New initiatives to encourage UK private investors into electronic shareholding and bring an end to paper share dealing have been spelled out in a consultation paper from the Association of Private Client Investment Managers.
The 14-page Way Forward document proposes alternatives to the current slow and expensive process of trading paper share certificates. Its main proposal is that all shareholders – regardless of whether they hold their shares in paper or electronically in their stockbroker’s account – should enjoy equal rights under company law.
Apcims chief executive Angela Knight says: "At the moment paper share holders often enjoy more rights than those holding them electronically – most importantly they can vote or appoint a proxy at company meetings."
She argues that this is fundamentally wrong and needs to be addressed urgently.
"Of equal importance is the need to create a system which gives investors the reassurance of a piece of paper, a 'share statement,' while giving them the convenience and cost benefits of electronic trading," she adds.
Apcims is proposing the creation of an "issuer sponsored dematerialised account," in which shares are held electronically in the investor’s name. The investor accesses the account using a personal identification number (PIN) and receives regular written confirmation of every share holding.
More than eight million UK small shareholders currently hold paper-based share certificates.