The Uncertificated Securities Regulations 2001

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)(b) of section 185 of the 1985 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 subsection (5) of section 183 of the 1985 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 185 of the 1985 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.

(9) Where a dematerialisation notice is given in the circumstances specified in paragraph (2)(b), such title shall be retained, and (where appropriate) such membership shall be deemed to continue, until the time at which the Operator enters the name of the relevant system-member on an Operator register of securities in accordance with paragraph (7).

(10) Within 2 months of receiving a dematerialisation notice, an Operator shall generate an Operator-instruction informing the participating issuer whether an entry has been made in an Operator register of securities in response to the dematerialisation notice.

(11) Such sanctions as apply to a company and its officers in the event of a default in complying with subsection (5) of section 183 of the 1985 Act shall apply—

(a)to a participating issuer and his officers in the event of a default in complying with paragraph (6); and

(b)to an Operator and his officers in the event of a default in complying with paragraph (7) or (10).

New issues in uncertificated form

34.—(1) For the purposes of an issue of units of a participating security, a participating issuer may require the Operator to enter the name of a person in an Operator register of securities as the holder of new units of that security in uncertificated form if, and only if, that person is a system-member; and provided that compliance with any such requirement shall be subject to the rules of the Operator.

(2) For the purposes of calculating the number of new units to which a system-member is entitled a participating issuer may treat a system-member’s holdings of certificated and uncertificated units of a security as if they were separate holdings.

(3) A requirement made by a participating issuer under paragraph (1) may be made by means of an issuer-instruction and shall specify the names of the persons to be entered in the Operator register of securities as the holders of new uncertificated units of the security, and the number of such units to be issued to each of those persons.

(4) An Operator who receives a requirement made by a participating issuer under paragraph (1) shall notify the participating issuer, by Operator-instruction or in writing, if he has not entered the name of any one or more of the persons in question in the Operator register of securities as the holder of new units of the security.