The Demise Of Paper Share Certificates

An image of different share certificates

Paper share certificates are to be cast out in favour of electronic records. This has been in dispute for a number of years, however, the regulation article states it is to come into practice in the next few years. Cave & Sons give you a brief overview of what you need to know about these changes.

What are paper share certificates? 

Paper share certificates, as many of you may know, are presented as evidence that you have bought a share – it states your ownership and can be used as proof if you ever need it. The use of paper share certificates dates back to nearly 400 years with the Dutch East Indies Company issuing the first stock certificate. Since then they have become a common conception within the investment industry; in more recent times, the certificates were often used as impressive wall art with companies competing to make their certificates the most impressive. Their demise marks the end of an era. 

What’s happening?

The EU Central Securities Depositories Regulation (CSDR) is taking share certificates online to make the process more disciplined, prompt and efficient. Currently, certificates take around ten days to be processed, whereas this would be reduced to two when done electronically. The current process is also quite costly for shareholders as they are subjected to higher trading fees due to it being a manual task that carries more risk. 

What does this mean? 

Firstly, don’t panic if you do have paper share certificates as your shares will not be affected and will remain as such. The paper certificate will eventually become void and your shares will be recorded in electronic form, which means there will be a digital trail of any transactions or adjustments with your shares. This comes with added security and reduced risk as the records cannot be lost or misused. In due course, the relevant share registrars should reach out to you and let you know about the changes and how you can access your shares online. 

If you do not want to hold your shares electronically, the industry director of Equiniti, who chairs the UK Dematerialisation Steering Group in charge of overseeing the process, has stated that those shareholders will be catered for and supported when it comes to accessing their shareholdings. 

Share Certificates With Cave & Sons

If you don’t have a stockbroker you work with, reach out to us at Cave & Sons where we can help. Our company has over 100 years of experience and we have a team of stockbrokers who are ready to provide their expert knowledge and impartial advice. Give us a call on 01604 621 421 or contact us through our online contact form and we’ll get back to you as soon as we can.