September 27, 2021 End of the Share Certificate?
Share Certificates have been around since, at least, the beginning of the 17th century with the creation of the Dutch East India company.
However, the vast majority of shares in public companies are not traded through exchanges and no share certificates are issued. This isn’t the case though for most private companies in the UK that still rely on the traditional share certificate. Although, in our experience, these often get lost and replaced with an indemnity when a sale is required.
The government has recently announced a consultation on the dematerialisation of shares, where they have said they will work with industry, regulators and shareholders in the medium term to determine the best mechanism for converting the minority of paper shares into electronic form, while preserving the rights of existing shareholders.
We don’t have any more detail than this at the moment, with the proposal included among 22 other proposals ranging from putting the Crown stamp back on the pint glass to modernising diabetes management for lorry drivers.
The role of the company secretary clearly goes well beyond the share certificate, but it is one of the most visible functions in many companies and so we will watch this space with interest.
There could be many benefits to getting rid of the share certificate, but there is a morsal of sentimentalism around the share certificate here at Elemental.