otherwise lost access to their tokens to have their address `cancelled` and the tokens re-issued to a new address.
By using a `DGCL` compatible token, a firm may be able to raise funds via IPO, conforming to Delaware Corporations Law, but bypassing the need for involvement of a traditional Stock Exchange.
There are currently no token standards that conform to the `DGCL` rules. `ERC-20` tokens do not support KYC/AML rules required by the General Corporation Law, and do not provide facilities for the exporting of lists of shareholders.
While the `ERC-721` token proposal allows for some association of metadata with an Ethereum address, its uses are _not completely aligned_ with The Act, and it is not, in its current form, fully `ERC-20` compatible.
The Securities Exchange Commission (SEC) has additional requirements as to how a crowdsale ought to be run and what information must be made available to the general public. This information is however out of scope from this standard, though the standard does support the requirements.
For example: The SEC requires a crowdsale's website display the amount of money raised in US Dollars. To support this a crowdsale contract minting these tokens must maintain a USD to ETH conversion rate (via Oracle or some other mechanism) and must record the conversion rate used at time of minting.
Also, depending on the type of raise, the SEC (or other statutory body) can apply limits to the number of shareholders allowed. To support this the standard provides the `holderCount` and `isHolder` functions which a crowdsale can invoke to check that limits have not been exceeded.
Implementers of a crowdsale, in order to comply with The Act, must be able to produce an up-to-date list of the names and addresses of all shareholders. It is not desirable to include those details in a public blockchain, both for reasons of privacy, and also for reasons of economy. Storing arbitrary string data on the blockchain is strongly discouraged.
Implementers should maintain an off-chain private database that records the owner's name, residential address, and Ethereum address. The implementer must then be able to extract the name and address for any address, and hash the name + address data and compare that hash to the hash recorded in the contract using the `hasHash` function. The specific details of this system are left to the implementer.
It is also desirable that the implementers offer a REST API endpoint along the lines of
GET https://<host>/<pathPrefix>/:ethereumAddress -> [true|false]
A traditional share register is typically managed by a Transfer Agent who is authorised to maintain the register accurately, and to handle shareholder enquiries. A common request is for share certificates to be reissued in the case where the shareholder has lost or destroyed their original.
Token implementers can handle that via the `cancelAndReissue` function, which must perform the various changes to ensure that the old address now points to the new one, and that cancelled addresses are not then reused.
### Permissions management
It is not desirable that anyone can add, remove, update, or supersede verified addresses. How access to these functions is controlled is outside of the scope of this standard.
The proposed standard offers as minimal an extension as possible over the existing `ERC-20` standard in order to conform to the requirements of The Act. Rather than return a `bool` for successful or unsuccessful completion of state-changing functions such as `addVerified`, `removeVerified`, and `updateVerified`, we have opted to require that implementations `throw` (preferably by using the [forthcoming `require(condition, 'fail message')` syntax](https://github.com/ethereum/solidity/issues/1686#issuecomment-328181514)).
Proviso 2 will cause transfers to fail if an attempt is made to transfer tokens to a non-verified address. This is implicit in the design and implementers are encouraged to make this abundantly clear to market participants. We appreciate that this will make the standard unpalatable to some exchanges, but it is an SEC requirement that shareholders of a corporation provide verified names and addresses.
Test cases and a reference implementation are available at [github.com/davesag/ERC884-reference-implementation](https://github.com/davesag/ERC884-reference-implementation).
## Copyright
Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).
