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The Uncertificated Securities Regulations 2001

Type Statutory-Instrument

Publication 2001-11-23

Last updated 2024-03-04

State In force

Department King's Printer of Acts of Parliament

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Made: 23rd November 2001

Coming into force: 26th November 2001

Now, therefore, the Treasury, in exercise of the powers conferred by section 207 of the Companies Act 1989¹ and now vested in them², and of all other powers enabling them in that behalf, hereby make the following Regulations:

PART 1 — CITATION, COMMENCEMENT, AND INTERPRETATION

Citation and commencement

1

These Regulations may be cited as the Uncertificated Securities Regulations 2001 and shall come into force on 26th November 2001.

Purposes and basic definition

2

(1) These Regulations enable title to units of a security to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument, and make provision for certain supplementary and incidental matters; and in these Regulations “relevant system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument, and which facilitate supplementary and incidental matters.

(2) Where title to a unit of a security is evidenced otherwise than by a certificate by virtue of these Regulations, the transfer of title to such a unit of a security shall be subject to these Regulations.

Interpretation

3

(1) In these Regulations—

“the 1877 Act” means the Treasury Bills Act 1877;

“the 1950 Act” means the Exchequer and Financial Provisions Act (Northern Ireland) 1950;

“the 1986 Act” means the Financial Services Act 1986³;

“the 2000 Act” means the Financial Services and Markets Act 2000⁴;

“the 2006 Act” means the Companies Act 2006;

“the 1968 Regulations” means the Treasury Bills Regulations 1968;

“the 1974 Regulations” means the Local Authority (Stocks and Bonds) Regulations 1974⁵; ...

“the 1995 Regulations” means the Uncertificated Securities Regulations 1995⁶;

“the 2003 Regulations” means the Uncertificated Securities (Amendment) (Eligible Debt Securities) Regulations 2003;

“the 2004 Regulations” means the Government Stock Regulations 2004;

“certificate” means any certificate, instrument or other document of, or evidencing, title to units of a security;

“company” means a company within the meaning of section 1(1) of the 2006 Act;

“CSD regulation” means Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories;

“dematerialised instruction” means an instruction sent or received by means of a relevant system;

“eligible debt security” means–a security that satisfies the following conditions–the security is constituted by an order, promise, engagement or acknowledgement to pay on demand, or at a determinable future time, a sum in money to, or to the order of, the holder of one or more units of the security; andthe current terms of issue of the security provide that its units may only be held in uncertificated form and title to them may only be transferred by means of a relevant system;an eligible Northern Ireland Treasury Bill; oran eligible Treasury bill;

“eligible Northern Ireland Treasury Bill” means a security–constituted by a Northern Ireland Treasury Bill issued in accordance with the 1950 Act as modified by Part 2 of Schedule 1 to the 2003 Regulations; andwhose current terms of issue provide that its units may only be held in uncertificated form and title to them may only be transferred by means of a relevant system;

“eligible Treasury bill” means a security–constituted by a Treasury bill issued in accordance with the 1877 Act and the 1968 Regulations as modified by Part 1 of Schedule 1 to the 2003 Regulations; andwhose current terms of issue provide that its units may only be held in uncertificated form and title to them may only be transferred by means of a relevant system;

“enactment” includes an enactment comprised in any subordinate legislation within the meaning of the Interpretation Act 1978⁷, and an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament;

“general local authority security” means a local authority security that is not an eligible debt security;

“general public sector security” means a public sector security that is not an eligible debt security;

“general UK Government security” means a UK Government security that is not an eligible debt security;

“generate”, in relation to an Operator-instruction, means to initiate the procedures by which the Operator-instruction comes to be sent;

“guidance”, in relation to an Operator, means guidance issued by him which is intended to have continuing effect and is issued in writing or other legible form, which if it were a rule, would come within the definition of a rule;

“instruction” includes any instruction, election, acceptance or any other message of any kind;

“interest in a security” means any legal or equitable interest or right in relation to a security, including—an absolute or contingent right to acquire a security created, allotted or issued or to be created, allotted or issued; andthe interests or rights of a person for whom a security is held on trust or by a custodian or depositary;

“issue”, in relation to a new unit of a security, means to confer title to a new unit on a person;

“issuer-instruction” means a properly authenticated dematerialised instruction attributable to a participating issuer;

“issuer register of members” has the meaning given by regulation 20(1)(a);

“issuer register of securities”—in relation to shares, means an issuer register of members; andin relation to units of securities other than–shares,securities in respect of which regulation 22(3) applies, orwholly dematerialised securities,means a register of persons holding the units, maintained by or on behalf of the issuer or, in the case of general public sector securities, by or on behalf of the person specified in regulation 21(3);

“local authority”–in relation to a security referred to in paragraph (a)(i) of the definition of “local authority security”, has the same meaning as in the 1974 Regulations; in relation to a security referred to in paragraph (b) of the definition of “local authority security”, has the same meaning as in section 23 of the Local Government Act 2003 (“local authority”);

“local authority security” means a security which is either–a security other than an eligible debt security which, when held in certificated form is–transferable in accordance with regulation 7(1) of the 1974 Regulations and title to which must be registered in accordance with regulation 5 of those Regulations; or...an eligible debt security issued by a local authority;

“officer”, in relation to an Operator or a participating issuer, includes—where the Operator or the participating issuer is a company, such persons as are mentioned in section 1173(1) of the 2006 Act;where the Operator or the participating issuer is a partnership, a partner; or in the event that no partner is situated in the United Kingdom, a person in the United Kingdom who is acting on behalf of a partner; andwhere the Operator or the participating issuer is neither a company nor a partnership, any member of its governing body; or in the event that no member of its governing body is situated in the United Kingdom, a person in the United Kingdom who is acting on behalf of any member of its governing body;

“Operator” means a person operating or proposing to operate a relevant system subject to these Regulations, who is—a recognised CSD within the meaning of section 285(1)(e) of the 2000 Act,...a third country CSD within the meaning of section 285(1)(g) of the 2000 Act;

“Operator-instruction” means a properly authenticated dematerialised instruction attributable to an Operator;

“Operator register of corporate securities” has the meaning given by regulation 22(2)(a)(i);

“Operator register of eligible debt securities” has the meaning given by regulation 22(3A)(a);

“Operator register of general public sector securities” has the meaning given by regulation 21(1)(a);

“Operator register of members” has the meaning given by regulation 20(1)(b);

“Operator register of securities”—in relation to shares, means an Operator register of members;in relation to units of a security other than shares, means an Operator register of corporate securities, an Operator register of general public sector securities, an Operator register of eligible debt securities or, as the case may be, a register maintained by an Operator in accordance with regulation 22(3)(a);

“Operator’s conversion rules” means the rules made and practices instituted by the Operator in order to comply with paragraph 18 of Schedule 1;

“Operator-system” means those facilities and procedures which are part of the relevant system, which are maintained and operated by or for an Operator, by which he generates Operator-instructions and receives dematerialised instructions from system-participants and by which persons change the form in which units of a participating security are held;

“participating issuer” means (subject to paragraph (3)) a person who has issued a security which is a participating security;

“participating security” means a security title to units of which is permitted by an Operator to be transferred by means of a relevant system;

“public sector securities” means UK Government securities and local authority securities;

“record of uncertificated general public sector securities” has the meaning given by regulation 21(2)(a);

“record of securities” means any of a record of uncertificated corporate securities, a record of uncertificated shares and a record of uncertificated general public sector securities;

“record of uncertificated corporate securities” has the meaning given by regulation 22(2)(b)(ii);

“record of uncertificated shares” has the meaning given by regulation 20(6)(a);

“register of members” means either or both of an issuer register of members and an Operator register of members;

“register of securities” means either or both of an issuer register of securities and an Operator register of securities;

“relevant system” has the meaning given by regulation 2(1); and “relevant system” includes an Operator-system;

“rules”, in relation to an Operator, means rules made or conditions imposed by him with respect to the provision of the relevant system;

“securities” means shares, stock, debentures, debenture stock, loan stock, bonds, units of a collective investment scheme within the meaning of section 235 of the 2000 Act, rights under a depositary receipt within the meaning of paragraph 4 of Schedule 2 to the Criminal Justice Act 1993⁸, and other securities of any description, and interests in a security;

“settlement”, ... in relation to a transfer of uncertificated units of a security between two system-members by means of a relevant system, means the delivery of those units to the transferee and, where appropriate, the creation of any associated obligation to make payments, in accordance with the rules and practices of the Operator; and “settle” shall be construed accordingly;

“settlement bank”, in relation to a relevant system, means a person who has contracted to make payments in connection with transfers of title to uncertificated units of a security by means of that system;

“share” means share (or stock) in the share capital of a company;

“system-member”, in relation to a relevant system, means a person who is permitted by an Operator to transfer by means of that system title to uncertificated units of a security held by him, and shall include, where relevant, two or more persons who are jointly so permitted;

“system-member instruction” means a properly authenticated dematerialised instruction attributable to a system-member;

“system-participant”, in relation to a relevant system, means a person who is permitted by an Operator to send and receive properly authenticated dematerialised instructions; and “sponsoring system-participant” means a system-participant who is permitted by an Operator to send properly authenticated dematerialised instructions attributable to another person and to receive properly authenticated dematerialised instructions on another person’s behalf;

“system-user”, in relation to a relevant system, means a person who as regards that system is a participating issuer, a system-member, system-participant or settlement bank;

“UK Government security” means a security issued by Her Majesty’s Government in the United Kingdom or by a Northern Ireland department;

“uncertificated”, in relation to a unit of a security, means (subject to regulation 42(11)(a)) that title to the unit is recorded on the relevant Operator register of securities, and may, by virtue of these Regulations, be transferred by means of a relevant system; and “certificated”, in relation to a unit of a security, means that the unit is not an uncertificated unit;

“unit”, in relation to a security, means the smallest possible transferable unit of the security (for example a single share);

“wholly dematerialised security” means—a strip, in relation to any stock or bond, within the meaning of section 47(1B) of the Finance Act 1942⁹; ora participating security whose terms of issue (or, in the case of shares, where its terms of issue or the articles of association of the company in question) provide that its units may only be held in uncertificated form and title to them may only be transferred by means of a relevant system;and other expressions have the meanings given to them by the Companies Acts (as defined by section 2 of the 2006 Act).

(2) For the purposes of these Regulations—

(a) a dematerialised instruction is properly authenticated if it complies with the specifications referred to in paragraph 5(3) of Schedule 1; or if it was given, and not withdrawn, before these Regulations came into force and was properly authenticated within the meaning of regulation 3(2)(a) of the 1995 Regulations;

(b) a dematerialised instruction is attributable to a person if it is expressed to have been sent by that person, or if it is expressed to have been sent on behalf of that person, in accordance with the rules and specifications referred to in paragraph 5(4) of Schedule 1; and a dematerialised instruction may be attributable to more than one person.

(3) In respect of a participating security which is a general public sector security, references in these Regulations to the participating issuer shall, other than in regulation 41, be taken to be references—

(a) in the case of a local authority security—

(i) to the relevant local authority; or

(ii) if the local authority has appointed another person to act as registrar for the purpose of the 1974 Regulations in respect of that security, to the person so appointed ...

(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) in the case of any other general public sector security, to the Registrar of Government Stock.

(4) In respect of a security which is an eligible debt security, references in these regulations to the issuer or the participating issuer of that security (or units of that security) shall be taken to be references to–

(a) a person (“P”) who undertakes as principal to perform the payment obligation constituted by the security in accordance with its current terms of issue; and

(b) any other person who undertakes as principal to perform that obligation in accordance with those terms in the event that P fails to do so.

(5) For the purposes of paragraph (4)(b), a person who undertakes to perform an obligation under a contract of guarantee or other contract of suretyship is not to be regarded as undertaking to perform it as principal.

(6) For the purposes of paragraph (a) of the definition of “eligible debt security” in paragraph (1), a sum of money–

(a) is to be regarded as payable at a determinable future time if it is payable–

(i) at a future time fixed by or in accordance with the current terms of issue of the security; or

(ii) at the expiry of a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening may be uncertain; and

(b) is not to be regarded as payable at a determinable future time if it is payable on a contingency.

PART 2 — THE OPERATOR

APPROVAL AND COMPLIANCE

Applications for approval

4

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Grant and refusal of approval

5

Schedule 1 contains the requirements which must be satisfied with respect to the Operator, the Operator's rules and practices and the relevant system.

Fees charged by the Treasury

6

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) The Bank of England may charge an Operator a periodical fee.

(3) Any fee chargeable by the Bank of England under this regulation shall not exceed an amount which reasonably represents the amount of costs incurred—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) in the case of a periodical fee, in satisfying itself that the Operator, his rules and practices and the relevant system continue to meet the requirements of Schedule 1 and that the Operator is complying with any obligations imposed on him by or under these Regulations.

(4) For the purposes of paragraph (3), the costs incurred by the Bank of England shall be determined on the basis that they include such proportion of the following matters as are properly attributable to the performance of the relevant function—

(a) expenditure on staff, equipment, premises, facilities, research and development;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) any notional interest incurred on any capital expended on or in connection with the performance of the function ...; and

(d) any other matter which, in accordance with generally accepted accounting principles, may properly be taken account of in ascertaining the costs properly attributable to the performance of the function.

(5) For the purposes of paragraph (4)(c)—

(a) “notional interest” means any interest which that person might reasonably have been expected to have been liable to pay had the sums expended been borrowed at arm’s length; ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Any fee which is owed to the Bank of England under this regulation may be recovered as a debt due to the Bank of England.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SUPERVISION

Withdrawal of approval

7

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Compliance orders and directions

8

(1) This regulation applies if it appears to the Bank of England that—

(a) any requirement of Schedule 1 is not satisfied, or is likely not to be satisfied, in relation to an Operator; or

(b) an Operator has failed to comply with any obligation imposed on him by or under these Regulations.

(2) The Bank of England may—

(a) make an application to the court; or

(b) subject to paragraph (4), direct the Operator to take specified steps for the purpose of securing—

(i) that the relevant requirement of Schedule 1 is satisfied in relation to the Operator; or

(ii) the Operator’s compliance with any obligation of the kind in question.

(3) If on any application by the Bank of England under paragraph (2)(a) the court is satisfied that the relevant requirement of Schedule 1 is not satisfied or is likely not to be satisfied, or, as the case may be, that the Operator has failed to comply with the obligation in question, it may order the Operator to take such steps as the court directs for securing that the requirement is satisfied or that the obligation is complied with.

(4) Schedule 3 shall have effect as regards the procedure to be followed before giving a direction under paragraph (2)(b).

(5) A direction under paragraph (2)(b) is enforceable, on the application of the Bank of England, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988¹⁰.

(6) The jurisdiction conferred by paragraph (3) shall be exercisable by the High Court and the Court of Session.

(7) The fact that a rule made or condition imposed by an Operator has been altered in response to a direction given by the Bank of England under paragraph (2)(b) or an order of the court under paragraph (3) does not prevent it from being subsequently altered or revoked by the Operator.

Injunctions and restitution orders

9

(1) If on the application of the Bank of England the court is satisfied—

(a) that there is a reasonable likelihood that any person will contravene a relevant rule; or

(b) that any person has contravened a relevant rule, and that there is a reasonable likelihood that the contravention will continue or be repeated,

the court may make an order restraining (or in Scotland an interdict prohibiting) the contravention.

(2) If on the application of the Bank of England the court is satisfied—

(a) that any person has contravened a relevant rule; and

(b) that there are steps which could be taken for remedying the contravention,

the court may make an order requiring that person and any other person who appears to the court to have been knowingly concerned in the contravention to take such steps as the court may direct to remedy it.

(3) No application shall be made by the Bank of England under paragraph (1) or (2) in respect of a relevant rule unless it appears to it that the Operator of the relevant system is unable or unwilling to take appropriate steps to restrain the contravention or to require the person concerned to take such steps as are mentioned in paragraph (2)(b).

(4) If on the application of the Bank of England the court is satisfied that any person may have—

(a) contravened a relevant rule; or

(b) been knowingly concerned in the contravention of a relevant rule,

the court may make an order restraining (or in Scotland an interdict prohibiting) him from disposing of, or otherwise dealing with, any assets of his which it is satisfied he is reasonably likely to dispose of or otherwise deal with.

(5) The court may, on the application of the Bank of England, make an order under paragraph (6) if it is satisfied that a person has contravened a relevant rule, or been knowingly concerned in the contravention of such a rule, and—

(a) that profits have accrued to him as a result of the contravention; or

(b) that one or more persons have suffered loss or been otherwise adversely affected as a result of the contravention.

(6) The court may order the person concerned to pay to the Bank of England such sum as appears to the court to be just having regard—

(a) in a case within subparagraph (a) of paragraph (5), to the profits appearing to the court to have accrued;

(b) in a case within subparagraph (b) of that paragraph, to the extent of the loss or other adverse effect; or

(c) in a case within both of those subparagraphs, to the profits appearing to the court to have accrued and to the extent of the loss or other adverse effect.

(7) Subsections (3) to (5) and (8) of section 382 of the 2000 Act shall apply in relation to an application of the Bank of England under paragraph (5) as they have effect in relation to an application of the appropriate regulator under subsection (1) of that section; and in those subsections as they so apply—

(a) the references to subsections (1) and (2) shall be taken to be references to paragraphs (5) and (6) respectively;

(b) the references to paragraphs (a) and (b) of subsection (1) shall be taken to be references to subparagraphs (a) and (b) respectively of paragraph (5).

(8) The jurisdiction conferred by this regulation shall be exercisable by the High Court and the Court of Session.

(9) Nothing in this regulation affects the right of any person other than the Bank of England to bring proceedings in respect of matters to which this regulation applies.

(10) In this regulation, “relevant rule” means any provision of the rules of an Operator to which the person in question is subject and which regulate the carrying on by that person of business of any of the following kinds—

(a) dealing in investments as principal;

(b) dealing in investments as agent;

(d) managing investments;

(e) safeguarding and administering investments;

(f) sending dematerialised instructions;

(fa) managing a UCITS;

(fb) acting as trustee or depositary of a UCITS;

(fc) managing an AIF;

(fd) acting as trustee or depositary of an AIF;

(g) establishing etc. a collective investment scheme;

(h) advising on investments; or

(i) agreeing to carry on any of the activities mentioned in paragraphs (a) to (h).

(11) In paragraph (2), references to remedying a contravention include references to mitigating its effect.

(12) Paragraph (10) shall be read with—

(a) section 22 of the 2000 Act;

(b) any relevant order under that section; and

(13) In this regulation, the “appropriate regulator” means whichever of the Prudential Regulation Authority or the Financial Conduct Authority is the appropriate regulator under

section 382 of the 2000 Act.

Provision of information by Operators

10

(1) The Bank of England may, in writing, require an Operator to give it such information or documents as it may specify.

(2) The Bank of England may also, in writing, require an Operator to give it, at such times or in respect of such periods as it may specify, such information or documents relating to that Operator as it may specify.

(3) Any information or documents required to be given under this regulation shall be only such as the Bank of England may reasonably require for the exercise of its functions under these Regulations.

(4) The Bank of England may require information to be given by a specified time, in a specified form and to be verified in a specified manner.

(5) If an Operator—

(a) alters or revokes any of his rules or guidance; or

(b) makes new rules or issues new guidance,

he shall give written notice to the Bank of England without delay.

Delegation of Treasury functions

11

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International obligations

12

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Prevention of restrictive practices

13

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PART 3 — PARTICIPATING SECURITIES

PARTICIPATION BY ISSUERS

Participation in respect of shares

14

Where—

(a) an Operator permits title to shares of a class in relation to which regulation 15 applies, or in relation to which a directors' resolution passed in accordance with regulation 16 is effective, to be transferred by means of a relevant system; and

(b) the company in question permits the holding of shares of that class in uncertificated form and the transfer of title to any such shares by means of a relevant system,

title to shares of that class which are recorded on an Operator register of members may be transferred by means of that relevant system.

15

This regulation applies to a class of shares if a company’s articles of association are in all respects consistent with—

(a) the holding of shares of that class in uncertificated form;

(b) the transfer of title to shares of that class by means of a relevant system; and

16

(1) This regulation applies to a class of shares if a company’s articles of association in any respect are inconsistent with—

(a) the holding of shares of that class in uncertificated form;

(b) the transfer of title to shares of that class by means of a relevant system; or

(2) A company may resolve, subject to paragraph (6)(a), by resolution of its directors (in this Part referred to as a “directors' resolution”) that title to shares of a class issued or to be issued by it may be transferred by means of a relevant system.

(3) Upon a directors' resolution becoming effective in accordance with its terms, and for as long as it is in force, the articles of association in relation to the class of shares which were the subject of the directors' resolution shall not apply to any uncertificated shares of that class to the extent that they are inconsistent with—

(a) the holding of shares of that class in uncertificated form;

(b) the transfer of title to shares of that class by means of a relevant system; or

(4) Unless a company has given notice to every member of the company in accordance with its articles of association of its intention to pass a directors' resolution before the passing of such a resolution, it shall give such notice within 60 days of the passing of the resolution.

(5) Notice given by the company before the coming into force of these Regulations of its intention to pass a directors' resolution which, if it had been given after the coming into force of these Regulations would have satisfied the requirements of paragraph (4), shall be taken to satisfy the requirements of that paragraph.

(6) In respect of a class of shares, the members of a company may by ordinary resolution—

(a) if a directors' resolution has not been passed, resolve that the directors of the company shall not pass a directors' resolution;

(b) if a directors' resolution has been passed but not yet come into effect in accordance with its terms, resolve that it shall not come into effect;

(c) if a directors' resolution has been passed and is effective in accordance with its terms but the class of shares has not yet been permitted by the Operator to be a participating security, resolve that the directors' resolution shall cease to have effect; or

(d) if a directors' resolution has been passed and is effective in accordance with its terms and the class of shares has been permitted by the Operator to be a participating security, resolve that the directors shall take the necessary steps to ensure that title to shares of the class that was the subject of the directors' resolution shall cease to be transferable by means of a relevant system and that the directors' resolution shall cease to have effect,

and the directors shall be bound by the terms of any such ordinary resolution.

(7) In the event of default in complying with paragraph (4), an offence is committed by every officer of the issuer who is in default.

(7A) A person guilty of such an offence is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(8) A company shall not permit the holding of shares in such a class as is referred to in paragraph (1) in uncertificated form, or the transfer of title to shares in such a class by means of a relevant system, unless in relation to that class of shares a directors' resolution is effective.

(8A) Chapter 3 of Part 3 of the 2006 Act (resolutions affecting a company’s constitution) applies to—

(a) a directors’ resolution passed by virtue of paragraph (2), or

(b) a resolution of a company passed by virtue of paragraph (6) preventing or reversing such a resolution.

(9) This regulation shall not be taken to exclude the right of the members of a company to amend the articles of association of the company, in accordance with the articles, to allow the holding of any class of its shares in uncertificated form and the transfer of title to shares in such a class by means of a relevant system.

17

(1) A class of shares in relation to which, immediately before the coming into force of these Regulations—

(a) regulation 15 of the 1995 Regulations applied; or

(b) a directors' resolution passed in accordance with regulation 16 of the 1995 Regulations was effective,

shall be taken to be a class of shares in relation to which regulation 15 of these Regulations applies or, as the case may be, a directors' resolution passed in accordance with regulation 16 is effective.

(2) On the coming into force of these Regulations a company’s articles of association in relation to any such class of shares, and the terms of issue of any such class of shares, shall cease to apply to the extent that they are inconsistent with any provision of these Regulations.

Interpretation of regulations 15, 16 and 17

18

For the purposes of regulations 15, 16 and 17 any shares with respect to which share warrants to bearer are issued under section 779 of the 2006 Act shall be regarded as forming a separate class of shares.

Participation in respect of securities other than shares

19

(1) Subject to paragraph (2), where—

(a) an Operator permits title to a security other than a share to be transferred by means of a relevant system; and

(b) the issuer permits the holding of units of that security in uncertificated form and the transfer of title to units of that security by means of a relevant system,

title to units of that security which are recorded on an Operator register of securities may be transferred by means of that relevant system.

(2) In relation to any security other than a share, if the law under which it is constituted is not the law of England and Wales, Northern Ireland or Scotland, or if the current terms of its issue are in any respect inconsistent with—

(a) the holding of title to units of that security in uncertificated form;

(b) the transfer of title to units of that security by means of a relevant system; or

an issuer of that security shall not permit the holding of units of that security in uncertificated form, or the transfer of title to units of that security by means of a relevant system.

(3) On the coming into force of these Regulations the current terms of issue of a relevant participating security shall cease to apply to the extent that they are inconsistent with any provision of these Regulations.

(4) For the purposes of this regulation—

(a) a relevant participating security is a participating security (other than a share) the terms of issue of which, immediately before the coming into force of these Regulations, were in all respects consistent with the 1995 Regulations; and

(b) the terms of issue of a security shall be taken to include the terms prescribed by the issuer on which units of the security are held and title to them is transferred.

KEEPING OF REGISTERS AND RECORDS

Entries on registers and records in respect of shares

20

(1) In respect of every company which is a participating issuer, there shall be—

(a) a register maintained by the participating issuer, and such a register is referred to in these Regulations as an “issuer register of members”; and

(b) a register maintained by the Operator, and such a register is referred to in these Regulations as an “Operator register of members”.

(2) A participating issuer which is a company shall keep and enter up the issuer register of members in accordance with paragraph 2 of Schedule 4.

(3) In respect of every company which is a participating issuer, the Operator shall keep and enter up the Operator register of members in accordance with paragraph 4 of Schedule 4.

(4) References in any enactment or instrument to a company’s register of members shall, unless the context otherwise requires, be construed in relation to a company which is a participating issuer as referring to the company’s issuer register of members and Operator register of members.

(5) Paragraph (4) does not apply in relation to a company’s issuer register of members to the extent that any of the particulars entered in that register in accordance with paragraph 2(1) of Schedule 4 are inconsistent with the company’s Operator register of members.

(6) A participating issuer which is a company shall—

(a) maintain a record of the entries made in its Operator register of members; and such a record is referred to in these Regulations as a “record of uncertificated shares”; and

(b) keep and enter up that record in accordance with paragraph 5 of Schedule 4.

(7) Such sanctions as apply to a company and its officers in the event of a default in complying with section 113 of the 2006 Act shall apply to—

(a) a company which is a participating issuer and its officers in the event of a default in complying with paragraph (1)(a) or (6)(a), or

(b) an Operator and his officers in the event of a default in complying with paragraph (1)(b).

Entries on registers and records in respect of general public sector securities

21

(1) In respect of every participating security which is a general public sector security the Operator shall—

(a) maintain a register, and such a register is referred to in these Regulations as an “Operator register of general public sector securities”; and

(b) keep and enter up the Operator register of general public sector securities in accordance with paragraph 12 of Schedule 4.

(2) The person specified in paragraph (3) shall—

(a) maintain a record of the entries made in an Operator register of general public sector securities; and such a record is referred to in these Regulations as a “record of uncertificated general public sector securities”; and

(b) keep and enter up that record in accordance with paragraph 13 of Schedule 4.

(3) The person referred to in paragraph (2) is the Registrar of Government Stock, except where the security to which an Operator register of general public sector securities relates is a general local authority security, in which case it is—

(a) the relevant local authority; or

(b) if the local authority has appointed another person to act as registrar for the purpose of the 1974 Regulations in respect of that security, the person so appointed ...

(4) Such sanctions as apply to a company and its officers in the event of a default in complying with section 113 of the 2006 Act shall apply to an Operator and his officers in the event of a default in complying with paragraph (1)(a).

(5) Such sanctions as apply to the registrar, within the meaning of the 1974 Regulations, in the event of a default in complying with regulation 5 of those Regulations shall apply to a participating issuer and his officers in the event of a default in complying with paragraph (2)(a) in respect of a local authority security falling within paragraph (a)(i) of the definition of “local authority security” in regulation 3(1).

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Entries on registers and records in respect of other securities

22

(1) Paragraph (2) applies where a participating issuer is required by or under an enactment or instrument to maintain in the United Kingdom a register of persons holding securities (other than shares , general public sector securities or eligible debt securities) issued by him.

(2) Where this paragraph applies, then in so far as the register in question relates to any class of security which is a participating security—

(a) the Operator shall—

(i) maintain a register, and such a register is referred to in these Regulations as an “Operator register of corporate securities”; and

(ii) keep and enter up the Operator register of corporate securities in accordance with paragraph 14 of Schedule 4;

(b) the participating issuer—

(i) shall not maintain the register to the extent that it relates to securities held in uncertificated form;

(ii) shall maintain a record of the entries made in any Operator register of corporate securities, and such a record is referred to in these Regulations as a “record of uncertificated corporate securities”; and

(iii) shall keep and enter up that record in accordance with paragraph 15 of Schedule 4.

(3) Where a participating issuer is not required by or under an enactment or instrument to maintain in the United Kingdom in respect of a participating security (other than an eligible debt security) issued by him a register of persons holding units of that participating security, the Operator shall—

(a) maintain a register in respect of that participating security; and

(b) record in that register—

(i) the names and addresses of the persons holding units of that security in uncertificated form, and

(ii) how many units of that security each such person holds in that form.

(3A) In respect of every participating security which is an eligible debt security, the Operator shall–

(a) maintain a register, and such a register is referred to in these Regulations as an “Operator register of eligible debt securities”; and

(b) record in that register–

(i) the names and addresses of the persons holding units of that security; and

(ii) how many units of that security each such person holds.

(4) Such sanctions as apply to a company and its officers in the event of a default in complying with section 113 of the 2006 Act shall apply to an Operator and his officers in the event of a default in complying with paragraph (2)(a)(i), (3) or (3A).

(5) Such sanctions as apply in the event of a default in complying with the requirement to maintain a register imposed by the relevant enactment or instrument referred to in paragraph (1) shall apply to a participating issuer and his officers in the event of a default in complying with paragraph (2)(b)(ii).

General provisions concerning keeping registers and records

23

(1) The obligations of an Operator to maintain and to keep and enter up any register of securities, imposed by these Regulations—

(a) shall not give rise to any form of duty or liability on the Operator, except such as is expressly provided for in these Regulations or as arises from fraud or other wilful default, or negligence, on the part of the Operator;

(b) shall not give rise to any form of duty or liability on a participating issuer, other than where the Operator acts on the instructions of that participating issuer, in the absence of fraud or other wilful default, or negligence, on the part of that participating issuer; and

(2) Without prejudice to paragraph (1) or to any lesser period of limitation and to any rule as to the prescription of rights, liability incurred by a participating issuer or by an Operator arising—

(a) from the making or deletion of an entry in a register of securities or record of securities pursuant to these Regulations; or

(b) from a failure to make or delete any such entry,

shall not be enforceable more than 10 years after the date on which the entry was made or deleted or, in the case of a failure, the failure first occurred.

(3) No notice of any trust, expressed, implied or constructive, shall be entered on an Operator register of securities, or a part of such a register, or be receivable by an Operator.

(4) Schedule 4 (which provides for the keeping of registers and records of participating securities, and which excludes, or applies with appropriate modifications, certain provisions of the 2006 Act) shall have effect.

(5) Section 120 of the 2006 Act shall not apply with respect to a company which is a participating issuer.

Effect of entries on registers

24

(1) Subject to regulation 29 and to paragraphs (2) and (3) below, a register of members is prima facie evidence, and in Scotland sufficient evidence unless the contrary is shown, of any matters which are by these Regulations directed or authorised to be inserted in it.

(2) Paragraph (1) does not apply to a company’s issuer register of members to the extent that any of the particulars entered in that register in accordance with paragraph 2(1) of Schedule 4 are inconsistent with the company’s Operator register of members.

(3) The entry of a person’s name and address in a company’s issuer register of members shall not be treated as showing that person to be a member of the company unless—

(a) the issuer register of members also shows him as holding shares in the company in certificated form;

(b) the Operator register of members shows him as holding shares in the company in uncertificated form; or

(4) Section 127 of the 2006 Act shall not apply with respect to a company which is a participating issuer.

(5) Subject to regulation 29, an Operator register of general public sector securities is prima facie evidence, and in Scotland sufficient evidence unless the contrary is shown, of any matters which are by these Regulations directed or authorised to be inserted in it.

(6) Subject to regulation 29, an entry on an Operator register of corporate securities which records a person as holding units of a security in uncertificated form shall be evidence of such title to the units as would be evidenced if the entry on that register—

(a) were an entry on the part maintained by the participating issuer of such register as is mentioned in regulation 22(1); and

(b) where appropriate, related to units of that security held in certificated form.

(7) Subject to regulation 29, an entry on a register maintained by virtue of regulation 22(3)(a) shall (where the units are capable of being held in certificated form) be prima facie evidence, and in Scotland sufficient evidence unless the contrary is shown, that the person to whom the entry relates has such title to the units of the security which he is recorded as holding in uncertificated form as he would have if he held the units in certificated form.

(8) Subject to regulation 29, an entry on an Operator register of eligible debt securities shall be prima facie evidence, and in Scotland sufficient evidence unless the contrary is shown, of any matters which are by these Regulations directed or authorised to be inserted in it.

Rectification of registers of securities

25

(1) Unless the circumstances described in paragraph (2) apply, a participating issuer shall not rectify an issuer register of securities if such rectification would also require the rectification of an Operator register of securities.

(2) The circumstances referred to in paragraph (1) are that the rectification of an issuer register of securities is effected—

(a) with the consent of the Operator; or

(b) by order of a court in the United Kingdom.

(3) A participating issuer who rectifies an issuer register of securities in order to give effect to an order of a court in the United Kingdom shall immediately give the Operator written notification of the change to the entry, if any rectification of the Operator register of securities may also be required (unless the change to the issuer register is made in response to an Operator-instruction).

(4) An Operator who rectifies an Operator register of securities shall immediately—

(a) generate an Operator-instruction to inform the relevant participating issuer of the change to the entry (unless the change is made in response to an issuer-instruction); and

(b) generate an Operator-instruction to inform the system-members concerned of the change to the entry.

Closing registers

26

Notwithstanding ... any other enactment, a participating issuer shall not close a register of securities relating to a participating security without the consent of the Operator.

Registration by an Operator of transfers of securities

27

(1) Except where relevant units of a security are transferred by means of a relevant system to a person who is to hold them thereafter in certificated form (and subject to paragraphs (2) and (4))—

(a) upon settlement of a transfer of uncertificated units of a security in accordance with his rules;

(b) following receipt of an issuer-instruction notifying him that the circumstances specified in regulation 33(2)(b) have arisen in respect of a transfer of units of a participating security; or

an Operator shall register on the relevant Operator register of securities the transfer of title to those units of that security.

(2) An Operator shall refuse to register a transfer of title to units of a participating security in accordance with a system-member instruction or an issuer-instruction (as the case may be) if he has actual notice that the transfer is—

(a) prohibited by order of a court in the United Kingdom;

(b) prohibited or avoided by or under an enactment;

(d) where the participating issuer is constituted under the law of Scotland, prohibited by or under an arrestment.

(3) Notwithstanding that an Operator has received, in respect of a transfer of title to units of a participating security, actual notice of the kind referred to in paragraph (2), the Operator may register that transfer of title on the relevant Operator register of securities if at the time that he received the actual notice it was not practicable for him to halt the process of registration.

(4) Without prejudice to his rules, an Operator may refuse to register a transfer of title to units of a participating security in accordance with a system-member instruction or an issuer-instruction (as the case may be) if the instruction requires a transfer of units—

(a) to an entity which is not a natural or legal person;

(b) to a minor (which, in relation to a participating issuer constituted under the law of Scotland, shall mean a person under 16 years of age);

(d) where, in relation to the system-member instruction or the issuer-instruction (as the case may be), the Operator has actual notice of any of the matters specified in regulation 35(5)(a)(i) to (iii).

(5) An Operator shall not register a transfer of title to uncertificated units of a security on an Operator register of securities otherwise than in accordance with paragraph (1) unless he is required to do so by order of a court in the United Kingdom or by or under an enactment.

(6) Paragraph (5) shall not be taken to prevent an Operator from entering on an Operator register of securities a person who is a system-member to whom title to uncertificated units of a security has been transmitted by operation of law.

(7) Subject to paragraph (7A), immediately upon—

(a) the registration by an Operator of the transfer of title to units of a participating security in accordance with—

(i) paragraph (1);

(ii) an order of a court in the United Kingdom; or

(iii) a requirement arising by or under an enactment; or

(b) the making or deletion by an Operator of an entry on an Operator register of securities—

(i) following the transmission of title to uncertificated units of a security by operation of law; or

(ii) upon the transfer of uncertificated units of a security to a person who is to hold them thereafter in certificated form,

the Operator shall generate an Operator-instruction to inform the relevant participating issuer of the registration, or of the making or deletion of the entry (as the case may be); and where appropriate the participating issuer shall register the transfer or transmission of title to those units on an issuer register of securities in accordance with regulation 28.

(7A) Paragraph (7) does not apply in relation to units of an eligible debt security.

(8) If an Operator refuses to register a transfer of securities in any of the circumstances specified in paragraphs (2) and (4), the Operator shall, within 2 months of the date on which the relevant system-member instruction or issuer-instruction (as the case may be) was received by the Operator, send an Operator-instruction, or written notification, informing the relevant system-member or participating issuer (as the case may be) of the refusal.

(9) Such sanctions as apply to a company and its officers in the event of a default in complying with subsections (1) and (2) of section 771 of the 2006 Act shall apply to an Operator and his officers in the event of a default in complying with that subsection as applied by paragraph (8).

Registration by a participating issuer of transfers of securities upon conversion into certificated form

28

(1) Paragraphs (2) to (5) apply where relevant units of a security are transferred by means of a relevant system to a person who is to hold them thereafter in certificated form.

(2) Subject to paragraphs (3) and (4), a participating issuer shall (where appropriate) register a transfer of title to relevant units of a security on an issuer register of securities in accordance with an Operator-instruction.

(3) A participating issuer shall refuse to register a transfer of title to relevant units of a security in accordance with an Operator-instruction if he has actual notice that the transfer is—

(a) prohibited by order of a court in the United Kingdom;

(b) prohibited or avoided by or under an enactment;

(d) where the participating issuer is constituted under the law of Scotland, prohibited by or under an arrestment.

(4) A participating issuer may refuse to register a transfer of title to relevant units of a security in accordance with an Operator-instruction if the instruction requires a transfer of units—

(a) to an entity which is not a natural or legal person;

(b) to a minor (which, in relation to a participating issuer constituted under the law of Scotland, shall mean a person under 16 years of age);

(d) where, in relation to the Operator-instruction. the participating issuer has actual notice from the Operator of any of the matters specified in regulation 35(5)(a)(i) to (iii).

(5) A participating issuer shall notify the Operator by issuer-instruction whether he has registered a transfer in response to an Operator-instruction to do so.

(6) A participating issuer shall not register a transfer of title to relevant units of a security on an issuer register of securities unless he is required to do so—

(a) by an Operator-instruction;

(b) by an order of a court in the United Kingdom; or

(7) A unit of a security is a relevant unit for the purposes of this regulation if, immediately before the transfer in question, it was held by the transferor in uncertificated form.

(8) If a participating issuer refuses to register under paragraph (2) a transfer of securities in any of the circumstances specified in paragraphs (3) and (4), the participating issuer shall, within 2 months of the date on which the Operator-instruction was received by the participating issuer, send to the transferee notice of the refusal.

(9) Such sanctions as apply to a company and its officers in the event of a default in complying with subsections (1) and (2) of section 771 of the 2006 Act shall apply to a participating issuer and his officers in the event of a default in complying with that subsection as applied by paragraph (8).

Registration to be in accordance with regulations 27 and 28

29

Any purported registration of a transfer of title to an uncertificated unit of a security other than in accordance with regulation 27 or 28 shall be of no effect.

Registration of linked transfers

30

(1) Paragraph (2) applies where an Operator receives two or more system-member instructions requesting him to register two or more transfers of title to uncertificated units of a security, and it appears to the Operator—

(a) either—

(i) that there are fewer units of the security registered on an Operator register of securities in the name of a person identified in any of the system-member instructions as a transferor than the number of units to be transferred from him under those system-member instructions; or

(ii) that it has not been established in accordance with paragraph 21(1)(c) of Schedule 1, in relation to any of the transfers taken without regard to the other transfers, that a settlement bank has agreed to make a payment; and

(b) that registration of all of the transfers would result in each of the persons identified in the system-member instructions as a transferor having title to a number of uncertificated units of a security equal to or greater than nil; and

(c) that the combined effect of all the transfers taken together would result in paragraph 21(1)(c) of Schedule 1 being satisfied.

(2) Where this paragraph applies, the Operator may either—

(a) register the combined effect of all the transfers taken together; or

(b) register all the transfers simultaneously,

unless one or more of those transfers may not be registered by virtue of the fact that the Operator has actual notice of any of the circumstances specified in regulation 27(2), or is to be refused registration by virtue of regulation 27(4).

(3) Notwithstanding that an Operator has received, in respect of two or more such system-member instructions as are referred to in paragraph (1), actual notice of the kind referred to in paragraph (2), the Operator may register all the transfers in question or their combined effect if at the time that he received the actual notice it was not practicable for him to halt the process of registration.

Position of a transferee prior to entry on an issuer register of securities

31

(1) Paragraph (2) applies when an Operator deletes an entry on an Operator register of securities in consequence of which—

(a) the Operator must generate an Operator-instruction in accordance with regulation 27(7); and

(b) by virtue of that instruction a participating issuer must register, on an issuer register of securities, a transfer of title to units of a participating security constituted under the law of England and Wales or Northern Ireland.

(2) Where this paragraph applies—

(a) subject to—

(i) subparagraph (b); and

(ii) any enactment or rule of law,

the transferor shall, notwithstanding the deletion of the entry in the Operator register of securities, retain title to the requisite number of units of the relevant participating security until the transferee is entered on the relevant issuer register of securities as the holder thereof; and

(b) the transferee shall acquire an equitable interest in the requisite number of units of that security.

(3) Paragraph (4) applies when an Operator deletes an entry on an Operator register of securities in consequence of which—

(a) the Operator must generate an Operator-instruction in accordance with regulation 27(7); and

(b) by virtue of that instruction a participating issuer must register, on an issuer register of securities, a transfer of title to units of a participating security constituted under the law of Scotland.

(4) Where this paragraph applies—

(a) subject to—

(i) subparagraph (b); and

(ii) any enactment or rule of law,

(b) the transferor shall hold the requisite number of units of that security on trust for the benefit of the transferee.

(5) The requisite number for the purposes of this regulation is the number of units which are to be specified in the Operator-instruction which the Operator must generate in accordance with regulation 27(7).

(6) This regulation has effect notwithstanding that the units to which the deletion of the entry in the Operator register of securities relates, or in which an interest arises by virtue of paragraph (2)(b) or (4)(b), or any of them, may be unascertained.

(7) In Scotland—

(a) this regulation has effect notwithstanding that the requirements relating to the creation of a trust under any enactment or rule of law have not been complied with; and

(b) as from the time the trust referred to in paragraph (4)(b) arises, any holder, or any holder thereafter, of a floating charge over any part of the property of the transferor shall be deemed to have received notice of the trust’s existence and of the property to which it relates.

(8) Subject to paragraphs (6) and (7), this regulation shall not be construed as conferring a proprietary interest (whether of the kind referred to in paragraph (2)(b) or (4)(b), or of any other kind) in units of a security if the conferring of such an interest at the time specified in these Regulations would otherwise be void by or under any enactment or rule of law.

(9) In this regulation—

(a) “the transferee” means the person to be identified in the Operator-instruction as the transferee; and

(b) “the transferor” means the person to be identified in the Operator-instruction as the transferor.

CONVERSIONS AND NEW ISSUES

Conversion of securities into certificated form

32

(1) Except as provided in regulation 42, a unit of a participating security shall not be converted from uncertificated form into certificated form unless an Operator generates an Operator-instruction to notify the relevant participating issuer that a conversion event has occurred; and in this regulation such an Operator-instruction is referred to as a “rematerialisation notice”.

(2) A conversion event occurs—

(a) where such a conversion is permitted by the Operator’s conversion rules; or

(b) following receipt by an Operator of a system-member instruction requiring the conversion into certificated form of uncertificated units of a participating security registered in the name of the system-member; or

(c) following receipt by an Operator of written notification from a participating issuer which is a company requiring the conversion into certificated form of uncertificated units of a participating security, issued by that participating issuer and registered in the name of a system-member, and which contains a statement that the conversion is required to enable the participating issuer to deal with the units in question in accordance with provisions in that participating issuer’s memorandum or articles or in the terms of issue of the units in question.

(3) An Operator—

(a) may generate a rematerialisation notice following a conversion event occurring in the circumstances specified in paragraph (2)(a);

(b) shall generate a rematerialisation notice following a conversion event occurring in the circumstances specified in paragraph (2)(b) unless the participation in the relevant system, by the system-member in whose name the uncertificated units in question are registered, has been suspended pursuant to the Operator’s rules; and

(c) shall generate a rematerialisation notice following a conversion event occurring in the circumstances specified in paragraph (2)(c).

(4) On the generation of a rematerialisation notice, the Operator shall delete any entry in an Operator register of securities which shows the relevant system-member as the holder of the unit or units specified in the rematerialisation notice.

(5) On receipt of a rematerialisation notice, the participating issuer to whom the rematerialisation notice is addressed shall, where relevant, enter the name of the system-member on an issuer register of securities as the holder of the unit or units specified in the rematerialisation notice.

(6) During any period between the deletion of any entry in an Operator register of securities required to be made by paragraph (4) and the making of the entry in an issuer register of securities required to be made by paragraph (5)—

(a) the relevant system-member shall retain title to the units of the security specified in the rematerialisation notice notwithstanding the deletion of any entry in the Operator register of securities; and

(b) where those units are shares, the relevant system-member shall be deemed to continue to be a member of the company.

(7) Following—

(a) the making of an entry in an issuer register of securities in accordance with paragraph (5); or

(b) registration of a transfer of title to units of a security in accordance with regulation 28,

the relevant participating issuer shall, where the terms of issue of the security in question provide for a certificate to be issued, issue a certificate in respect of the units of the security to the relevant person.

(8) Subsection (1) of section 776 of the 2006 Act shall apply in relation to the issue of a certificate by a participating issuer pursuant to paragraph (7) as it applies in relation to the completion and having ready for delivery by a company of share certificates, debentures or certificates of debenture stock; and in that subsection as it so applies the reference to the date on which a transfer is lodged with the company shall be a reference to the date on which the participating issuer receives the relevant rematerialisation notice in accordance with this regulation, or the relevant Operator-instruction in accordance with regulation 27(7).

(9) Such sanctions as apply to a company and its officers in the event of a default in complying with subsections (1) and (2) of section 771 of the 2006 Act shall apply—

(a) to an Operator and his officers in the event of a default in complying with paragraph (4); and

(b) to a participating issuer and his officers in the event of a default in complying with paragraph (5).

(10) Such sanctions as apply to a company and its officers in the event of a default in complying with subsection (1) of section 776 of the 2006 Act shall apply to a participating issuer and his officers in the event of a default in complying with paragraph (7) in accordance with the requirements laid down in paragraph (8).

Conversion of securities into uncertificated form

33

(1) A unit of a participating security shall not be converted from certificated form into uncertificated form unless the participating issuer notifies the Operator by means of an issuer-instruction that any of the circumstances specified in paragraph (2) have arisen; and in this regulation such an issuer-instruction is referred to as a “dematerialisation notice”.

(2) The circumstances referred to in paragraph (1) are—

(a) where the unit of the participating security is held by a system-member, that the participating issuer has received—

(i) a request in writing from the system-member in the form required by the Operator’s conversion rules that the unit be converted from certificated form to uncertificated form; and

(ii) subject to paragraph (4), the certificate relating to that unit; or

(b) where the unit of the participating security is to be registered on an Operator register of securities in the name of a system-member following a transfer of the unit to him, that the participating issuer—

(i) subject to paragraph (3), has received (by means of the Operator-system unless the Operator’s conversion rules permit otherwise) a proper instrument of transfer in favour of the system-member relating to the unit to be transferred;

(ii) subject to paragraph (4), has received (by means of the Operator-system unless the Operator’s conversion rules permit otherwise) the certificate relating to that unit; and

(iii) may accept by virtue of the Operator’s conversion rules that the system-member to whom the unit is to be transferred wishes to hold it in uncertificated form.

(3) The requirement in paragraph (2)(b)(i) that the participating issuer shall have received an instrument of transfer relating to the unit of the participating security shall not apply in a case where for a transfer of a unit of that security no instrument of transfer is required.

(4) The requirements in paragraphs (2)(a)(ii) and (2)(b)(ii) that the participating issuer shall have received a certificate relating to the unit of the participating security shall not apply in a case where the system-member or transferor (as the case may be) does not have a certificate in respect of the unit to be converted into uncertificated form because no certificate has yet been issued to him or is due to be issued to him in accordance with the terms of issue of the relevant participating security.

(5) Subject to paragraphs (3) and (4), a participating issuer shall not give a dematerialisation notice except in the circumstances specified in paragraph (2).

(6) Upon giving a dematerialisation notice, a participating issuer shall delete any entry in any issuer register of securities which evidences title to the unit or units of the participating security in question.

(7) Following receipt of a dematerialisation notice, an Operator shall enter the name of the relevant system-member on an Operator register of securities as the holder of the relevant unit or units of the participating security in question, provided that this obligation shall be subject to regulation 27 if the notice was given in the circumstances specified in paragraph (2)(b).

(8) When a dematerialisation notice is given, the relevant system-member, or the transferor of the unit or units of the security in question, as the case may be, shall (without prejudice to any equitable interest which the transferee may have acquired in the unit or units in question)—

(a) retain title to the units of the security specified in the dematerialisation notice notwithstanding the deletion of any entry in any issuer register of securities required to be made by paragraph (6); and

(b) where those units are shares, be deemed to continue to be a member of the company.

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