Plans to axe paper share certificates fuel outrage
Plans to scrap physical share certificates will strip millions of investors of their basic rights and erode their ability to hold company boards to account, top shareholder groups warn.
The move, meant to cut costs and red tape for listed firms, is backed by the Chancellor, who wants the UK stock market to be fully digitalised to boost the City’s competitiveness.
Rachel Reeves backed a report by ex-chairman of HSBC Douglas Flint recommending abolishing paper certificates and moving to online share registers by the end of 2027.
But critics say that would force all UK share owners into a nominee system, where shares are held on their behalf by third party bodies such as investment platforms.
Warning: Plans to scrap physical share certificates will strip millions of investors of their basic rights and erode their ability to hold company boards to account
They say that some platforms do not pass on details about shareholder rights, such as the right to vote and attend meetings, or charge high fees for doing so, which prevents investors from having a say in the future of their firm.
Flint set out measures to protect these rights but they do not cover the right to call shareholder meetings or inspect an ownership register.
‘The current nominee system effectively blocks much small shareholder activism. Flint’s recommendation will make it worse,’ said Cliff Weight of ShareSoc, which represents small investors. It calls the changes ‘a charter for boards to become unaccountable to shareholders’.
The report found nearly half of all share certificates were held in five firms – Lloyds Bank, Aberdeen, National Grid, BT and British Gas owner Centrica.
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