John Britton
Governance & Industry Director
The UK is taking a bold step into the digital age with the release of the Digitisation Taskforce’s final report and the government’s enthusiastic endorsement of its recommendations. This initiative, led by Sir Douglas Flint, marks a pivotal moment in the evolution of the UK’s capital markets, aiming to eliminate outdated paper share certificates and modernise the system of share ownership.
Here at Computershare we’ve been continually reviewing and developing digital solutions to improve the experience of investors and aid companies. We’ve been tapping into our national, regional and global experience and have been engaging with the Taskforce, HM Treasury, the Department for Business and Trade, investor groups, custodians, UK PLCs and other stakeholders ahead of and since the publication of the interim report back in 2023.
Why this matters
The current system delivers full shareholder rights for those investors who hold shares on an issuer’s share register but, where those investors hold paper share certificates, there is a degree of friction and inconvenience when transacting – their experience is out of sync with the digital-first world, for example they cannot easily participate in shorter settlement cycles that are available to intermediated investors, and they may not be included in secondary capital raisings. It’s estimated that there are 4-5 million individuals holding approximately 8-10 million certificated shareholdings in the UK market.
The Taskforce was established to address two core challenges:
- Eliminating paper share certificates for traded companies.
- Improving the intermediated system of share ownership to empower investors.
These reforms are part of the broader Wholesale Financial Markets Digital Strategy, which seeks to make UK capital markets more efficient, resilient and globally competitive.
The three-step plan for digitisation
The Taskforce’s final report outlines a three-step roadmap to achieve full digitisation, in which sit 16 individual recommendations:
Step 1: Digitised share registers
The first step is to replace the paper element of directly registered shareholdings and record share ownership for these investors exclusively via digital means. Essentially this replicates the current system but without physical certificates: something that the Taskforce recommends should be achieved by the end of 2027 in parallel to the UK’s implementation of a T+1 settlement cycle. We believe this is achievable. It’s a transitional phase designed to maintain continuity while laying the groundwork for subsequent reforms.
Step 2: Reforming the intermediated system
Next, the focus shifts to enhancing the rights of beneficial owners — the actual investors — who often hold shares through intermediaries like brokers or custodians. The goal is to ensure these investors can exercise their rights (including voting and receiving information) more effectively and transparently. It’s recommended that these reforms take place through the life of this parliament, meaning they should be completed or in-flight by 2029.
It is recognised that if directly registered shareholders, currently with perfect legal and shareholder rights, are ever to be required to transfer their shares to an intermediary, their ability to exercise the equivalent rights must improve.
Step 3: Full transition to the intermediated system
Finally, the recommendation of the Taskforce is that all shares will move into the improved intermediated system once the government is certain the improvements have been made. The report suggests mechanisms such as:
- A “one-way street” approach, where shares automatically transition when corporate actions are taken.
- A “sunset date”, by which all shares must be transferred into an intermediated arrangement.
It also considers what the market could do for those investors who remain unresponsive or lost should a ‘sunset date’ be introduced, and this could include forcing them into a nominee structure, liquidating their shares or forfeiture.
Government response: full support and next steps
The UK government has welcomed the report and committed to implementing its recommendations in full. Key actions include:
- Establishing a Technical Group of industry experts to oversee the transition, which should be made up of UK PLCs, investors (retail and institutional), registrars and other leading market stakeholders.
- Setting a firm date for the implementation of Step 1, ideally before the end of 2027.
- Developing a detailed roadmap for Steps 2 and 3, in collaboration with market participants.
This response signals a strong political will to modernise the UK’s financial infrastructure and aligns with broader efforts to boost investor confidence and market transparency.
What digitisation means for investors and companies
For investors:
- Greater control over their investments.
- Improved access to shareholder rights.
- Faster and more secure transactions.
For companies:
- Streamlined shareholder communications.
- Enhanced corporate governance.
- Greater transparency for their underlying beneficial investors.
Challenges ahead
While the vision is clear, the path forward will require:
- Robust technological infrastructure which through our extensive experience and digital solutions we are well positioned to deliver.
- Clear legal frameworks to support fully digital registers and the introduction of the Stage 2 and 3 recommendations.
- Strong stakeholder engagement, especially from registrars, brokers and custodians.
- Investor education, while not strictly part of recommendations within the Taskforce’s report, it is clear that improving the knowledge of existing and new investors as to the benefits of capital markets will be supported by improved digital experiences.
The Taskforce acknowledges that previous attempts at digitisation have stalled but believes that modern technology and greater appetite for digital services make success far more likely this time.
Final thoughts
The Digitisation Taskforce’s final report is more than a technical document — it’s a blueprint for transforming how UK share ownership structures are recorded, and capital markets operate. With the government’s full backing, the UK is seeking to become a global leader in digital finance infrastructure.
As the transition unfolds, stakeholders across the financial ecosystem will need to collaborate closely to ensure a smooth, inclusive and secure shift to a fully digitised future.
Computershare welcomes the work of the Taskforce and will continue to promote the need to digitise the UK capital market in the most efficient manner that best suits its array of stakeholders.
We stand ready to support the market positively and proactively in pursuing these bold endeavours, leveraging our expertise in national, international and complex cross-border listing structures matters, our tapping into our direct and deep expertise in existing dematerialised markets such as USA, Australia and more recently Ireland, as well as the markets that are now seeking to implement dematerialisation regimes, such as Hong Kong.
