Paper certificate shares / Common Reporting Standard

Arter

What is the situation with a person who lives in France and who holds shares in large UK plc companies (eg. Barclays plc, Lloyds plc, Prudential plc, Next plc) in Paper certificate form with regard to the Common Reporting Standard ?

Are UK Registrars such as Computershare and Equiniti required to report all of their paper certificate shareholders with an overseas address (such as France) to HMRC every year ?

Or are UK Registrars exempt from the Common Reporting Standard ?

If UK Registrars are not exempt, it must be a huge reporting task for them given the constant daily changing of a share register for a large UK plc, with potentially many thousands of paper certificate shareholders on the register with an overseas address.

Apodemus

I don’t know the answer to your question, but I think you are over-estimating the potential difficulty for the registrars. The shareholders are presumably all named on the database along with a registered address, it would need at most a single additional data-point per shareholder for the list to be extractable by reporting requirement.

Thrugelmir

Arter wrote: »

If UK Registrars are not exempt, it must be a huge reporting task for them given the constant daily changing of a share register for a large UK plc, with potentially many thousands of paper certificate shareholders on the register with an overseas address.

Why would overseas shareholders be issued with paper certificates when they trade?

Arter

Why would overseas shareholders be issued with paper certificates when they trade?

There could be several reasons. For example if they were issued in the UK several years ago and the shareholder has now moved overseas and changed the address.

eskbanker

Arter wrote: »

If UK Registrars are not exempt, it must be a huge reporting task for them given the constant daily changing of a share register for a large UK plc, with potentially many thousands of paper certificate shareholders on the register with an overseas address.

I think I may be missing the point of this thread and have some questions too:

Why would the UK be exempt from this reporting standard?
Why would paper certificate holders be more onerous to report on?
Why would overseas addresses be problematic?

Just to amplify on an earlier post, Lloyds (for example) currently has over 2.4 million shareholders, so obviously their registrars are required to deal with substantial volumes of data, but that's their job....

bowlhead99

Arter wrote: »

Are UK Registrars such as Computershare and Equiniti required to report all of their paper certificate shareholders with an overseas address (such as France) to HMRC every year ?

If you are talking about a registrar of a normal company, which is an operating business such as Next - then no, because the paper shareholders of an operating business are not considered to be 'accountholders' of a 'financial institution'.

In the case of Barclays, Lloyds, Prudential, then - because they are banks or insurers offering cash value insurance contracts - those entities are 'financial institutions' under the CRS. But the 'accountholders' who might be reported under CRS are the people who open financial accounts with the banks or insurance companies, not the people who actually own the banks or insurance companies.

However, if the company for which Computershare or Equinity are acting as registrar is an investment entity within the definitions in the CRS (e.g. an investment trust or VCT or private fund) then the owners of the debt or equity interests in that investment entity are considered 'accountholders'. The details of their financial accounts (account balance and annual amounts paid or credited, including redemption proceeds) would get reported to HMRC so that HMRC can share that information with tax authorities in the investors' country of residence(s)

Or are UK Registrars exempt from the Common Reporting Standard ?

If the entity is a financial institution such as Scottish Mortgage or Finsbury Growth & Income, whose financial accounts are debt or equity interests maintained on a register for them by someone like Computershare or Equinity or Link, the entity will have an obligation to report the financial accounts of non resident account holders appearing on the register, and the registrars (who have the investor data) will get involved in capturing the investor data and reporting it.

Whereas if it's not a financial institution- and is just a random public or private company e.g. Next or Tesco - the shareholder register of the company is *not* considered to be a list of financial account holders of a financial institution and so the registrar doesn't need to do any reporting as there aren't any accounts to report.

If you hold your shares in paper form (where you are directly named on the share register), and the entity isn't an investment entity such as an IT, you are not considered to be a financial account holder. Whereas if you have your shares electronically instead of in paper form and the broker provides you with a professional nominee /custody account, your broker is considered a financial institution - regardless of what types of financial assets you hold with them (Next shares, Lloyds shares, investment trust shares, bonds etc) - and so they will report your account activity (balance, dividends, interest, gross asset sales proceeds)

Just to amplify on an earlier post, Lloyds (for example) currently has over 2.4 million shareholders, so obviously their registrars are required to deal with substantial volumes of data, but that's their job....

Lloyds's millions of account *customers* are reportable if they have foreign CRS country-of-residences (or US residence or citizenship, for FATCA) holding a financial account with Lloyds. Such customer account holders would also include not just bank accounts but also holders of brokerage accounts with eg Lloyds, Halifax, IWeb.

However, Lloyds's owners are not going to be reportable by Lloyds or their registrars, just for appearing on the Lloyds share register. They might be reportable if (as I do) they hold their Lloyds debt or equity interests through brokers or custodians - because the broker is maintaining a financial account for them (in which to hold the Lloyds shares).

Arter

bowlhead,

Thanks for the explanation.

So from what you are saying, a shareholder with an overseas address in France, or in any other country, can hold Paper share certificates in the ordinary shares of UK companies in any quantity (eg. 1 million ordinary shares in Barclays plc, and 1 million ordinary shares in Lloyds plc, and Prudential plc, and Next plc) and there is no reporting by the UK Registrars under CRS.

Do you not think that this seems like quite a big flaw or hole in the reporting system ?

iglad

Sell those Lloyds shares while they still have some value. I finally saw sense and got rid a few weeks ago.