As a holder of paper share certificates, with no intention of executing in the immediate future, do I need to dematerialise? Is there a deadline?
Also, I have some £60 in old sterling £10 notes. Can they be changed anywhere or is it the shredder as I believe?
Mr DH
Dematerialisation has been a long time coming in Ireland where small shareholders have had a particular affinity for paper share certificates.
I’m not sure whether it is simply the pleasure of holding the proof of purchase in hand or a more deep-seated suspicion of handing over control to others operating electronic forms of ownership certification. I suspect it might be simply an issue of money: holding shares digitally has, until recently, normally meant doing so through a broker account with one of the stockbrokers for which they would charge ongoing fees.
Anyone trading shares in the US will have had no choice but to operate electronically for a long time now. Similarly with European exchanges and, more recently, with the UK.
There are very good reasons for going electronic, mostly to do with security – but also with efficiency and customer satisfaction.
Paper certs were proof of ownership but when they got lost, stolen or destroyed, getting them replaced was a complicated, time-consuming and costly process.
And with modern trading all being done electronically and involving ever shorter settlement dates, anyone you approached to sell your shares on the back of a paper certificate would have to convert them to electronic form anyway before doing the trade, which meant the price you get could be a long way from what you thought you were getting when you made the decision to sell.
[ Workers without pensions are big losers from latest auto-enrolment delayOpens in new window ]
Anyway, it is all academic now. Ireland dematerialised for all existing listed companies on January 1st of this year on the back of EU legislation on the issue. So yes, there was a deadline and it has passed.
That means your paper certificates are now invalid and, literally, not worth the paper they are written on. But never fear – you do not have to do anything yourself and, more importantly, you’re not out of pocket.
Where are your shares now and how can you prove ownership?
Share registrars – companies that manage who owns what shares in a listed company – have always had to record your ownership. In the old days, this was done laboriously in longhand in a ledger but for a long time now, it has been done electrically in what is called book entry format.
Up to now, for those with paper certs, that was only a backup information file, used only when certificates needed to be replaced. Now, however, it is the legal evidence of title – your proof of ownership.
In Ireland, the biggest of the registrars is Computershare Investor Services followed by Capita Asset Services and Link Asset Services. Another of the big registrars if you hold UK stock is Equiniti. Your shares will be managed by one of these. Which one should be evident from any mailings you have received regarding your investment from the listed company – notice of dividends, share splits or consolidations, notice of annual meetings, etc.
For those who have not already done so, as I suspect is the case with you, the biggest change will be the need to register with the online service of the registrar for each company in which you have invested.
This is where you will find details of your shareholding and any transactions, which can be useful in managing your tax affairs.
To register, you’ll need the name of the company in which you have invested and your shareholder reference number – a number exclusive to you which you should be able to find on your share certificate.
You’ll also need your own personal details. In terms of address, the key is the address under which the shares are registered. If you bought them a long time ago, it could be different from your current address unless you updated those details previously.
[ Making sense of shifting inheritance tax thresholdsOpens in new window ]
Once you are registered, you should certainly ensure that your details are amended so they are up to date for any future communications.
If you are someone who is really uncomfortable online, or simply does not have easy online access, you can still communicate with your share registrar by phone or post. Those details should also be on any letters you have in your file related to your shareholding.
None of these affects how you trade shares. You will still need to contact a broker to sell or buy shares and, with the information you provide, they will be able to track down your shareholdings if selling. What it will do is reduce the costs of share transactions compared with what it cost you with your share certificate.
What should you do with your paper certificates? In terms of value, you might as well bin them unless you feel they are artistic enough to merit framing or holding on to as a keepsake.
Old banknotes
Turning to your old bank notes, don’t do anything hasty. Certainly don’t shred them.
As you suspect, unless they are the British tenners first issued in 2017, which feature the head of Jane Austen, they are no longer legal tender and have not been since sometime in 2018.
Those new tenners are no longer paper notes as we would be familiar with but made from plastic for durability and featuring a range of additional security features.
However, all is not lost. In fact, you have two options.
While you certainly won’t be able to spend any pre-2017 notes in a store, the Bank of England does still accept them for exchange at face value. You can exchange it at a local UK bank branch or at a branch of the UK post office. Alternatively, you can mail your notes to the Bank of England or attend in person.
You will need to fill out a form and have proof of ID and address. You can find all the details here.
For those with old Irish bank notes or coins, the same option is available with our Central Bank (though they obviously will not accept foreign notes, including sterling). You can do this at a bank branch or directly with the Central Bank by registered post or in person – though you’ll need to call to make an appointment at (01) 224 5969.
As with the UK, you’ll also need to fill out a form and have proof ID. You can find out more about your options here.
The second option for your sterling depends on whether your particular notes have any unusual quirks on them. Some notes have value as collectibles. Obviously, these would be rare but you could check it out.
At worst, they have no collectible value and you can simply hold on to them until you’re next in a position to return them to the Bank of England. But if any are worth more than face value, you’re clearly better off availing of that option.
[ Are neighbours entitled to a share of the estate of a man they cared for?Opens in new window ]
You’re certainly not alone out there. I don’t have recent figures but back in 2019, more than a year after they were no longer legal tender, there were 94 million paper tenners and 118 million paper fivers unaccounted for, lying in people’s wallets or elsewhere in their homes.
In its most recent annual report, the Bank of England said that 119 million unfit banknotes were returned to it in the 12 months to March 2024. The vast majority of these would be old paper notes across various denominations.
My advice is to hold on to the cash until you or someone you know is next heading over to London.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
