Dematerialisation - The End For Paper Certificates ?

[PrefInvestor]

Hi All,

It is clear from reading many of the posts on the Lemon Fool that many investors are still holding their shares in paper certificate form. Now having looked into this topic a few times I am well aware of the advantages and disadvantages of doing this. However I have just recently seen a couple of articles which talk of the ability to hold paper certificates being brought to an end in a process called “dematerialisation”. I have attached links to these articles below:-

https://www.barclays.co.uk/smart-invest ... e-dealing/

https://www.thetimes.co.uk/article/pape ... -sp7rpfv8j

Interested to hear others views on this and / or any further details regarding "dematerialisation" that I may not have seen.

Pref

[doug2500]

I find myself in the process of 're-materialising'! Not really through choice though.

Naturally Barclay's don't mention the quickly disappearing CREST accounts as an option despite them offering the best of both types of holding.

I see de-materialisation as inevitable but I hope that in this country we're not left with nominee accounts only.

[Lootman]

I find myself in the process of 're-materialising'! Not really through choice though.

Naturally Barclay's don't mention the quickly disappearing CREST accounts as an option despite them offering the best of both types of holding.

I see de-materialisation as inevitable but I hope that in this country we're not left with nominee accounts only.

It is inevitable. The only surprise is that this was not imposed on you twenty years ago, when the logistics of doing that were already in place, and when every institution went over to that.

[Alaric]

I have attached links to these articles below:-

From the Barclays link

The European Parliament has passed legislation putting an end to paper share certificates. Known as ‘dematerialisation’, the new law is at present expected to be mandatory by 2025.

Is it correct that it's EU interference in domestic issues, or is it a case of the British Civil Service gold plating?

[Dod101]

I think it is nothing to do with gold plating, whatever Alaric means by that. It is I suspect an inevitable development in this age of digitalisation. Every time we sell a certificated share it has to be dematerialised first at the moment of sale, and so it is not surprising that the powers that be want to remove paper certificates in general.

I do not welcome this in the least because as a LTBH investor my certificates just lie in a drawer and the main risk is I suppose a fire or theft. Putting them in digital form means that they will presumably go in to a nominee account, increasing the risk of something going wrong. OTOH ISAs and SIPPs need to be in nominee accounts at the moment anyway, and I have spent the last 20 years or so transferring certificated shares into either a SIPP or an ISA so reducing the number of certificates I hold.

I thought that this change was due before 2025 and was primarily being driven by the EU, but I am sure the UK authorities are now behind it as well.

The biggest drawback I see is firstly the security aspect, and secondly the ability to easily attend AGMs, receive Annual Reports and generally get the benefits of a shareholder with his/her name on the share register. UKSA and ShareSoc from time to time get worked up about this and the need to protect shareholders' rights.

Dod

[dionaeamuscipula]

The biggest drawback I see is firstly the security aspect, and secondly the ability to easily attend AGMs, receive Annual Reports and generally get the benefits of a shareholder with his/her name on the share register. UKSA and ShareSoc from time to time get worked up about this and the need to protect shareholders' rights.

Dod

Certificated holdings are a right pain all round. But it really needs to be easier to hold dematerialised shares in the shareholders own name.

AGM notices and annual reports are increasingly going online only, indeed Link (the former Capita Registrars) have a package they sell to listed/AIM businesses to assist them in administering this, and I imagine the others do too.

DM

[Dod101]

I agree that Annual Reports are now online mostly although of course you can still ask for a hard copy. I attend AGMs when I can and that is an issue with shares held in nominee accounts. Quite a number on these Boards seem to attend AGMs of ITs if nothing else and although my experience is that most IT managements will allow you to attend even if you do not have accreditation, you will attend as a guest and will be unable to vote or in most cases even to ask questions.

Certificates have the great advantage that you get these benefits as I think I have already said and if you do not trade they are not really a pain in any sense.

Dod