BRØK, the Norwegian government’s project to track ownership of unlisted shares, went into testing earlier this month. What is a bit different compared to other solutions is that you plan to use a public blockchain. Specifically, you are using Arbitrum, a Layer 2 scaling solution for Ethereum with lower transaction costs.

Many countries around the world have corporate registries where you can search for information on companies of any size, including unlisted ones. These often have some shareholder data, but are usually up to a year old. For updated details, you need to contact the company. Norway’s corporate registry, which maintains records for 380,000 companies, is no different.

Hence the concept of creating a blockchain system to track the change in ownership of any private stock and get a current view of the ‘cap table’: who owns shares, how much they own and when they bought them.

Another benefit of using a blockchain is immutability. Because companies only share snapshots of share ownership on an irregular basis, the potential for cap table manipulation exists, though it’s not a particularly common scam. In fact, the most likely victim is the government if there are stock transfer taxes and there is a desire to change the timing. Unsurprisingly, the tax agency is a participant in the ecosystem.

There are benefits for the company too. The most obvious one is that they only have to record stock transactions instead of managing the limits table. It makes it easier to sell stocks with less due diligence on the limit table itself. This is because the buyer and seller must accept blockchain transactions, which provides some level of third-party validity. In addition, the shares can be used as collateral for a loan, and the charge on the shares will also be recorded on the blockchain.

The solution provides a good foundation for the next wave of tokenization, as shares are stored using the ERC1400 Ethereum security token standard.

The project has been in the works for some time with developer Blockchangers posting the code for a fix three years ago, which has been moving forward ever since. It is now making the software development kit (SDK) available.

BRØK combines blockchain, an open database, and custom software. The solution is GDPR compliant, so personal information is not stored directly on the blockchain. However, it uses the Ceramic protocol for personal information, an open distributed database that allows data to be deleted and corrected, as required by the GDPR.

This might be one of the first times a government has used blockchain for cap tables, but it is far from the first cap table solution. One of the first to go private was Swiss firm daura, a joint venture between BDO, BEKB, SIX, Swisscom and Sygnum. Another Swiss example is Aequitec. In the US, Figure Technologies has developed a cap table solution using its Provenance public blockchain.