The Government has published its response to the final report of the Digitisation Taskforce. The Taskforce has been assessing how the UK can eliminate the use of paper share certificates for traded companies, which create inefficiencies and costs for companies and investors. The Taskforce has also examined how to improve the intermediated system of share ownership, so that investors are better able to exercise rights associated with shares held by intermediaries on their behalf.

The report recommends that the digitisation of share certificates be delivered in three steps:

• Step 1: existing paper-based or ‘certificated’ share registers should be replaced by digitised share registers. This would temporarily replicate the current system, but without paper share certificates;
• Step 2: improvements should be made to the intermediated system to make it easier for beneficial owners of shares to exercise their rights effectively and efficiently through intermediaries;
• Step 3: once these improvements have been made, all shares should transition into the intermediated system.

The Government has accepted the report’s recommendations and has set out in its response how it intends to take them forward. It intends to legislate to end the issuance of paper share certificates and require companies to replace paper share registers with digitised share registers by the end of 2027 at the latest.

The Government is confident that the approach recommended by the report will deliver the benefits of removing paper share certificates relatively quickly while setting a path towards a fully digital, modern and efficient system of share ownership in the UK.