Many reasons delay registration

AFTER our recent article about the unhappy experience of a Limerick reader in securing share certificates for stock he had purchased through a Dublin broker, a number of stockbrokers have written to Family Money to confirm their own positions regarding nominee accounts and share certs.

In every case, the stockbrokers' insist upon written agreements, or confirmations before registering stock in a nominee account. (In our reader's case, their transaction was automatically conducted through the new CREST system and their stocks registered with the broker's nominee account.) At least two noted that the issuing of what are known as contract notes within short periods of the purchase transaction, denotes that the purchaser is the legal owner of the stock.

Mr Brendan O'Connor of Campbell O'Connor and Co thought Family Money readers may be interested in the actual process by which share certificates must be registered and what may cause delays in their being sent to new owners.

"Firstly, the stockbroker must obtain the share certificate(s) and a stock transfer from the selling client. Secondly, the broker must arrange for registration of the stock into the buyer client's name. This sounds simple, but there are many reasons to delay the registration of shares:

(1) For every buyer on the Irish market there must be a seller;

(2) There are sometimes lengthy delays in the postal system, and therefore delays in receiving a seller's share certificate and transferring it back into the stockbroker's office

(3) The seller may not have been able to locate their share certificate and then had to go through the lengthy process of obtaining an indemnity;

(4) The seller may have incorrectly signed their stock transfer form and the stockbroker had to return same to the selling client for correction;

(5) Where the shares were purchased from a market maker (the very issue your reader suffered), the market maker may himself be awaiting stocks from elsewhere;

(6) Clerical error.

Mr Campbell insists that the issuing of share certificates by company registers has improved considerably over the past two years, but it is unrealistic to expect a share certificate to be issued within two weeks.

"As a practitioner, I can say that it is highly unusual for a share certificate to be issued two weeks alter the dealing date or within two weeks of the settlement date. A fair average would be three to four weeks, but there will always be exceptions to the rules." As for our reader's view that he would have secured better service had he dealt with a bank-affiliated stockbroker, Mr Campbell believes the same difficulties in securing the certificate "would have arisen regardless of which stockbroker he had dealt through."