GovWire

Mark Austin published the outcome of his review of Secondary Capital Raising in the UK on 19 July 2022, making a series of recommendations to the Government, Financial Conduct Authority (FCA) and the Pre-Emption Group (PEG). Modernising the UKs shareholding framework was an important element of his review, as reform here would enhance the efficiency of capital markets, ensure investors are able to properly exercise their rights, and support innovation in UK capital markets. As outlined in Mr Austins report, digitisation encompasses reforming the UKs shareholding framework and completing the elimination of paper share certificates.

On 19 July, the Government accepted Marks recommendation to establish a taskforce to modernise the UKs shareholding framework, and appointed Sir Douglas Flint as chair of the Digitisation Taskforce. Sir Douglas is Chairman of Abrdn PLC and previously Group Chairman of HSBC. He also serves as HM Treasurys Special Envoy for Financial and Professional Services to Chinas Belt and Road Initiative.

The Taskforce, under the chairmanship of Sir Douglas, has been asked to a work with stakeholders across the financial services sector to build a broad consensus for change. In particular he has been asked to:

1. Identify immediate, and longer term, means of improving on the current intermediated system of share ownership;
2. Eliminate the use of paper share certificates for traded companies and mandate the use of additional options to cheques for cash remittances; and
3. Consider whether the arrangements for digitisation can be extended to newly formed private companies and as an optional route for existing UK private companies.

The Taskforce will also consider the use of new processes and technologies in achieving these goals.

The Taskforce will develop a timetable and plan for implementation of changes, and support progress. It will engage with the Government and regulators on progress, and advise on any legislative, regulatory or other changes required to support the programme.

The Chancellor has asked Sir Douglas to provide a public report on the Taskforces progress and initial findings by spring 2023, and to publish final recommendations and an implementation plan by spring 2024.