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The March issue of The Private Investor reports on an EU Regulation heading this way that will require the eventual abolition of share certificates, by a process called 'dematerialisation'. This raises serious questions.

Those investors who currently choose to hold paper certificates enjoy full ownership rights over their shares, so how will retention of those rights be preserved once the shares are dematerialised? If shareholders are forced into a nominee account those rights will be immediately extinguished, because the legal ownership of shares in a nominee account belongs to the nominee and not to the investor. The only way, at present, of being the legal owner of one’s equity investments if they are not held in paper form is through a personal CREST account.

UKSA will press for all investors to retain full legal rights over their investments after dematerialisation — and use this opportunity to press for this facility to be available to all equity investors, including those
investing through ISAs and SIPPs.

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