The Unfairness of Non-UK Residents Holding UK Certificated Shares
The Unfairness of Non-UK Residents Holding UK Certificated Shares
By Orlanda Carroll
For many shareholders outside the UK, owning UK-based certificated shares was once considered straightforward. Investors, whether purchasing in good faith or inheriting shares, assumed they could sell when needed. However, a growing issue has emerged: non-UK residents are increasingly unable to sell their UK shares without navigating an expensive and complex process.
Historically, a handful of brokers could facilitate the direct sale of these shares. Today, most decline outright unless the shareholder engages a solicitor regulated by the Financial Conduct Authority (FCA) to manage the process. This raises serious questions about the fairness of the system and whether the focus has shifted from shareholder service to unnecessary revenue generation.
The Real Impact on Shareholders
The practical impact is stark. A shareholder may now need to pay fees to at least three separate parties: the solicitor, the broker, and the share registry. Administration costs quickly mount, often leaving shareholders with very little of the actual value of their shares after the sale. In some cases, shareholders holding low-value shares end up losing money rather than realizing any benefit.
Proponents of these restrictions argue that they are necessary for fraud protection. But if a shareholder has already proven ownership and provided all certified documentation required, the rationale becomes less convincing. Why should demonstrating compliance not be sufficient to sell shares?
The scale of this issue is significant. In the UK alone, approximately 4.7 million people still hold certificated (paper) shares, equivalent to roughly 9% of UK adults who invest directly (Euroclear, 2025). Estimates suggest that up to 8–10 million certificated holdings remain on UK registers. However, some may be inactive (Computershare, 2023).
Globally, while most major markets have transitioned to electronic or book-entry systems, significant numbers of paper certificates still exist in some countries. As a result, similar barriers could affect millions of shareholders worldwide.
A critical consideration is residency. There is no authoritative public data on how many of the 4.7 million certificated shareholders in the UK reside abroad, but we know that overseas investors hold a substantial portion of UK share ownership by value. According to the UK Office for National Statistics, overseas investors hold over 58% of the quoted share value in the UK. (ONS, 2024). While this statistic refers to electronic markets rather than paper certificates, it illustrates that non-UK residents are a significant and relevant group affected by these restrictions.
The result is a dilemma for international shareholders. They can either abandon their shares entirely—effectively writing off their investment—or pay exorbitant fees that often consume the value of the holdings themselves. This not only feels unfair but actively penalizes shareholders for circumstances beyond their control, such as residency.
Ultimately, this situation highlights a fundamental tension in modern share trading: balancing legitimate fraud protection with equitable treatment of investors. Currently, non-UK shareholders face limited options, high costs, and little recourse. This raises questions about why companies initially sell such shares to international investors if they cannot be accessed freely.
Without practical solutions, this policy may alienate investors and damage confidence in UK shares among non-residents, leading to serious repercussions for both the market and individual shareholders.
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