When the share certificate disappears

The public equity market is entering the final phase of a transition that began decades ago: the disappearance of the physical share certificate. Hong Kong launches its Uncertificated Securities Market in November 2026. The United Kingdom has committed to digital share registers and the removal of paper certificates as evidence of ownership before the end of 2027. Australia has long operated an electronic registration and settlement model through CHESS. The United States has been overwhelmingly book-entry for years.

It is tempting to describe these reforms as versions of the same technological journey. They are not. Each market has made different choices about the relationship between the registered owner, the beneficial owner, the intermediary and the issuer. Those choices determine whether digitisation makes ownership more transparent or merely makes an intermediated system operate more efficiently.

This distinction matters because dematerialisation, direct ownership and ownership transparency are often treated as though they were the same thing. They are not. A market can eliminate paper while leaving the issuer several institutions removed from the investor whose capital actually owns the company. Equally, a market can use digital infrastructure while preserving direct legal title.

The next global debate is therefore unlikely to be paper versus digital. Almost every major market will become digital. The more meaningful divide may be between markets where issuers can identify and communicate effectively with beneficial owners, and markets where ownership is operationally efficient but structurally opaque. That difference has consequences for Investor Relations, corporate governance, voting, activism, retail participation and capital formation.

Core thesis

Dematerialisation solves the problem of paper. It does not automatically solve the problem of ownership.

For most of the history of public equity markets, ownership had a physical manifestation. There was a certificate. It carried a name, a number of shares and the legal symbolism of ownership. In modern markets, the economics of ownership have moved far ahead of that physical architecture. Trading is electronic, settlement is automated, portfolios are global and investors expect information instantly.

The certificate is therefore disappearing, but different markets are replacing it with very different legal and operational structures. Some allow electronic holdings while preserving direct registration. Others rely heavily on omnibus or nominee arrangements. Some are moving deliberately toward full intermediation. The result is that two investors in economically similar public companies can have very different legal relationships with the issuer depending on the jurisdiction in which the securities are held.

The global policy question is no longer whether securities should be digital. It is what digital ownership should mean. Does it mean the investor remains visible on an electronic register? Does it mean the investor holds a beneficial interest behind a broker or custodian? Who receives communications directly? Who is entitled to vote? Who does the issuer recognise? And how easily can the company identify the person making the investment decision?

Hong Kong’s USM is particularly interesting because it does not force a choice between direct and intermediated ownership. From 16 November 2026, investors will be able to hold prescribed securities electronically in their own names and enjoy shareholder rights directly. At the same time, CCASS and HKSCC Nominees remain central to the market, and investors can continue holding through brokers and custodians.

This creates a hybrid architecture. The investor who values direct legal ownership can hold electronically without paper. The institution that values custody and operational convenience can remain inside an intermediated structure. Mainland investors can continue to access Hong Kong through Stock Connect. The market therefore allows different forms of ownership to coexist rather than declaring one model to be universally superior.

For Investor Relations, this makes Hong Kong a valuable test case. Will investors meaningfully adopt direct electronic registration, or will the convenience of intermediated holdings remain dominant? Will the directly registered portion of the shareholder base grow? Will issuers become better able to communicate with retail investors? Or will USM mainly improve the efficiency of a market in which much economic ownership remains beneath nominees?

The answer will matter beyond Hong Kong because it tests whether direct digital ownership can coexist with a sophisticated institutional market rather than being treated as an historical exception.

Australia provides a very different reference point. Under the CHESS framework, investors can hold legal title on the CHESS subregister through a sponsoring broker, identified by a Holder Identification Number. Alternatively, investors can hold on an issuer-sponsored subregister using a Securityholder Reference Number. ASX explicitly describes CHESS-sponsored investors as remaining the registered legal owners of their securities.

This is important because it challenges a common assumption: that efficient electronic trading requires the investor to give up direct legal title to a nominee. Australia demonstrates that broker sponsorship and registered ownership can coexist. The investor can gain portfolio convenience through a sponsoring participant while remaining the person registered as the legal owner.

That does not make the Australian system free of intermediaries or operational complexity. But it means the legal architecture starts from a different place. The broker helps administer the relationship; it does not necessarily replace the investor on the ownership register. For issuers and IR teams, that distinction can make direct communication and ownership transparency structurally easier.

Australian lesson

Electronic settlement does not inevitably require omnibus ownership. Market design determines whether convenience and direct title can coexist.

The United Kingdom is taking another route. In July 2026, the Dematerialisation Market Action Taskforce published an implementation plan that the government accepted. Paper share certificates in publicly traded UK companies are intended to cease being evidence of ownership, with digital share registers mandated before the end of 2027.

Importantly, that first step is not the proposed end state. The UK reform programme is staged. The first phase replaces certificated registers with digitised registers while preserving the existing service model. The second phase is intended to improve the intermediated system so beneficial owners can exercise shareholder rights more effectively. The longer-term direction is towards a system in which shares move into the intermediated chain.

This creates a fascinating policy tension. A fully intermediated system may be operationally efficient and easier to integrate with modern trading platforms. But it also places greater importance on the mechanisms through which beneficial owners receive information, exercise votes and are identified by companies. The UK reform agenda itself recognises that those rights and communication channels have to be improved before the final transition can credibly occur.

The British experience therefore reframes dematerialisation as a governance question rather than merely a technology project. Removing paper is relatively straightforward. Rebuilding the connection between issuer and beneficial owner inside an intermediated structure is much harder.

The United States offers the clearest warning against treating electronic ownership as synonymous with ownership transparency. The SEC describes “street name” ownership as the common arrangement in which a broker or nominee is the registered holder while the investor is recorded by the broker as the beneficial owner. The investor does not receive a certificate, but also does not appear as the registered owner.

This structure is operationally efficient and supports enormous trading volumes. It also illustrates the distance that can emerge between legal title and economic ownership. Communications, voting materials and payments can travel through intermediaries because the issuer’s formal relationship is with the registered holder rather than directly with every beneficial owner.

The United States also supports forms of direct registration, but the coexistence of direct and street-name ownership demonstrates that dematerialisation alone does not determine the issuer-investor relationship. The legal and operational architecture layered on top of electronic records does.

US lesson

A market can be almost entirely electronic and still leave the issuer several layers removed from the beneficial owner.

This sounds like an easy question. It frequently is not. Consider a global investment manager that controls 4% of a listed company. The legal owner may be a nominee. The economic interests may sit across several funds. Behind those funds may be pension schemes, insurance customers, wealth-management clients and individual savers. The entity meeting management may be the asset manager, while voting authority is distributed between stewardship teams, portfolio managers and increasingly the underlying clients themselves.

The result is that “shareholder” can describe several different relationships at once. There is the legal owner, the beneficial owner, the investment decision-maker and the voting decision-maker. Those parties may be the same in a directly registered retail holding. In institutional markets they can be four different entities.

Dematerialisation makes the record keeping faster. It does not resolve the conceptual problem. In some markets it can even make the ownership chain less visible because highly efficient omnibus structures aggregate many investors beneath a small number of registered positions.

Another structural change is happening in parallel. Large asset managers are expanding pass-through, client-directed and customised voting models. This means a single manager’s aggregate economic position may increasingly be divided across different voting policies.

For Investor Relations teams, the implications are substantial. An issuer can identify the asset manager correctly and still misunderstand how its shares will vote. Different funds or clients can follow different governance policies. Some may delegate to a central stewardship team, some may select an external policy and others may exercise more direct influence.

This fragments voting power even as electronic systems make voting technically easier. It also reinforces the importance of year-round governance engagement. Companies need to understand not only who owns the shares, but where decision-making authority sits within the ownership chain.

The institutionalisation of equity markets over recent decades encouraged many IR teams to concentrate heavily on professional fund managers. Digital ownership infrastructure may partly reverse that trend by making it easier for individual investors to receive information, manage holdings, vote and participate in corporate actions electronically.

At the same time, retail investors now have access to analytical tools that were once the preserve of professional institutions. They can compare financial data instantly, participate in online meetings, discuss companies on social media and increasingly use AI tools to interpret announcements and annual reports.

This combination matters. Digital securities infrastructure makes the retail shareholder easier to service at precisely the moment the retail shareholder is becoming more technologically capable. Markets that preserve direct or high-quality pass-through communication may therefore see the retail investor become a more active governance constituency rather than a passive residual category.

Digitisation is often justified by efficiency: fewer manual forms, faster transfers, more automated elections and quicker payments. Those are important benefits, but they should not be the ceiling of ambition.

A rights issue can be processed electronically and still be poorly understood. A tender offer can arrive in an investor’s account without the investor understanding the economics. An AGM notice can be delivered instantly and still fail to engage the shareholder.

The next stage of digital market infrastructure should therefore treat corporate actions as communications products. Formal legal documents remain essential, but they can be supported by plain-language explanations, interactive timetables, multilingual content, digital reminders and more accessible investor support. The technology that removes paper should also reduce informational friction.

The traditional register is a legal record. The intelligent register is something broader: a connected view of legal ownership, beneficial ownership, ownership movement, engagement history and voting behaviour.

Imagine an issuer that knows Investor A is directly registered, Fund Manager B controls another position through Custodian C, B increased its holding after results, management met B twice during the year, three of B’s underlying funds follow different voting policies, and several investors have repeatedly engaged with the company’s strategy materials. No single dataset provides that picture.

The future of Investor Relations therefore lies not in replacing the share register, but in connecting it with shareholder identification, surveillance, CRM, meeting history, voting intelligence and digital engagement. This is where dematerialisation becomes strategically important. It creates faster, cleaner ownership infrastructure that can feed a broader investor-intelligence model.

Within a few years, the distinction between “paper markets” and “digital markets” will be increasingly meaningless. Major developed markets are moving decisively towards electronic ownership records. The more important distinction will be what those electronic records allow issuers and investors to do.

One group of markets may combine digital efficiency with strong visibility of legal or beneficial ownership and reliable shareholder communication. Another may achieve exceptional settlement efficiency while the issuer remains dependent on layers of intermediaries to identify, communicate with and understand its economic owners.

This divide has implications beyond IR. It affects corporate governance, stewardship, takeover defence, shareholder activism, retail participation, capital raising and investor protection. A market that cannot connect companies with their real owners may be operationally modern but relationally weak.

The disappearance of the share certificate is inevitable. It may also be the least interesting part of what comes next. The deeper transformation concerns the relationship between capital and companies: who owns the company, who controls those shares, who decides how they vote, who management communicates with and whether the legal register bears any meaningful resemblance to economic ownership.

Technology can make ownership records instantaneous. It cannot, by itself, answer those questions. Hong Kong’s hybrid model, Australia’s direct-title CHESS architecture, the United Kingdom’s planned move from digital registers towards fuller intermediation and the United States’ long-established street-name system all demonstrate that market design matters as much as market technology.

The most successful reforms may therefore be judged not by how quickly paper disappears, but by whether issuers and investors become better connected after the paper is gone.

The future of securities ownership will unquestionably be digital. The unanswered question is whether it will also be transparent.

Final thought

When everything becomes digital, will companies finally know their shareholders better — or will technology simply make an opaque ownership system operate faster?

About Irostors

Irostors helps listed companies better understand, monitor and engage with their investor base. By connecting shareholder identification, ownership surveillance, investor targeting, meeting intelligence and corporate-action insight, Irostors helps Investor Relations teams move from periodic shareholder analysis toward continuous investor intelligence.

Beyond investor intelligence

Research sources and notes

1. 01
   Securities and Futures Commission of Hong Kong, USM overview and FAQs, 2026; Hong Kong Exchanges and Clearing Limited, USM overview and Guide on the Uncertificated Securities Market, July 2026.
2. 02
   Australian Securities Exchange, materials on CHESS-sponsored and issuer-sponsored holdings, legal title and holder management, accessed September 2026.
3. 03
   HM Treasury, Dematerialisation Market Action Taskforce implementation plan and government response, July 2026; Digitisation Taskforce final report, July 2025.
4. 04
   U.S. Securities and Exchange Commission, investor guidance on street-name ownership and beneficial ownership.
5. 05
   Industry USM briefing supplied for this research, 27 August 2026. Company and presenter names intentionally omitted.

This paper is intended as research and discussion material and does not constitute legal, regulatory or investment advice.