What is the easiest way to sell shares in certificated paper form?

My wife and I hold shares in two Irish plcs that are registered jointly in our names. The shares are in the traditional “certificated” form — ie, certificates are issued showing details of the number of shares held and the registered holders.

Recently we decided to sell the shares, but it seems most brokers — and certainly those offering low-cost online share dealing — trade only in “electronic” rather than certificated shareholdings. It seems the process of converting the traditional certificated holdings into electronic holdings is called “dematerialisation”. The sale of such shares entails a two-part process — first, the shares are dematerialised; as part of this step, the shares are transferred into a nominee account with a stockbroker. Following this the (now electronic) shares are sold.

The problem is that, while charges for online trading in “electronic” shares are quite attractive, the cost of the prior dematerialisation can be prohibitive. In our case, the combined value of the two shareholdings is less than €3,000 but the dematerialisation fee quoted was as high as “€100 per line of stock”, or €200.

I imagine this is or will be a common issue for many shareholders who, like us, have traditionally held shares in certificated form. Do you know if there is an easier — and, thus, cheaper — way to dispose of such shares?

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Mr T.O’L.

The age of the paper share certificate is certainly drawing to a close, and faster than we might have expected. Many, if not most, small retail shareholders in Ireland traditionally held their stock in the form of paper share certificates while more regular, larger-scale or professional investors were more likely to avail of nominee accounts offered by the various stockbrokers.

Part of this, I guess, was down to the preference for physically holding on to the asset — the share certificate is a legal document proving your ownership — rather than it being just a line in a broker’s ledger. But there was also a financial reason. Many small investors could not really justify the regular fees charged by brokers for account maintenance and advice, so they opted for execution-only type arrangements where they simply paid higher transaction fees without any ongoing obligation to the broker.

By and large, these were people who bought and held — I know people who have held traditional dividend-yielding stock for decades — and the longer ago the shares were acquired, the more likely they are to be held in paper format.

But the stockbroking sector has seen fairly fundamental change. The dwindling pool of Irish stockbrokers now require you to set up accounts with them, incurring quarterly charges and other fees. The alternative, more recently, have been online-only brokers such as DeGiro, which by their nature have only dealt in electronic holdings.

There has been talk of dematerialising Irish shares for close to 20 years now. This being Ireland, as usual, the transition when it came was down to an initiative from Brussels — and Brexit.

Until last year, it was still possible to trade shares in certain Irish companies in paper form, but that is now a thing of the past. To the best of my knowledge, any broker in the Irish market will require you to convert the share into electronic form before they will consider taking any trading instructions.

You’re quite right about the process. Stockbrokers will have forms on their websites that you can fill out and return to the broker for each company in which you hold shares — along with your treasured paper share certificate. This should be by registered post for added security. If your share cert goes missing, things can get very messy, time-consuming and expensive.

The broker then sends the forms on to the company that acts as registrar for that company’s share register.

Goodbody’s says that it should take two to five working days to “dematerialise” shares in an Irish or British company. For those holding paper certs for US-listed companies, the process can take from four to six weeks, Goodbody says.

There are different forms for Irish, UK and US shares so make sure you choose the right one or you will suffer further delays.

Of course, to do all this, you will first have to open an account with your chosen broker. They won’t accept any forms or certificates until you do.

There is also, as you say, a charge for the actual dematerialisation and further charges either for the broker selling the stock or for transferring the stock to an electronic broker to sell.

The fees you are quoting sound a little on the high side to me but, without chasing around all the brokers, I couldn’t say for sure. But with a shareholding of around €3,000 in value, the costs involved will certainly be material. In general, for smaller shareholdings, you will find that it is cheaper to trade through an online broker even though you have an account with one of the more traditional Irish brokers for dematerialisation purposes.

It is difficult to avoid the conclusion that brokers and modern regulation mitigate against the concept of the small retail shareholder. But do remember that once you have moved the shares into electronic form and sold them, you will not need to continue incurring quarterly or annual management charges as any future stock you buy will be in electronic form and can be traded through the online broker channels, which are cheaper.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice