Tag: Digitisation Task Force

Digitised Share Registers and surrounding myths

The Investors Chronicle have reported that the Government has announced its intention to accept the recommendation of the Digitisation Task Force to proceed to a staged transition to remove paper share certificates. To quote: “The first stage of this process will see existing paper share registers replaced with digitised versions, which should be completed by the end of 2027”.

It astonishes me that there are any paper share registers still in use. Are there companies really still using leather bound paper share ledgers to track their shareholders? Surely most are now at least using spreadsheets to record their shareholders.

For publicly listed companies (which is all we are concerned with) they are typically using a few professional registrars who all have digital systems. So setting an end-date for completion of this step of 2027 is surely quite ridiculous and shows how little knowledge there is of the work required to remove paper share certificates.   

P.S. Some people think that the fact you are holding a paper share certificate is indisputable evidence that you own the shares. This is mistaken. The ownership is confirmed by an entry in the company’s share register alone.                                                                           

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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Dematerialisation and the Digitisation Taskforce Final Report

The scrapping of paper share certificates for listed companies has been planned for many years. It is something I have strongly supported for 25 years although this is a complex area and it is important to protect shareholder rights during this transition. You can read more about the issues on this Sharesoc web page: https://www.sharesoc.org/campaigns/shareholder-rights-campaign/

The interim report and consultation from the Digitisation TaskForce showed strong support for this move – to quote: “almost universal support for the removal of paper shares”.

Another need is for the removal of the need to pay dividends via cheque – they should all be paid by bank transfer – a safer and more secure system. Despite the fact that I personally only have paper share certificates for a few private companies (which it is not proposed to change) and most of my holdings are either in ISAs, in Crest accounts or other broker nominee accounts, I still receive a few dividend cheques. This can make it horribly complicated to identify and trace all dividends.

The Final Digitisation Report covers some of the technical issues that need to be dealt with in the conversion. There are still many people holding paper share certificates in listed companies (over a million I understand)  often as a result of privatisation events or new issues such as in VCTs.

Companies (i.e. “Issuers”) also wish to improve their communications with the beneficial owners of their shares which at present can be very haphazard – companies do not know who owns their shares which is a major defect.

The Final Digitisation Report comprehensively covers the issues and I won’t even attempt to cover it in detail. But certainly it is worth reading – see https://www.gov.uk/government/publications/digitisation-taskforce-july-2025 . There are few points worth highlighting:

  1. Should it be done in a “big bang” for all issuers or a gradual process over some time? If KYC checks are necessary then it is going to be practically difficult particularly as many certificated shareholders may have lost their certificates. It could take years to complete the process so surely the sooner it is started the better.
  • The Report makes a number of recommendations regarding the transition including the “establishment of a Technical Group of relevant experts” which I agree with. There may be changes to legislation required (as in the Companies Act) so great care must be taken to ensure shareholder rights are not lost and any new systems operate smoothly. This cannot be rushed but it does need to be progressed without delay.
  • Another recommendation is that all shares should transition into the intermediated securities chain, i.e. digitised registers should only be an intermediate step. This is a questionable step as it might frustrate public access to a list of all shareholders which needs to be retained in case of the need for access to highlight shareholder concerns. There is also a potential problem with the separation of legal ownership from the Ultimate Beneficial Owner (the individual shareholder), who under the proposed Model 3 would become reliant on the nominee who has the legal status (see Page 33 last paragraph).  This is a major issue which the Final Report has ducked.
  • There are recommendations to improve the legal standing of beneficial owners which is certainly required.
  • The Report also includes a “Bill of Shareholder Rights” (see page 24) which certainly covers the key requirements of most shareholders.
  • The Final Report does cover all the issues that need to be covered by a Technical Group but does not resolve them.

In summary, the Final Flint Report may note all the issues but does not clearly solve them.  

There does need to be back-up systems because relying on digital communications alone is risky. For example a fox chewed through our fibre internet cable at home this week. Our back-up BT 4G line did switch in but proved unreliable. Have these potential issues been taken into account?

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

ShareSoc Newsletters and SIPP Dangers

Another good newsletter issued by ShareSoc this month. Go here to sign up for it (you need to be a full member to get it): https://www.sharesoc.org/upgrade-to-save/

It covers yet another case where investors who hold funds in a SIPP may be prejudiced by an administrator charging fees to the SIPP funds. The latest case is that of Rowanmoor but the latest news on Hartley Pensions is also covered in the newsletter.

The moral is that you should only invest in a SIPP with a financially stable organisation and I suggest preferably one that is listed so you can easily monitor their financial stability – such as AJ Bell Youinvest or Hargreaves Lansdown.

The newsletter also covers the latest news for Woodford investors and the disappointing progress from the Digitisation Taskforce to improve the position of nominee shareholders – or at least make them no worse which is at high risk of happening if everyone is stuffed into a corporate nominee in the name of dematerialisation.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Digitisation Task Force Proposals

Sir Douglas Flint has published his Interim Report from the Digitisation Task Force – see https://www.gov.uk/government/publications/digitisation-taskforce. This covers many important issues for private investors such as the use of nominee accounts, the scrapping of paper share certificates (dematerialisation) and many other important issues. You can read the comments I have submitted here: https://www.roliscon.com/_files/ugd/8ec181_18053a9b5cfa4eb788731a82aafb3a57.pdf.

I would encourage all private investors to send in your own comments.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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