Companies falling in scope
Does this apply to all UK companies, both PLCs and Ltd companies?
EQ Response July 2026: No.
The current Step 1 recommendations apply to UK-incorporated companies with shares admitted to trading on a UK regulated market or UK growth market, including:
- Main Market listed companies
- AIM companies
- AQSE Growth Market companies
The proposals do not currently apply to private limited companies or other companies whose shares are not traded on a UK market.
The report does discuss the possibility of an optional future framework for private companies to adopt digital registers, but this is outside the scope of Step 1.
Non-UK companies
Where an issuer is a non-UK company, do you envisage a remat solution being feasible for shareholders with whom contact has been lost as part of this change?
EQ response from March 2026 webinars: Generally, no. For international securities, particularly where the originating market is already dematerialised—rematerialisation is not an option; any such provisions would apply selectively.
Overseas shareholders
What, if anything, should issuers be thinking about now for overseas shareholders outside the European Union, particularly gone-away holders who may be difficult to trace?
EQ response July 2026: At this stage, given the challenges with tracing international shareholders, the most sensible focus is to take preventative measures by:
- taking all actions possible to establish digital communication channels to help keep in contact.
- being more prominent in communications reminding shareholders to keep their records up to date
- strongly recommending that shareholders sign up to Shareview/EQ One
- using issuer websites to promote this messaging
The greatest challenges are expected to arise during Step 3, when shareholders will need to transition into an intermediary or nominee arrangement. Overseas holders may face additional complexities depending on local market arrangements and the availability of suitable intermediaries.
Further guidance is expected once the Step 2 and Step 3 framework, including any backstop arrangements and implementation timelines, has been developed.
Share Certificates
Can shareholders still request a share certificate even though it will no longer be recognised as evidence of ownership?
EQ response from July 2026 webinar: No. Once Step 1 is implemented, paper share certificates for in-scope securities will no longer be issued. Existing certificates will lose their legal status as evidence of ownership, and registrars will not produce replacement certificates on request.
Instead, shareholders will be able to access a digital holding confirmation via the registrar's online services. This will provide point-in-time evidence of their holding but will not replace the ongoing evidentiary status that share certificates currently provide.
Articles of Association
Is it essential that companies' Articles of Association remove references to share certificates?
EQ response from July 2026 webinar: No. Companies are not expected to amend their Articles before the implementation of Step 1.
The statutory instrument used to implement dematerialisation is expected to override existing Articles and Companies Act provisions where necessary. While companies will likely wish to update their Articles in due course to align with the new framework, the expectation is that most issuers will consider doing this during the 2028 AGM season rather than in advance of Step 1 implementation.
Model wording is also expected to be developed by GC100 to support issuers when the time comes.
The July 2026 DEMAT Report confirms:
1. The Statutory Instrument should:
1.1 Disapply requirements for issuers to issue new share certificates following an allotment or transfer of in-scope shares; and
1.2 Override any provisions to the contrary in an issuer’s articles, resolutions or terms of any share issuance or transfer in relation to in-scope shares.
2. that GC100 will lead on the development of model provisions for articles of association which may be adopted by issuers following Step 1.
Electronic communications and payments
How forceful are the expected powers for issuers to collect bank mandates and email addresses? Will it be mandatory for shareholders?
EQ response July 2026: The July 2026 DEMAT Report confirms that the dematerialisation awareness campaign should encourage Non-CREST shareholders to provide issuers with their contact and payment details to facilitate electronic communications and payments.
Under Step 2 and Step 3 considerations, there are recommendations for measures to require shareholders to provide issuers with their email addresses or other form of digital identity or electronic messaging solutions) and their bank account details. DEMAT considers these powers should be explicitly set out in legislation rather the relying on issuers articles of association.
DEMAT’s initial view is that any non-compliance with the requirement by a holder to provide such information should not constitute an offence. Potential consequences, for further consideration, may be empowering issuers to disapply certain shareholder rights during the period in which a shareholder has not provided such details eg
No bank mandate – no dividend payment
No email address – no company documents
When email addresses are collected for e-comms, will these be made available for public inspection of the public register? Will they be made available through the intermediary chain?
EQ Response July 2026: The July 2026 DEMAT Report confirms that any electronic communication and payment details added to the register, whether the digital issuer register or the Operator register, should be exempted from the inspection of register obligations found within the Companies Act and the USRs, to avoid the risk of causing undue harm to investors by making such personal data publicly accessible.
Untraceable/historic shareholders
Have you seen companies looking at updating articles in 2026 to reduce share forfeiture periods as part of the steps to update the register in advance of 2027?
EQ response July 2026: Yes. We have seen companies bringing forward article changes to reduce forfeiture periods (typically from 12 to 6 years). It’s not yet the majority but there’s a noticeable increase across last year and this year, and it’s likely to continue into 2027.
Read more in our recent article around Articles of Association here.
There are a lot of historic shareholders on the register. Will there be an exercise to reverify holders before they default to a nominee / Corporate Sponsored Nominee (CSN) or is it an automatic transfer regardless?
EQ response July 2026: The July 2026 DEMAT Report confirms that a number of important considerations will need to be addressed in the Step 2 & 3 report expected to follow in summer 2027:
- the need for pre-transition shareholder tracing and reunification programmes to minimise the number of shares which fall into default arrangements;
- issuer optionality whereby issuers retain meaningful choice over default arrangements rather than being steered toward a single mandated model;
- the potential market impact of any resulting large block sales on share prices and the broader investor base (which may be relevant for smaller issuers);
- KYC, sanctions compliance and transaction reporting requirements;
- the treatment of international holders; and
- protection of property rights under Article 1 of Protocol 1 to the European Convention on Human Rights.
Potential backstop mechanisms, identify three options:
- Government backed depository with ongoing administration
- Issuer funded Corporate Sponsored Nominee (CSN)
- Government backed depository with forced sale
Substantial shareholders
For substantial shareholders (holding more than 3%), if their paper share certificates are changed to demat, will it require them to file TR1 notifications during the conversion considering the intermediary will be the registered shareholder?
EQ response July 2026: There will be no requirement for Step 1. Removing the legal status of paper certificates does not change beneficial ownership, so a DTR/TR1 disclosure isn’t triggered merely by digitising the register. Further details on the impacts of moving shares to an intermediary are expected to be considered as part of the work on Steps 2 and 3.
Vulnerable shareholders
How are vulnerable shareholders being considered?
EQ response from March 2026 webinars: DEMAT has actively recognised the impacts for vulnerable investors — areas such as anxiety caused by change, and challenges with digital processes. A full roundtable was held specifically on vulnerable investors, and DEMAT includes a retail investor representative to ensure retail investor protections are built into recommendations. We expect legislative changes will be designed and implemented as sensitively as possible while still enabling the broader market transition.
EQ response July 2026: The July 2026 DEMAT Report confirms that as part of the awareness campaign that a key consideration will be provision for vulnerable and digitally excluded investors, including confirmation that shareholders without digital access will still be able to access all relevant information and support, and that civil society organisations would be invited to ensure communications will be made available in alternative formats including Braille, audio, ESL and BSL.
As part of the Step 2 and 3 considerations, the right to require hard copies will consider whether a shareholder should continue to have the option to request to receive a hard copy version and this discretion would cover not only vulnerable and digitally excluded people, but all shareholders.
Corporate Sponsored Nominee
For issuers with an existing Corporate Sponsored Nominee (CSN), what impact is anticipated?
EQ response from March 2026 webinars: No action is required for Step 1.
EQ response July 2026: The July 2026 DEMAT Report confirms that re-registration of inactive CSN interests, as part of Steps 2 and 3, requires further work.
Employee share plans
Do we need to review Share plan rules?
EQ response from March 2026 webinars: Step 1: Plan rules should roll across neatly; extensive changes aren’t expected. Step 3: Focus on the post award holding options you’ll offer (e.g., Individual Savings Account (ISA) via EQI, Global Nominee, CSN)—these are already Step 3 compliant; only limited technical changes may be needed.
Role of registrars
What will be the role of registrars as we move to Step 3, all shares being held through intermediaries?
EQ response May 2026: registrar services cover many areas linked to core share registration eg dividend distribution, vote collation, AGM management, shareholder contact, to name a few. The proposed move towards all shares being held by intermediaries requires a full assessment of what the future market infrastructure will be and what services will be needed to fit that infrastructure. At this point in the DEMAT programme, the future market infrastructure has not been decided.
Annual General Meetings
When all shares move into the intermediary chain, how will an AGM quorum be achieved?
EQ Response July 2026: This is a point that will need to be considered as part of making improvements to the intermediary chain of ownership and before the recommended transfer of all shares into an intermediary.
Share Sales and Transfers
How will retail shareholders sell their shares when share certificates are no longer valid?
EQ Response July 2026: Evidence of ownership will be the entry on the digital register. If selling through a broker the shareholder will need their Shareholder Reference Number which will be the primary identifier to identify the holding.
Tokenised securities
How does tokenisation work with the recommended end state of Step 3, all shares held within the intermediary chain?
EQ Response July 2026: The July 2026 DEMAT Report states that “Tokenisation initiatives using distributed ledger technology are being actively developed and deployed in international capital markets, and the FCA and Bank of England published a consultation on tokenisation in May 2026. The architecture for tokenisation has the potential to be inconsistent with the Step 3 proposal for a single, centralised intermediated model. For example, the Digital Securities Sandbox, which tests the issuance, trading, and settlement of tokenised securities in a live regulated environment through to 2029, has been created to specifically encourage innovation in financial market infrastructure.
DEMAT notes that tokenisation may be operational in UK markets before Step 3 is initiated and that the detailed specification for Step 3 implementation remains to be finalised. DEMAT’s preliminary observation is that the DEMAT and tokenisation initiatives should be reviewed side-by-side and, where appropriate, consolidated into a coherent overarching deployment strategy and transition plan, to ensure that the UK does not adopt an end-state for Step 3 that is inconsistent with tokenised market structures being deployed domestically and internationally. This will require close coordination between DEMAT and the relevant regulatory workstreams on tokenisation.”
Fraud risk
Is there a risk of heightened fraud during this transition? Has this been considered?
EQ Response July 2026: The July 2026 DEMAT Report advises that there should be specific powers under the Statutory Instrument to help safeguard against fraudulent or unauthorised transfers in the absence of paper share certificates and executed stock transfer forms while being exercised in a manner that does not unduly disrupt established digitised transfer processes.
As part of the awareness campaign it will be highlighted that the benefits of the transition for shareholders who currently hold paper share certificates, will include ease of verifying holdings online, the security measures to prevent fraud, and the elimination of risks and costs associated with paper certificates.
The awareness campaign will warn of heightened scam risks, instructing investors to rely on communications from their issuer, registrar or recognised intermediaries, and to verify information via official registrar and issuer channels. All materials will include clear signposts to authoritative sources (official issuer websites, registrar portals and helplines) to minimise the risk of fraud and false information.
Digital registers will require all transactions to be initiated digitally through Shareview/EQ One, and this will add ID&V and MFA protection to each instruction.
Ahead of the removal of paper share certificates, issuers can take proactive steps such as obtaining digital communications channels (email and portals like Shareview/EQ One). Additionally, issuers could consider running checks across the register which will cross check information with other sources to check that address data is correct and dividend bank accounts are owned by the shareholder, improving confidence that the person transacting is legitimate.
Issuer Actions
For a company with a small number of paper certificate holders, what would you recommend they do now, if anything?
EQ response from July 2026 webinar: There is no immediate action required specifically as a result of Step 1.
However, issuers can take practical steps now that are likely to be beneficial regardless of the final Step 2 and Step 3 framework:
- Continue shareholder tracing and reunification exercises to reconnect with "gone-away" shareholders.
- Encourage shareholders to provide email addresses and bank mandates.
- Increase digital engagement and use of online shareholder services.
- Review the profile of certificated holders and identify any potentially vulnerable or hard-to-reach groups.
- Work with your registrar to understand the characteristics of your register and prepare for future stages of the reform programme.
For companies with only a small number of certificated holders, the direct impact of Step 1 should be relatively limited, as shareholders will remain on the register and retain their existing rights.