The Dematerialisation Market Action Taskforce (DEMAT) published its long-awaited report on 14 July 2026, timed to coincide with the Chancellor's Mansion House Speech. The report sets out a detailed implementation plan for the UK's move away from paper share certificates — a reform that will have significant practical implications for listed companies. 

Paper share certificates to go by end of 2027

The DEMAT report provides concrete steps for the government to reach what is described as 'Model 1' — the digital register model . In response to the report, the government has confirmed that legislation will come into force before the end of 2027. Exact timing to implement Model 1 will be confirmed taking into account the most appropriate weekend for system changes, though DEMAT recommends this should avoid being in close proximity to the implementation of T+1 accelerated settlement in October 2027.  

Under Model 1, paper share certificates will no longer constitute evidence of ownership. Instead, shares in UK-incorporated companies that are traded on a UK regulated market or an SME Growth Market will be held and transferred through digital registers, operating alongside the existing CREST system. Shareholders will access their holdings through online portals.

However, the report is clear that Model 1 is intended to be no more than a 'pit stop' on the road to full reform. The ultimate destination is 'Model 3' — a fully intermediated model under which shares will be issued in fully digital form, held through a central securities depository (CREST), with shareholders holding either directly in CREST or through intermediaries such as banks, brokers, platforms or nominees. Work on Steps 2 and 3 of the transition — which address improvements to the intermediated system and the eventual move to Model 3 — will continue in the background, with DEMAT's second report expected in Summer 2027.

What does the report cover?

The report is a comprehensive implementation plan covering the legislative, operational and practical steps needed to deliver Model 1. Key areas addressed include:

• Withdrawal of paper share certificates as evidence of ownership title and the move to electronic recording on digital registers.
• Modernisation of share transfer requirements to permit digital transfers and electronic signatures.
• Development of Step 1 Operational Standards by Euroclear, registrars, companies, brokers and shareholder associations, with government endorsement expected by Summer 2027 and an “expectation” that these standards are adhered to.
• The process for taking security over shares, with DEMAT to conduct a sounding exercise with the lending community.
• Competing takeover offers and the prevention of multiple acceptances in a dematerialised environment.
• Stamp duty and stamp duty reserve tax (SDRT) processes, with DEMAT recommending that Model 1 is implemented at the same time as the planned replacement of stamp duty and SDRT with a single tax on transfers of in-scope securities and the digitisation of reporting and payment of such tax.
• A public awareness campaign — to be coordinated by DEMAT and delivered through companies, registrars, intermediaries, investment platforms and civil society organisations.
• Guidance and template materials to assist in preparing for the transition.

Articles of association: legislation will override articles, but companies may wish to update

It is proposed that a Statutory Instrument will be used to override any provisions in a company’s articles of association that are inconsistent with the new digital register model and so there will be no mandatory obligation on companies to amend their articles. That said, the practical reality is that articles drafted before dematerialisation will contain references to share certificates and certificate-related processes that will become redundant and potentially confusing. Companies are therefore expected to want to bring their articles up to date, likely at their 2028 AGM (assuming the government meets the proposed implementation timetable). To support this, it is proposed that GC100 will lead an industry working group to develop model provisions for articles of association amendments. 

Practical issues to be resolved

While the DEMAT report is welcomed, a number of important practical concerns which companies have raised about digitisation have not been fully addressed at this stage. Even within the scope of Model 1, DEMAT acknowledges that there are a number of practical implementation points still to be worked through ahead of the late 2027 go-live. These include how share transfers outside CREST will be validated and title evidenced in the absence of paper certificates, how security can be taken and enforced over shares when a physical certificate can no longer be deposited with a collateral taker, and how shareholders will be prevented from accepting more than one competing offer in a takeover situation.

Beyond Model 1, and largely because DEMAT's terms of reference for this report were focused on delivery of Step 1 only, the more complex issues arising in connection with Models 2 and 3 remain to be addressed. In particular, a number of companies and interested parties have noted the importance of ensuring that the implementation path to Model 3 is prioritised and defined so as to deliver a single, authoritative legal register, with intermediaries competing on a level playing field to serve their direct clients.

Given the increased prevalence of UK-traded companies having a dual listing of their shares (particularly in the US), the interaction with the foreign central securities depositories will also need to be addressed as part of the transition to Model 3.  DEMAT has acknowledged in this context that exceptions may be needed to the general proposition that direct ownership of shares outside of CREST should not be possible under Model 3 — a concession that will be welcomed by affected companies, who will now be looking for that commitment to be reflected clearly in the implementing legislation.

Next steps: what are companies being asked to do?

There are no immediate asks of companies at this stage, but the direction of travel is clear and the timetable is tight. The indicative key dates from the report are:

• H2 2026: Commencement of the public awareness campaign.
• Summer 2027: Draft Statutory Instrument laid before Parliament. + DEMAT second report addressing Steps 2 and 3.
• Late 2027: Digital register model takes effect; paper share certificates no longer constitute evidence of ownership.

In practical terms, company secretaries of listed companies should be familiarising themselves with the DEMAT report and its recommendations, in particular the scope of the digital register model and any carve-outs relevant to their company and ensuring their boards are briefed on the scope and timeline of the reform. 

We will continue to monitor developments closely and will provide further updates as the legislative timetable and the GC100 model articles work progresses. Please do not hesitate to contact Rós Ní Dhubháin, Ziyad Nassif or any member of your Freshfields team if you would like to discuss any aspect of the reforms or their implications for your company.