DEMAT Outlines Plan to Remove Paper Share Certificates by 2027

On 14 July 2026, the Dematerialisation Market Action Taskforce (DEMAT), chaired by Mark Austin CBE and established by HM Treasury in October 2025, published its first report.https://assets.publishing.service.gov.uk/media/6a50fca2a4890e65cce64d06/DEMAT_Report.pdf.

The report sets out a comprehensive implementation plan for the withdrawal of paper share certificates as evidence of ownership of shares in publicly traded UK companies by the end of 2027. It is the first step in the UK’s three-step approach to digitising share ownership. DEMAT intends to publish a second report next year that will address steps two and three, addressing the move to all shareholders holding shares through the intermediated securities chain that will start by the end of this Parliament in 2029.

This Client Alert provides an overview of Steps 1–3, outlines the key measures of Step 1, and analyses the impact on issuers and shareholders.

Steps 1–3: Process Overview

"Step 1 is a pit stop — a break for drinks — on the road to the full transition to the intermediated shareholding model, which will start by the end of this Parliament.”

Mark Austin CBE, Chair, Dematerialisation Market Action Taskforce

Step 1: Key Measures

The key measures to be implemented under Step 1, as set out in DEMAT’s first report, include:

• Withdrawal of paper share certificates: Paper share certificates will no longer constitute evidence of ownership title for shares that fall within the scope of the digital register model, and ownership will solely be recorded on the company’s digital register of members.

  DEMAT recommends that the scope of the digital register model should encompass any UK incorporated company’s shares that are admitted to trading on a regulated or an SME Growth Market in the UK.

• Modernising share transfer requirements: The laws governing how shares are transferred should be updated to allow share transfers and related processes to be carried out digitally, including through the use of electronic signatures.
• Operation of digital registers: DEMAT would develop the “Step 1 Operational Standards” through industry-led protocols and practice established collaboratively between Euroclear, shareholder associations, and representatives from the issuer, registrar, and broker communities. These operational standards are expected to be endorsed by the government following their publication around summer 2027. Shareholders should be able to access their holdings through online portals.
• Taking security over shares: The report considers the issues relating to security arrangements over shares (e.g., as collateral for a loan). This includes how a collateral taker may evidence their right to transfer shares when enforcing security over in-scope shares under the digital register model.
• Competing takeover offers: The report addresses the issue of preventing shareholders from accepting more than one competing takeover offer for the same shares in the absence of paper certificates — recommending certain amendments to the UK City Code on Takeovers and Mergers to prevent such double counting.
• Stamp duty and Stamp Duty Reserve Tax (SDRT): The report considers the impact of the withdrawal of paper certificates and digitisation of the share register on how the transfers of shares held on a digital register are processed from a stamp duty and SDRT perspective. DEMAT proposes that the digital register model should be introduced at the same time as the planned replacement of stamp duty and SDRT with a single tax on transfers of in-scope securities and introduction of an online portal to digitise the reporting and payment of that tax. HMRC has indicated that it intends to implement such stamp tax reforms in 2027.
• Issuer and registrar preparatory actions: Guidance and template materials will be published to help market participants prepare for the transition to the digital register model.
• Awareness campaign: A public awareness campaign will be delivered to explain the Step 1 reforms to shareholders and other market participants, with accessible communications aimed at a range of audiences, including retail investors, civil society organisations, and digitally excluded individuals.

"These changes will make it much easier, quicker, and more transparent for retail investors to hold and trade shares in the UK market, driving the continued development of an equity culture."

Mark Austin CBE, Chair, Dematerialisation Market Action Taskforce

Timeline

The government has accepted the recommendations in full and confirmed it will legislate in 2027 through a statutory instrument, as recommended by the Digitisation Taskforce.

Note: Several dates above remain indicative and subject to further market engagement. A recommended precise go-live date will be communicated in the coming weeks.

Impact

Issuers

Step 1 will reduce administrative cost and operational friction by eliminating processes that currently require paper share certificates. Issuer and registrars (acting on their behalf) are expected to implement the digital register model for their respective share registers within the framework of the Step 1 operational standards.

Issuers should continue to monitor developments, including the progress of the statutory instrument and DEMAT’s Step 1 awareness campaign, and prepare to undertake the following actions before Step 1 takes effect:

• consider any amendments to their engagement terms with their registrars to address the new operational framework for the digitised register model;
• review their articles of association, such as removing references to share certificates and related processes, with the benefit of model provisions to be developed by GC100; and
• arrange for communications to shareholders (potentially through their registrars) with clear messaging on the impact of Step 1 on certificated holders.

Shareholders

Certificated holders will benefit from digital processes that will simplify viewing their shareholdings and share transfers, without the risks and administrative costs associated with paper certificates. Such holders will not need to take any action — their existing paper certificates will become obsolete on the Step 1 effective date.

Investors holding through nominees, brokers, or platforms within CREST will be unaffected at Step 1. Steps 2 and 3 will improve intermediated holders’ position over the longer term so that such investors would receive communications and exercise rights more effectively through the intermediated chain.

Looking Ahead: Steps 2 and 3

DEMAT’s first report sets out preliminary observations on certain measures relating to Steps 2 and 3. These matters are flagged for further work and are not the subject of final recommendations at this stage. Key themes include:

• Opt-in for private company shares: DEMAT has been considering the possibility of an opt-in for private company shares as a Step 2/3 matter for its further report expected in 2027. Further work should be undertaken following Step 1 to give UK-incorporated private companies the option of applying the digital register model arrangements to their shares.
• Electronic communications and payments: DEMAT has been considering legislative proposals to enable issuers to communicate electronically by default and to eliminate cheque payments. DEMAT has also been considering introducing measures whereby shareholders would be required to provide their issuers with their email address (or other form of digital identity or electronic messaging solutions) and their bank account details to facilitate digital arrangements.
• Shareholder rights: Further work is required to ensure that legal rights accruing to non-CREST shareholders under the Companies Act and related legislation are effectively accessible to ultimate beneficial owners, either directly or through the intermediated securities chain.
• Step 3 backstop options: The report describes the potential backstop arrangements for shareholders who remain on digital registers at any Step 3 sunset date. These include: (a) a government-backed depository with ongoing administration; (b) issuer-funded corporate sponsored nominees; and (c) a government-backed depository with forced sale.