The Digitisation Taskforce Final Report

Taskforce proposals miss the mark.
They put shareholder activism at risk and damage corporate governance.

The Digitisation Taskforce, comprising Sir Douglas Flint, Mark Austin and, latterly Chris Horton, has at long last released its long-awaited final report.

The report recommends a staged plan to completely eliminate both paper share certificates and digitised share registers, forcing all UK investors into an intermediated (nominee) system where shares are held on their behalf by financial institutions:

Step 1: Eliminate paper share certificates by 2027 (via a temporary transition to digitised registries)

Step 2: Improve the intermediated system of shareholding (to provide, among other things, a baseline service in relation to shareholders’ rights)

Step 3: All shares transitioned to the intermediated securities chain (eventually eliminating the digitised registries)

It includes 16 recommendations and proposes a Technical Group to oversee implementation. ShareSoc notes that the Technical Group does not include any individual shareholder representatives and would like to see this addressed.

The government has reportedly accepted all recommendations and committed to full implementation.

While the modernising of the system and dematerialisation of shares are positive steps, the taskforce’s proposals fail to address some of the taskforce’s key objectives. They contain fatal flaws that will strip essential rights from millions of investors and will erode their ability to hold company boards to account.

ShareSoc identifies two fundamental failures in the report:

Shareholder activism is at risk: the report proposes a “Shareholder Bill of Rights” which sets out a baseline service level for intermediaries.

This focuses on information rights and on the right to vote and participate in general meetings but signally fails to address other key shareholder rights including the rights to inspect and receive copies of the shareholder register, to submit statements and requisitions and to requisition meetings. It also looks to remove the headcount test for court sanction of schemes of arrangement (CA2006 S899) which protects minority shareholders in takeovers and delistings.

The protection of these rights is fundamental to good governance and to shareholder activism.

A key proposal is to restrict investors with proper purpose from having access to email addresses of other investors. This eliminates a primary benefit of digitisation, which is to facilitate communication between investors on stewardship matters including excessive executive pay, poor operational management, or environmental and social failings.

Investors are financially incentivised to opt out: although the report proposes a baseline service, it completely undermines this concept by allowing intermediaries to offer a level of service without access to shareholder rights at a lower cost.

This creates a perverse financial incentive for investors to opt out, en masse, from the ability to access rights associated with shares. It also introduces the risk that nominees may introduce prohibitive charges for the baseline service, effectively penalising responsible shareholders.

Allowing discriminatory pricing also degrades the rights of current certificated shareholders.

The taskforce has placed the interests of issuers and financial intermediaries above those of investors. The recommendations in the report fail to protect key shareholder rights and introduce dangerous financial incentives which will further erode investor engagement.

While ShareSoc acknowledges that some of the report’s recommendations offer an improvement over the current broken nominee system, it firmly believes these are overshadowed by the fundamental and damaging flaws at the report’s core.

We also note that the report fails to address the reduced financial protection for investors under the nominee system compared to direct ownership.

ShareSoc is now urging HM Treasury and government to override the damaging elements of the report’s recommendations and work with investor organisations to ensure a truly modern system that empowers all shareholders, rather than silencing them.

Post Date: July 21, 2025

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Group description:	Our group discuss a wide range of income generating instruments. Quoted dividend paying companies are usually the biggest topic for discussion; but we also discuss dividend paying Investment Trusts (including REITs) and ETFs, bonds (government and corporate), and preference shares.
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Group description:	The aim of this group is to share our investing ideas and experiences across all equity markets, brokers, websites and software to the benefit of us all. We do not discuss sums of money invested but may mention percentages gained and lost. We will rotate the chairperson who is responsible for creating, with member’s help, suitable agendas. We also rotate members to deliver a presentation, lasting between 15 and 45 minutes, on a topic of their choosing.
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Group description:	A small group whose primary interests are equity and Investment Trusts.
Meeting Type/Venue:	Meetings are online using Skype.
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Group description:	We welcome anyone interested in investments regardless of their level of knowledge and experience.
Meeting Type/Venue:	Meetings are held in a function room of a pub in Beaconsfield New Town.
Meeting Frequency/Timing:	Monthly on the 1st Wednesday of each month at 6pm.

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Meeting Type/Venue:	Meetings are in-person in a pub near to Waterloo station in London.
Meeting Frequency/Timing:	Meetings are bi-monthly on a Monday from 10:45am to 4:30pm. Members are expected to also pay for their own lunch which secures the group free use of a private room in the pub. The cost is expected to be £35-40 per person, per meeting, in addition to your SIGnet membership fee.

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The Digitisation Taskforce Final Report

ShareSoc identifies two fundamental failures in the report:

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