UK companies have been put on notice that paper share certificates are set to disappear, with legislation expected to require fully digital share ownership by the end of 2027. The shift marks one of the most significant changes to shareholder administration in decades and will require companies to prepare their registers, processes and communications for a new digital framework.
The reforms are designed to replace paper share certificates with electronic records, bringing the UK into line with markets where digital ownership is already standard. Over time, shareholders are also expected to hold their investments through brokers and investment platforms rather than appearing directly on company share registers.
The first stage will see paper certificates removed and digital registers become the norm. Companies are expected to encourage shareholders to receive communications electronically and have dividends paid digitally ahead of these methods becoming standard practice. A later phase is likely to require shareholders to use an intermediary for certain corporate actions, although the timetable for this wider change has yet to be confirmed.
The transition will not be without challenges. Companies will need to identify shareholders who still hold paper certificates, trace inactive investors and consider how to deal with shareholders who may have difficulty accessing intermediary services. The treatment of overseas shareholders, the cost of intermediary accounts and the impact on employee share plans also remain under consideration.
Despite the changes, shareholders’ legal rights are expected to remain unchanged. Voting rights, access to company information and participation in meetings will continue, although these activities will increasingly be handled through intermediaries rather than directly through the company.
The reforms sit alongside wider changes to UK market infrastructure. Equity settlement is due to move from T+2 to T+1 in October 2027, while regulators continue to examine the future use of tokenised securities. Together, these developments point to a more digital and automated market environment.
Reviewing shareholder registers, updating governance documents, increasing the use of digital communications and preparing for paperless administration should help reduce disruption when the new rules take effect. Businesses that leave these changes until legislation is finalised may face a more demanding transition.
Law Debenture Corporation plc (LON:LWDB) provides a wider range of services including corporate and pension trusts, process agent services, treasury management, corporate services including for special purpose vehicles, structured finance administration and whistleblowing services.
