Dematerialisation of Paper Share Certificates

Owning share certificates can become burdensome – and there is a risk that they can be lost, damaged or stolen.

European Securities and Markets Authority (ESMA), the pan-European regulator, is soon to make share certificates obsolete, with a date to be confirmed for the phasing out of paper certificates altogether in favour of share certificates being dematerialised and held electronically within a nominee account.

When shares are held in a nominee account, the investor remains the beneficial owner, but their name does not appear on the company’s share register. ESMA explains that the aim of dematerialisation across Europe is to harmonise and bring discipline to a number of aspects of the post-trade settlement cycle.

Whilst many investors feel a sentimental attachment to their share certificates, the immediate advantage of a nominee arrangement is that the investment manager/stockbroker handles the administration side of buying and selling your shares for you. This means that your transactions are settled much more quickly. Electronic handling removes postal delays or the risk of certificates being lost in the post. Dealing costs are cheaper, too. Further advantages and administrative improvements include live pricing of the security so that you know the value of your holding, the automatic collection of dividends, ease in preparation of annual consolidated tax vouchers, and time efficiencies regarding corporate actions.

If you have any paper share certificates and would like to discuss the possibility of moving these into a BRI portfolio, please contact one of our advisors on 01676 523 550 or email invest@brigroup.co.uk.