Share Certificates Lost in Post - Indemnity?

dimtim

My mum is an elderly lady (96 and counting). Some decades ago she was advised to invest in some Unilever shares. Her couple of hundred pounds investment is now worth over £100,000. She wanted to sell some of these to pay for some care needs and sent off the share certificate to Computershare only to be told that a new issue certificate had been sent to her in 2006 and the one she had sent was not valid. The certificate sent in 2006 (which was sent ordinary first class post by Computershare on behalf of Unilever) never arrived. She has asked for a new share certificate to be issued and was willing to pay the Registrar’s fee of £32 but needed to return a letter of indemnity countersigned by a UK bank or insurance company. Computershare will provide this indemnity countersignature through their insurer (for an exorbitant fee – about 0.5% of the value of the certificate) for certificates up to £50,000 - but not in my mum’s case because of the high value of her holding. She has been told by the Registrar that the lost certificate has now been invalidated as lost and cannot be traded (so why the need for indemnity?) . She has approached her bank (NatWest) for a countersignature to the letter of indemnity but they have refused (at any price) because they do not wish to take the “risk” and view this as an unsecured loan! We don’t know where to look for insurers now as anyone we phone doesn’t seem to know a lot about this situation.

This seems to me like a ludicrous situation. The share certificate clearly has a significant intrinsic value when lost so surely it was negligent for Computershare to send it out ordinary mail? Does anyone know of an insurer who understands these things and will countersign the letter of indemnity for a “reasonable” fee? She (and I on her behalf) would be really grateful if anyone can come up with a suggestion.

cheerfulcat

Hi, dimtim,

Has your mum been receiving dividends?

fozzeh

dimtim wrote: »

My mum is an elderly lady (96 and counting). Some decades ago she was advised to invest in some Unilever shares. Her couple of hundred pounds investment is now worth over £100,000.

That is pretty wow! Would indicate that they traded at 19p when she bought them...if they ever traded at that price but I'll excuse any exaggerations or me not looking far enough back.

dimtim wrote: »

She wanted to sell some of these to pay for some care needs and sent off the share certificate to Computershare only to be told that a new issue certificate had been sent to her in 2006 and the one she had sent was not valid.

General practice if anything happens with the company. You will have got notification in the post about 4 times prior at least that something was going to happen and to ensure you registration details are correct.

dimtim wrote: »

The certificate sent in 2006 (which was sent ordinary first class post by Computershare on behalf of Unilever) never arrived.

Again, standard yet awful practice for CS.

dimtim wrote: »

She has asked for a new share certificate to be issued and was willing to pay the Registrar’s fee of £32 but needed to return a letter of indemnity countersigned by a UK bank or insurance company. Computershare will provide this indemnity countersignature through their insurer (for an exorbitant fee – about 0.5% of the value of the certificate) for certificates up to £50,000 - but not in my mum’s case because of the high value of her holding.

This bit puzzles me. £100,000 on a certificate is nothing (in full scale terms)...and I can't see why they won't fill the LOI in through themselves. The ability to be able to offer this service and retract it breaches a guideline but not sure which.

dimtim wrote: »

She has been told by the Registrar that the lost certificate has now been invalidated as lost and cannot be traded (so why the need for indemnity?).

That's a very strong and bold statement.

dimtim wrote: »

She has approached her bank (NatWest) for a countersignature to the letter of indemnity but they have refused (at any price) because they do not wish to take the “risk” and view this as an unsecured loan! We don’t know where to look for insurers now as anyone we phone doesn’t seem to know a lot about this situation.

Unfortunately, most banks would do this as it is not their niche. The certificate is registered in the customer’s name and can only be utilised by them (unless fraudulently done so). The only way the bank would get it classed as an unsecured loan would be if the customer used the basis for the validity of the certificate to give her a different loan...and I can't see anywhere doing this (unless they're stupid/loan sharks).

dimtim wrote: »

This seems to me like a ludicrous situation. The share certificate clearly has a significant intrinsic value when lost so surely it was negligent for Computershare to send it out ordinary mail?

Poor customer service. They rake it in this way...and Royal Mail do too. Corporate bumming!

dimtim wrote: »

Does anyone know of an insurer who understands these things and will countersign the letter of indemnity for a “reasonable” fee? She (and I on her behalf) would be really grateful if anyone can come up with a suggestion.

Suggestion would be for you to contact the registrar again (Computershare) and ask for a statement of holding (maybe a small fee available). They cannot dent anyone this providing they can provide the relevant details.
I would also write to the company and tell them your problem too. The company will have a full list of shareholders dating back forever and you can get some info this way (again, maybe for a small fee).

Escalating complaints with any registrar is not easy (trust me) but if what you say is true, CS will be acting in a very poor manner. There will be a procedure for complaint in line. Dependant on when you read this and how far you get, drop me a PM and can be discussed further.

As for the dividend thing, it is a stong thing you have in your favour. If you get cash ones, you will have received these via cheque/BACS and the rate will be measurable to your holding. However, if this is DRIP (dividend reinvestment), the shares will have been sent certificated and you should have them too somewhere (unless, as above, hey have been sent to the wrong address which would be your responsibility).

Note to yourself and everyone else who plays the market; don't use certificates.

dimtim

Many thanks Fozzeh. The original share purchase was way back and I'm not entirely sure what she paid for them - guessing at the £200. Yes my mum has been receiving dividends paid by BACS I think every 6 months. She did receive notification that a new certificate would be sent but these were filed and it didn't click that the certificates never arrived (it wouldn't have made any difference if it had clicked as she would have been in the same position only 3 years ago instead of now). My mum does need to sell some of her shares now and the processes for complaints to the Registrar and Ombudsman can take an age I understand. Can you or anyone suggest an insurer who would take this on at a fee so she can move things on and perhaps lodge the complaint later? I take your point about paper certificates and will be advising her to do it differently when this mess is sorted out.

I just found a post by digerati on this subject from 2 years ago. He suggested "Can you not ask your household insurer to provide a letter of indemnity? If the registrar refuses to replace your lost certificates, make a claim for the full amount under your household insurance for the current value of the lost share holding. Your insurer can claim ownership of the lost shares with the registrar." Do you or anyone have a view as to the validity of this suggestion and whether it has worked in the past? Don't know if the insurer would cover something that never arrived in the post?

fozzeh

Does she have an original contract note? Long shot, I know.

Can she document receiving the dividends by previous bank statements? If so, this would be helpful.

No-one will sell those shares for you unfortunately. The LOI process is a 4-6 week process (once you've got over the above stage) and the risk of selling without documents is too high risk. You'd have to trade on a T+40 basis and any delays or lapses would leave you liable...and T+40 is unheard of really. You'd have to take a loan out yourself to cover the costs. I'll send you a PM too.

fozzeh

As for the added point, you'd have to check with your home insurance...I can't see why your insurers would loan you some money on the basis you may or may not have the stock, unless you could prove it. Most insurers work on the basis of how much it costs to replace the item, not its actual value on the open market.

dimtim

She does have evidence of ownership and this is not disputed by Unilever or Computershare. I realise it's not possible to sell without a new certificate. There's no problem about finding the fee for getting a letter of indemnity countersigned but the problem is finding an insurance company who will do this when the value of the holding is more than £50,000. Any ideas? I must admit that the idea of asking her home insurer didn't sound as if it would work but maybe others have had a different experience. Thanks again for your suggestions.

fozzeh

To be honest, it's a very odd situation, one I've not seen. If a registrar can prove you holding and none of the registration details are being changed, I can't see why they won't do it.
I've no suggestions apart from really following the correct method on this one.

Rollinghome

I'd suggest you contact a decent old-fashioned stockbroker and have them sort it all out. There'll be a massive CGT liability so the lost certificate may be the least of the problems.

fozzeh

CGT sting would be bad (£10,100 is annual personal allowance) but your mother could potentially gift some shares and allow that person (you, a sibling) to utilise their allowance too…but that would be personal choice and you would have to research this sufficiently before making any choices.
As for processing this, can you PM me your e-mail address? I've just spoken to our in house expert on this and she can't see why Computershare are doing this. Regardless to say, you will still be looking at a wait for the funds as no-one would want to be taking a huge risk.
My recommendation at this stage would be e-mail me, discuss from there and put the shares into a nominee account.

catz1ct

You will still need a share certificate to submit in order to transfer them to a nominee account though.

Computershare wont reccommend anyone who will be able to countersign for you either as they deem it as giving financial advice.