Dematerialisation FAQ

UK dematerialisation is the government-led process to remove physical share certificates and replace them with electronic records.

The UK Government has committed to abolishing physical share certificates before the end of 2027. A precise implementation date will be confirmed by the Dematerialisation Market Action Taskforce (DEMAT), but issuers should plan on certificates no longer being valid evidence of title after that point.

No. For UK-incorporated companies with securities listed on a UK market dematerialisation is mandatory under the government’s Digitisation Taskforce recommendations. Issuers will be required to operate digitised share registers and stop issuing paper certificates. The precise scope of companies and securities impacted will be confirmed as part of the formal policy announcement, expected in summer 2026.

Dematerialisation impacts shareholder rights, market access, governance controls, operational resilience and reputation. Boards retain ultimate responsibility for how shareholder records, communications and rights are managed, and the progression of this initiative has the potential to impact aspects of these arrangements. Consequently, we encourage issuers to engage with the dematerialisation initiative to avoid unexpected outcomes including any that might undermine governance and long-term flexibility in relation to their share ownership structures and arrangements.

The dematerialisation initiative, taken as a whole, has the potential to impact shareholder visibility, engagement arrangements with retail investors, the use of intermediaries for holding shares, communications between issuers and investors and the burden of responsibility and cost between market stakeholders. As part of a later phase of work, the manner in which shareholders are transitioned into intermediary arrangements and the option of direct registration phased out will need careful management to avoid stakeholder backlash and reputational damage.

Issuers should already be preparing. The practical work will require a significant amount of time, covering legal review, registrar coordination, data quality and shareholder communications. Early preparation reduces delivery risk, avoids rushed changes and allows issuers to engage shareholders in a controlled manner.

T+1 Settlement, mandated from 11 October 2027, compresses post-trade timelines and increases reliance on clean, digital processes. While dematerialisation and T+1 are separate reforms, they are operationally interdependent, with paper-heavy processes being incompatible with faster settlement, and dematerialisation supporting automation and reduced settlement risk.

At Step 1, shareholders do not need to open a broker or nominee account. Their ownership will continue to be recorded directly on a digitised share register. While paper certificates are withdrawn, shareholder rights will remain unchanged. Issues arise only if shareholders are unaware, disengaged or unsupported.

It is envisaged that as part of the move to fully intermediated share ownership arrangements as part of Step 3, a “sunset date” will need to be set. This will act as a deadline for shareholders to transfer their shares to an intermediary. Backstop arrangements are being considered to support those who have not made that transition. Careful management and communication will be required to ensure individuals who have not taken action for any reason are not disadvantaged.

Issuers can improve shareholder communications, promote digital access, clean data and educate investors early. Encouraging voluntary digital engagement, ensuring accessibility and maintaining trust reduces issues later on.

The DEMAT report, expected in summer 2026 will help clarify the scope and determine the impact on non-UK issuers.

If you are incorporated in the Crown Dependencies the taskforce is planning to engage with your markets to potentially include you the UK’s dematerialisation efforts and Computershare have had early conversations with the authorities in the Crown Dependencies.

If you are incorporated in another territory and have a secondary listing in the UK the effect on you may be limited dependent on the share ownership structure you have in operation in the UK. If you have any questions please contact your client manager and look to review the DEMAT report, once published.

Step 3 is the potential transition from digitised registers to a fully intermediated system. This means retail shareholders will need to find an intermediary able to hold their assets. While no firm date has yet been set for the completion of this step, the current recommendations and industry discussion indicate that this will begin from mid-2029, subject to readiness and political direction.

A fully intermediated model will reduce the direct relationship between an issuer and a retail shareholder that exists today where those shares are held in certificated form. In future, retail investors will exclusively hold their shares through intermediaries, who will be responsible for passing information, voting and identity data between the issuer and underlying investors. Reforms aim to preserve beneficial owner rights, but issuer visibility and control have the potential to be reduced. This is why issuers view Step 3 as a critical governance and engagement issue.

As soon as possible. Early, clear communication builds trust, reduces misinformation and prevents future friction. Shareholders now need reassurance that rights are not being removed, only paper. Educating shareholders early is more effective than last-minute notices driven by regulatory deadlines. We expect to see industry-standard FAQs released by the Taskforce in due course.

Poor communication risks shareholder confusion, complaints, disengagement, reputational damage and media scrutiny, particularly around vulnerable or older investors. It also increases the risk of resistance if future changes are required.

Issuers can focus on education, reassurance and access – explaining what is changing, what is not, and how shareholders can engage digitally without pressure. Improving data quality and aligning communications across registrars, websites and corporate reporting also lays strong foundations for later stages.

Government and industry have explicitly recognised the need to protect vulnerable and those who may be considered digitally excluded. Transition planning is expected to include support mechanisms, alternative access methods, clear communications and safeguards. Issuers should identify and support these cohorts early, rather than treat vulnerability as an operational afterthought.

For shareholders, there is no mandatory cost to dematerialisation at Step 1.

Benefits include greater efficiency, improved resilience, faster settlement compatibility (T+1), reduced risk, lower long-term costs, enhanced ESG outcomes and modernised shareholder engagement. For issuers, it simplifies your registry operations.