The vast majority of shares are held in electronic form but there are an estimated 10mn investors who still hold shares in paper form, including shares from privatisations in the 1980s, and certificates passed down to them.
"The challenge for advisers is that trading and settlement of shares held in paper form is generally more expensive and often takes longer", wrote Michael Carty in a piece for FTAdviser.
"There is also the associated risk of certificates going astray during the process, creating an added administrative burden and hindering communications between advisers and their clients."
Currently, by law, shareholders can request their shares to be certificated and they can request reissue of a lost, damaged or stolen certificate.
Companies can issue paper certificates for new issuance, and shareholders in receipt of scrip dividends or participating in dividend reinvestment plans (Drips) can take these distributions in paper certificate form.
Shareholders can also sell part of their holding and request a certificate for the remaining portion or sub-divide their holding into multiple ownership with fresh certificates issued to record each interest.
Richard Wilson, CEO of Interactive Investor, welcomed the recommendations, saying they had "finally caught up" with modern investing.
"The scope for unintended consequences when paper share certificates are kept in the bottom drawer is huge," he said.
"What we now have is a set of sensible proposals that seek to align the rights of shareholders with the rights of nominee shareholders. That means that beneficial owners should be better able to exercise their shareholder rights, and issuers can better identify and communicate with those shareholders, driving efficiencies in time and cost."
But he said there needed to be more than one solution when it comes to encouraging shareholders to actually vote.
"Today’s report notes that private investor voting numbers have been on an upwards trajectory; but the industry should not assume this trajectory will continue, even as more investment platforms begin to facilitate access.
"While Interactive Investor saw a 30 per cent increase in votes processed last year after we made our voting service opt out, rather than opt in, 92 per cent of votes still went to waste.
"At ii, we still have some technology innovations up our sleeve and coming soon, and which will make it even easier to vote. But this is not a ‘one and done’ solution. This stuff is hard. We want to see better, more retail friendly communications in the run up to and after an AGM. UK PLC must play its part."
The taskforce is accepting responses to its proposals until September, 25.
carmen.reichman@ft.com
