Digitisation of shares for UK PLCs

Why should I read this?

On 14 July 2026 to coincide with the former Chancellor's Mansion House speech, the Dematerialisation Market Action Taskforce (DEMAT), published its Implementation Plan setting out a roadmap for the removal of paper share certificates and transition to digital share ownership for UK publicly traded companies.

Currently, shares in UK traded companies can be held either directly through paper share certificates or digitally through intermediaries in a central securities depository (CSD) (in the UK, this is CREST). The vast majority of shares in UK traded companies are held digitally. Administering the small number of paper share certificates can lead to market inefficiencies and additional costs for companies. The 2022 UK Secondary Capital Raising Review  recommended moving to a fully digitised system of share ownership as part of its proposals to improve secondary capital raisings.

DEMAT was established by HM Treasury in October 2025, following the Digitisation Taskforce's Final Report (July 2025), which recommended a staged approach to fully digitise share ownership in UK traded companies. The 2025 report sets out a three-step roadmap:

• Step 1: Replace paper share certificates with digital share registers (before the end of 2027);
• Step 2: Improve the intermediated system so beneficial owners can exercise rights through intermediaries (over the course of the current Parliament); and
• Step 3: Transition digital register holdings into the improved intermediated system (full digitisation).

Step 1 is explicitly described as an interim measure - designed to be proportionate and not over-engineered - operating alongside the existing CREST system. The Starmer government accepted DEMAT's recommendations. Notwithstanding the UK now having a new Prime Minister, the implementation plan and wider proposals represent a long-standing recommendation as part of capital markets reform.

Key takeaways

Scope: In summary, the measures apply to shares in UK-incorporated companies admitted to trading on a UK regulated market (e.g. the London Stock Exchange Main Market) or an SME Growth Market (e.g. AIM and the AQSE Growth Market).

Abolition of paper certificates as evidence of title: Section 768 of the Companies Act 2006 (which provides that a share certificate is evidence of title) will be disapplied for in-scope shares. Ownership will instead be evidenced solely by the electronic record on the company's digital register of members. Shareholders are not required to return or destroy existing paper certificates. They may be retained, but will have no legal evidential value from the effective date.

Modernisation of share transfers: The Stock Transfer Act 1963 and section 770 of the Companies Act 2006 will be amended to permit digital/electronic transfer instructions and electronic signatures. Paper-based processes will remain available.

New digital registers: The new digital registers will need to be designed and put in place. DEMAT will work with the market to develop Step 1 operational standards that will represent industry best practice.

Stamp Duty / SDRT: it will need to be determined how transfers of shares held on a digital register are processed from a stamp duty and Stamp Duty Reserve Tax (SDRT) perspective. DEMAT considers that the introduction of the digital register model should coincide with the planned replacement of stamp duty and SDRT with a new securities transfer tax next year. Moving shares to the digital register, and subsequently into a CSD, will not trigger a stamp duty or SDRT charge as there will be no change of ownership.

Shares as security: if shares are used as collateral for financing arrangements, this may require the share certificates to be delivered to the lender for the term of the loan. The plan describes a number of issues that will need to be addressed to reflect the removal of paper share certificates that lenders will need to be aware of and engage with further.

The plan also sets out proposals regarding competing bids under the Takeover Code, overseas branch registers, US registration requirements for offers made outside the US, and raising awareness of the move to full digitisation.

Legal mechanism and timeline

The Step 1 changes will be implemented by Statutory Instrument under powers in Part 21 of the Companies Act 2006, and the implementation plan envisages the following timeline:

• Statutory instrument to be laid before Parliament in Summer 2027.
• The digital register model to take effect before the end of 2027 (exact date to be confirmed).
• An industry awareness campaign to commence in H2 2026.

Next steps

Whilst there are no immediate actions to take at this stage, traded companies and in particular their company secretaries may wish to consider the following:

• Review the report: Familiarise themselves with the implementation plan and recommendations.
• Review articles of association: Identify provisions requiring share certificates to be issued. While the implementation plan notes that the Statutory Instrument will override contrary provisions, companies may wish to update their articles of association at the appropriate time for consistency.
• Engage with registrars: Discuss digital register capability, online shareholder portals, and identity verification/authentication protocols for transfers.
• Plan shareholder communications: Prepare for the Step 1 awareness campaign, informing shareholders that certificates will cease to be evidence of title, no action is required from them, and encouraging provision of email and bank details for digital communications.
• Monitor legislative developments: Await publication of the Statutory Instrument (the plan notes that this is expected in Summer 2027) and Step 1 operational standards as they are finalised.

DEMAT intends to report further on Steps 2 and 3 in the process towards full digitisation in the summer of 2027.