An EU threat to require the abolition of share certificates was originally reported to UKSA members in the association’s magazine The Private Investor in March 2012. The proposal is that all shares should be held in central securities depositories (CSDs). Discussions continue within Europe on the draft Regulation, to be known as the CSDR. UKSA understands that the UK government continues to resist such a change being made mandatory.
UKSA has been assisting HM Treasury and BIS with issues raised by the draft CSDR. In the event of this mandating dematerialisation, UKSA has advised HM Treasury that a number of issues will need to be addressed by the UK government, with three aspects to consider.
• Full legal rights, which depend solely upon the company and its registrar.
• Concessionary arrangements granted by the company through its registrar, or by the stockbroker or its nominee (ie custodian of the shares).
• The penalties attached to holding shares in nominee accounts.
The UK Shareholders’ Association regards it as of the utmost importance that any enforced dematerialisation is preceded by legislation to preserve full legal rights for shareholders currently holding certificates. We also wish to see full legal rights extended to investors using nominee accounts, including ISAs and SIPPs and have offered to work with HMT and others on how to achieve this.
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