On 15 July 2025, HM Treasury published the final recommendations of the Digitisation Taskforce for modernising the UK shareholding ownership framework through the digitisation of the securities settlement infrastructure for capital markets (Final Report: Digitisation Taskforce). The Taskforce has concluded that full digitisation should take place in stages commencing with the abolition of paper share certificates by the end of 2027, with the ultimate objective being to move to a fully intermediated system for UK capital markets in which all shareholders (both institutional and retail) hold their shares in digitised form. The government has accepted all the Taskforce's recommendations and has set out the steps it intends to take to achieve a fully digitised public market shareholding framework (Government Response).
Background
The Digitisation Taskforce was established in July 2022 to take forward a key proposal in the UK Secondary Capital Raising Review that all shareholders in UK quoted companies should hold their shares in fully digitised form (see FC Feature 19 July 2022). In addition, the Taskforce was asked to consider how the UK's intermediated system of share ownership via CREST could be improved to enhance efficiency while protecting investors' interests.
In July 2023, the Taskforce published an interim report setting out initial proposals and seeking feedback across a number of key questions (see FC Feature 11 July 2023).
Final Report
Feedback on interim report
There was near universal support for the removal of paper-based processing for shares traded on UK capital markets, although the Taskforce notes that there is currently no appetite for extending mandatory digitised securities to private companies. Respondents expressed a variety of views on the most appropriate architecture for a fully digitised infrastructure and raised a number of legal, technical and practical issues that companies and shareholders could face. Acknowledging the scale of these challenges, the Final Report recommends a direction of travel and the steps that should be taken incrementally to achieve full digitisation. These include the creation of a Technical Group of industry experts to consider how to develop and implement the recommendations contained in the Final Report and devise practical solutions to the issues identified.
Digitisation process
The Taskforce recommends that full digitisation should be implemented in the three separate stages outlined below.
- Step 1 – removing paper share certificates and establishing digitised share registers: after a period of communication with certificated shareholders, paper-based share registers should be replaced by digitised registers. This would temporarily replicate existing arrangements, but without paper share certificates. Companies would not be permitted to issue physical share certificates and existing certificates would no longer have any currency. The Final Report recommends that the Technical Group should set a single implementation date for this move, which should take place by the end of 2027.
- Step 2 – improvements to the intermediated system: the Taskforce proposes a comprehensive package of measures to make it easier for companies to communicate digitally with their shareholders and enhance the rights of ultimate beneficial owners (UBOs). The Final Report recommends that intermediaries should be required to offer a 'baseline service' to all shareholders, including extending certain provisions of the Shareholder Rights Amending Directive (SRD II) rather than limiting these rights to registered shareholders. Payments to shareholders should be made electronically unless otherwise agreed between a company and shareholder. Other recommendations to improve UBOs' rights include changes to the Companies Act 2006 to require companies to provide information to members enabling them to determine that their votes have been validly recorded and counted, as well as removal of the headcount test for the approval of schemes of arrangement from s 899 CA 2006 (see Schemes of arrangement, Q&A here). As elements of these reforms will require primary legislation, the Taskforce does not indicate a set timeframe for completion, suggesting instead that the government should aim to implement the changes during the current Parliament.
- Step 3 – all shares transition into the intermediated securities chain: once improvements to the intermediated system have been made under Step 2, there should be a process for moving all remaining shares into the intermediated system. The Taskforce recommends that the Technical Group should consider methods for delivering this transition, including whether a 'sunset date' should be set for digitised registers to end and the full move to the intermediated system to take place. No definitive timeframe for this last stage is given in the Final Report due to the time needed for completion of Step 2.
The principal legislative changes required to implement the Taskforce's final recommendations are set out on pages 27 to 31 of the Final Report. The Taskforce has also produced a 'Bill of Shareholder Rights' (page 24) setting out the general rights that should be provided to all shareholders, including to UBOs as part of the baseline service.
Government response and next steps
The government supports the Taskforce's recommended staged approach to full digitisation, which is designed to remove the inefficiencies caused by remaining paper shares while providing time for the necessary improvements to be made to the intermediated system before all shares are migrated to it. The government will set criteria before Step 3 takes place, which will include ensuring that the needs of vulnerable and older investors are taken into account.
The government therefore intends to:
- appoint an industry chair to establish and lead the recommended Technical Group. The government will publish terms of reference for the Group together with a timeline for reporting back to the government with its implementation plan;
- legislate to end the issuance of paper share certificates and require companies to replace paper share registers with digitised versions by the end of 2027. The precise implementation date will be determined by the Technical Group;
- amend relevant legislation by Q2 2027 so that shares in UK companies can be held on overseas branch registers in uncertificated form; and
- take forward the recommendations that require legislative change as part of Step 2. The government aims to deliver these reforms during the current Parliament.
First published on the Corporate News Service on 15 July 2025.
To view our previous blogs, please visit the blog home page.
Want to view more content like this? Or to view our previous features? Request a free trial of our knowledge service:
