UK Jurisdiction Taskforce issues consultation on digital securities


The UK Jurisdiction Taskforce (UKJT) was set up to help develop and transform the UK legal sector through technology. It has previously issued statements on the Status of Cryptoassets and Smart Contracts and the Digital Dispute Resolution Tools.  Its latest consultation is on the issuance and transfer of digital securities under English private law (Consultation). The Consultation is open until 23 September 2022, with a legal statement expected to be published in December 2022 (Legal Statement).

Aside from the stated aims of the UKJT, a motivation behind the Consultation is to address some perceptions in the market that English law is comparatively less supportive of digital securities due to its lack of a statutory regime which specifically accommodates digital securities.

Scope of the Legal Statement

The focus of the Consultation is on equity or debt securities which are constituted or evidenced by reference to a blockchain or distributed ledger technology (DLT). The overarching question that the UKJT is seeking to address through its Legal Statement is whether English private law supports the issuance and transfer of equity or debt securities using a system deploying blockchain or DLT. The focus is not on conventional securities whose performance is linked to, or which are collateralised by, digital assets.

The aim of the Legal Statement is to provide clarity to the market on:

  • the availability of English law as an option for constituting digital securities; and
  • the types of digital security models which English law will support.

The Consultation asks stakeholders to consider what issues need to be addressed in addition to those set out in the Annex to the Consultation.


At present English law does not easily provide for the issuance and transfer of securities in entirely digital form.

Using private company shares as an example, the default is that a company must issue a share certificate following the issuance of, or transfer of, shares.  There are certain exceptions but none which will apply in ordinary circumstances. A transfer of a share must be affected by way of a form of written instrument, typically a ‘stock transfer form’. For legal title in the transferred share to properly vest in the transferee, the relevant company’s register of members must be updated, and in order to do that the instrument of transfer must be duly stamped by HM Revenue & Customs, certifying that any and all stamp duty (a transfer tax) has either been paid or is not payable.

Of course the process is far more straightforward for securities held and transferred via CREST, an electronic settlement system. CREST will deal with the issues mentioned above, including deducting the necessary amount of stamp duty. However, for a security to be capable of being admitted to CREST it must be uncertificated, and for a security to be uncertificated it must (among other matters) be, in effect, held by an ‘operator’ (which CREST is). In simple terms, an operator must be recognised and authorised by the UK Financial Conduct Authority or by the European Securities and Markets Authority.  This presents an unattractive, impractical and possibly ethical hurdle for operators of a blockchain. Of course, all of this comes at a cost to the issuing private company.

These are just some of the issues facing would-be issuers of digital securities.

Even without the advent of crypto assets, change is overdue. There is not a company lawyer in the land who has not encountered incomplete or erroneous registers of shareholders, or missing certificates. To enable digitization of private company shares, and to provide for an effective, automated process of transfer and updating of corporate records would be a welcome step forward by both practitioners and those responsible for administering companies.

Deliveroo IPO raises questions around worker rights and dual class share structures


Several fund managers have elected not to participate in Deliveroo Holdings plc’s (Deliveroo) impending initial public offering (IPO), with concerns over the company’s treatment of workers and the dual class share structure. The roster includes Legal and General Investment Management, which is the UK’s largest fund manager with £1.3tn of assets under management.  Similarly, M&G, Aberdeen Standard Investments and Aviva Investors have told the Financial Times that they too will “shun” the listing (“Legal and General joins investors shunning Deliveroo IPO”, Financial Times, 25 March 2020).


Deliveroo is a popular online food delivery company founded in London.  Customers use an app or website to order food from grocers, local restaurants or ‘ghost kitchens’ and the food is delivered by self-employed bicycle or motorcycle couriers.  Revenue is generated by charging fees to both restaurants and customers.

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UK Government Consultation on the Promotion of Cryptoassets

By Sam Pearse


Samuel J. Pearse

The UK Government has launched a Consultation regarding cryptoassets, focussing on whether unregulated cryptoassets should fall within the financial promotions regime, thereby affording protection for consumers. There is no immediate impact on cryptoasset businesses, but the regulatory landscape is changing.


The UK Financial Services and Markets Act 2000 sets out restrictions on the communication of invitations or inducements to engage in investment activity, such as investing in securities. In brief terms, only those persons who are authorised by the Financial Conduct Authority (FCA) may make such communications, or persons who are making a communication which as been authorised by an authorised person. Incidentally, the ‘approved communications’ exemption is also being reviewed by HM Treasury and our article about that can be found here.

At its core, the restriction on financial promotion is intended to protect consumers from being mis sold products, whether by virtue of being provided with insufficient information or by fraudulent activity or investing in immature or inadequate market infrastructures. Continue reading “UK Government Consultation on the Promotion of Cryptoassets”

COVID-19: Update To Future Fund Eligibility

By Sam Pearse

Samuel J. Pearse


As previously reported (see here), the UK Government launched the Future Fund on 20 May, with the intention of providing financial support to British start-ups. It has proved to be popular, with over £320m of convertible loans to 322 businesses having been approved.

One of the criteria for accessing the Future Fund was that the applicant had to be a UK-incorporated company or a group with a UK ultimate holding company. The UK Treasury has now elected to expand the programme to include certain overseas companies.

It is not uncommon for British start-up businesses to incorporate outside of the UK, or put a non-UK holding company in place, in order to be eligible for local funding programmes. For example, European businesses may incorporate in the US in order to be more attractive to investors in the US and being able to participate in US accelerator programmes. After all, the US seed and venture capital market has much deeper pockets than its European equivalents.

In order to address this, the British Business Bank has announced the expansion of the Future Fund in order to:

accommodate businesses that contribute significantly to the UK economy, but do not have their parent company based in the UK because they participated in a non-UK based accelerator programme”.

Revised eligibility – overview

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Covid-19: The Future Fund for Financing of Innovative UK Companies

By Sam Pearse


On 20 April the United Kingdom’s Chancellor of the Exchequer announced that the UK Government would launch the Future Fund as part of the British Business Bank Coronavirus Business Interruption Loan Scheme. The Future Fund is intended to provide support to the UK’s innovative companies with good potential, for which we might read start-ups, growth companies or emerging companies. The Future Fund was launched on 20 May. This alert summarises the scheme, eligibility and the application process.

What financing is available?

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Corporate Update: Annual General Meetings During COVID-19 Lockdown

By Sam Pearse



  • AGMS for UK-incorporated public limited companies can and should still go ahead during the lockdown.
  • Companies should take advantage of any flexibility in their articles of association to hold meetings either virtually or partly in-person and partly virtually.
  • Companies can still hold AGMs even if their articles of association have not been amended to take advantage of the flexibility available to them, however they should consider amending their articles of association for subsequent years.
  • Shareholders will be able to vote using proxy forms but should expect to have less opportunity for Q&A.


The annual general meeting (AGM) season is upon us. English company law requires public limited companies (English private companies do not have to hold AGMs, and most dispensed with them once the Companies Act 2006 (CA 2006) came into force) to hold their AGMs to be held within six months of the financial year end. With most public companies closing their books on 31 December, that means that the bulk of the AGMs need to be concluded before 30 June with notices calling the meetings being sent out by early June.

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COVID-19 Impact: UK Corporate Residence & Permanent Establishment

By Sam Pearse



  • The OECD and HMRC have issued guidance on the impact of Covid-19 on corporate residence and permanent establishment.
  • Both have expressed sympathy and understanding, and intimated that the restrictions caused by Covid-19 will not have an impact on assessment.


The travel restrictions imposed as a result of trying to control the spread of Covid-19 present myriad issues for corporate groups. Two such problems are the impact on the corporate residence of a company and whether a permanent establishment in the UK could be unwittingly created.

Her Majesty’s Revenue and Customs (HMRC) and the Organisation for Economic Co-operation and Development (OECD) have published guidance setting out their views on the impact of travel restrictions.

Continue reading “COVID-19 Impact: UK Corporate Residence & Permanent Establishment”

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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