Demystifying Dematerialisation

As the DEMAT Task Force gets closer to releasing its first paper on the 3-step process through to 2029, we look at one possible unintended consequence of the process that is directly relevant to our audience of IROs.

There is a custodial push to align more closely with the European SRDII framework, which could lead to changes to the current effective Share Register Analysis process under s793 of the Companies Act.

The Investor Relations Society spoke to Gustav Pegers, Director Investor Relations EMEA at MUFG Corporate Markets, about the upcoming changes that Dematerialisation could bring for UK issuers.

If you had to sum it up in one line, what’s the biggest risk for UK issuers as we move toward dematerialisation?

Many aspects of the changes under dematerialisation are very positive for issuers and shareholders, but there is a risk of unintended consequences, one of which is we trade a flexible, low-cost share register analysis system under s793 for one that is more expensive for issuers, intermediary-driven, and ultimately reduces transparency.

You warn that companies could end up “paying more to know less”. Why is that a risk people should care about?

Because higher, less predictable costs directly influence how often companies can analyse their register. If you analyse less frequently, you lose visibility and the ability to respond quickly to shifts in your shareholder base.

What could these changes mean in practical terms for how companies engage with their investors?

Engagement becomes more reactive than proactive. If visibility drops or becomes more expensive to obtain, companies will find it harder to identify and reach the right investors at the right time. It will also limit their ability to target new investors.

If there’s one thing policymakers should get right in these reforms, what would it be?

Preserve issuer access to cost-effective, flexible shareholder transparency. Modernising infrastructure is important, but not if it weakens visibility or shifts control too far towards intermediaries.

From a board or IR perspective, what’s the single most important action companies should be taking right now to prepare for DEMAT changes?

Engage early – with registrars, agents and industry bodies – to understand how the model is evolving for Step 1 and ensure issuer requirements on key topics for Step 2 and 3, including share register analysis transparency, cost and flexibility, are properly represented before the framework is set. In addition, you can also reach out to the Dematerialisation Market Action Taskforce (DEMAT) directly, who we expect to be looking at Steps 2 and 3 from Q3 2026.