We can arrange for the shares to be transferred into the name of the Executors, and then sold (if you wish to sell the same) and for the Medallion Guarantee to be affixed to the Securities Transfer Form (see below), as the procedures in Canada are that a Declaration of Transmission will have to sworn by the Executors and also the Securities Transfer Form will have to be signed to which the Medallion Guarantee will have to be affixed. There will also be Form NR 301E to be signed.

HKMB HUB – LOST SHARE CERTIFICATES

Please can you note that if any of the share certificates have been lost, and Computershare (Canada) are the share registrars, then we will have to deal with the HKMB HUB Lost Affidavit documentation and payment of the bond premium; and the title to the shareholdings.

We do not deal with HKMB HUB issues in article, as we will deal with them once we start drafting the documents for signature and notarisation by the Executors.

If any share certificates have been lost then a bond premium will be payable (usually about 3% of the current value of the shares in the market today.

 

Can you please note that when we use the word “you” in this article, it includes both the  instructing law firm / accountants / regulated adviser and also the deceased’s executors (as the case may be), as the use of the word “you” seems more friendly and personal.

For your easy reference, we have divided this e-mail into four parts: (A) The Medallion Guarantee Documents; (B) The Transfer of the Shares; (C) The sale of the Shares; and (D) the Dividends. You can therefore pick and choose what parts of the article are of interest to you at this time, and regard the remainder as useful information for future reference.

The documents that we will need are:

 

(A) THE MEDALLION GUARANTEE DOCUMENTS

OTHER CANADIAN SHAREHOLDINGS

(1)        The original share certificate or other evidence of ownership of the shares. Sometimes a copy of whatever correspondence has been found will be most useful as well as a copy of any letter you have received from the share registrars which confirms the shareholding. What we are trying to do is show the deceased’s ownership of the shares.

If the original share certificate is missing, you will have to have a bond premium paid in due time – probably to HKMB HUB (if Computershare are the share registrars) or to Martin Merry & Reid (if Canadian Stock Transfer (CST) are the share registrars) (see below).

Sometimes a copy of whatever correspondence has been found will be most useful as well as a copy of any letter you have received from the share registrars which confirms the shareholding. What we are trying to do is show the deceased’s ownership of the shares.

You should note that if any share certificate was issued and it has been lost, then the share registrars will need an indemnity from you based upon the value of the shares. You will have to pay an insurance premium to the share registrars (or their nominated insurer / indemnifier – which could also be SafeCo). The amount is usually about 3% of the value of the shares, with a minimum premium being payable. The 3% is calculated upon the value of the shares at the time that payment is to be made, and it is possible to pay by wire transfer if you prefer, rather than using a bank draft.

If there is no evidence as to the type of shares, we can ask our brokers to obtain a Direct Registration (DRS) Advice Statement which should tell us in what form the shares are held – share certificate, electronic or a mixture of both.

 

As the deceased may have owned the shares for some time a copy of a recent dividend statement will be required, and if that does not show the deceased’s shareholding, then a letter from the company or its share registrars will be required to show the deceased’s ownership of the shares. We can write to the company or its share registrars on your behalf to confirm the shareholding, if you wish us to do so. We will need a Letter of Authority, a sealed and certified copy of the Grant of Probate (we will need a cheque in favour of HMCTS for £10 in payment of the probate registry fees when we obtain the same) and an original copy of the Death Certificate (the green coloured version) (as to which see below) for such purpose.

If the shares are what is known as “book entry” shares, i.e. they are held in electronic form, then a dividend statement will be sufficient for our purposes, or a “Book Entry Advice” /  “Direct Registration Advice” (sometimes simply called a “DRS Statement”).These DRS Statements are usually issued by the Company’s share registrars every 6 months, and so the most recent DRS Statement will be best. If you also have the original DRS statement that was issued when the shares were first converted into electronic form, this also will be very useful to establish and confirm the deceased’s ownership of the shares.

If the shares are in certificated form, they will have to be converted into book entry (electronic) form before they can be sold. This should be effected by Computershare / CST or other share registrar when we send them all the documents to have the shares transferred into the names of the Executors prior to sale.

If you are dealing directly with the share registrars in Canada, you may care to note that on many occasions they have a time limit within which the Certified Copy of the Probate / Scottish Confirmation must be dated (usually somewhere between 45 – 60 days before being submitted to the Canadian Registrars). A certified copy by solicitors will not be sufficient for Canadian registration purposes, it must be a copy certified by the local District Probate Registry. We will obtain this on your behalf.

You should note, as mentioned above, that if we have to write initially to the share registrars to obtain details as to the shareholding, that they will require a sealed and certified copy of the Grant (we need a cheque in favour of HMCTS for £10 in payment of the probate registry fees in order to obtain the same), and an original Death Certificate (the green coloured version) just to obtain the needed information, and we hope that once filed, there will not be any need to obtain a second sealed and certified copy of the Grant or second original Death Certificate, although the actions of Canadian share registrars are very variable, and we will not know this until after all of the other needed documents have been filed with the appropriate share registrar.

If the shares are not publicly quoted, then a copy of the most recent set of Accounts will be needed.

You will not have to attend our offices, as all of the process can be dealt with by e-mails, letters and telephone calls.

 

(B) THE TRANSFER OF THE SHARES

 

i) Registration of the Death

First of all, has the death been registered with the share registrars, and have they therefore issued a new Direct Registration Advice / DRS Statement / Financial Confirmation of Holding (or similar document) (“DRS Statement”)?

If the deceased’s house (or registered address) has been sold, or there is no mail forwarding, or it is not practical to obtain the needed original DRS Statement from that address, then we will use the present address of the Executor as the address to which the new DRS Statement is to be sent. The share registrars will use the first Executor and his / her address for this purpose. At the time of notification you need to state that there has not been any change in beneficial ownership, so that the share registrars are aware that the needed transfer documents and supporting documentation will be forthcoming in due time; and it also makes such notification much easier for the share registrars to process. What we will need is an original death certificate (the green coloured version) and a sealed and probate court certified copy of the Grant of Probate. We can obtain this Grant.

Once we have the new DRS Statement from the share registrars, then provided we also have the our brokers Forms to open the account (see above) and Form NR 301E which we will send to you – we must use the official Form, not some form prepared by a third party such as a share registrar; our brokers will organise the sale of the shares and for the proceeds of sale to be paid to you, but in any event we will need all the other documents mentioned in due time. By dealing with the notification of the deceased’s death at this time, time will be saved later.

ii) Transfer – general information

What is certain, is that the company’s registrars will probably need one or more of the following documents, in due time:

If we do not have to write to the share registrars at this time for details as to the shareholding (in which case we will not have an immediate need for a sealed and certified copy of the Grant), please note that in due time we will need a Probate Court sealed and certified copy of the Grant when the documents are finally sent off to the share registrars for processing. The certification has to be done by the local District Probate Registry. We will organise this for you (we will need a cheque in favour of HMCTS for £10). Sometimes more than one share registrar is involved, in which case we will need a cheque in favour of HMCTS for £10.50 if we need two (2) copies, usually one for CST; and one for Computershare.

We will also need a Court sealed (with the impressed court seal) copy of the Grant of Probate when we apply to open the account with our stockbrokers.

At this time a simple photocopy of the Will; the Death Certificate; and the passport of the deceased will be sufficient to enable us to start preparing the needed documents. Whatever you do, please do NOT surrender, cancel or destroy the Deceased’s passport until after all the work has been completed.

Please note that in due time both the Declaration of Transmission must be sworn before a Notary Public. We advise that you have an Apostille also affixed to the same.

As mentioned above, we will need the Letter of Authority (which we will prepare and send to you for signature and return) and the same applies for Form NR 3091E (again, which we will send to you in due time).

           If you need our help, then once we have an idea of what will be involved, we will give you a fixed quote for the cost of doing the work. We operate on a fixed fee basis, although if extra unanticipated work is involved, we may ask for a review. The disbursements are likely to be the Medallion Guarantee fees which cost about £295 as mentioned above, and other minor miscellaneous charges – such as £60 to cover postages including overseas postages; the printing costs of £35; the costs of the sealed and certified copy of the Grant – HMCTS for £10; Notarial fees and the cost of the Apostille also have to be taken into account, but these will be paid by the Executors direct to the Notary.

 

Our Stockbrokers

 

If you do not have a regular firm of stockbrokers that you use who are able to sell foreign shares, then we will send to you the appropriate forms to enable you to open an account with our brokers for the sale of the shares in due time. Our brokers are a firm with which we have been working for many years, and they need you to complete the enclosed Terms of Business Form and the Nominee Accountg Agreement Form.

In order for the shares to be sold there is a two (2) stage process:

(i)         We will open an account in your name with our brokers; and

(ii)         We will then open a sub-account to your account in the name of the deceased.

Once these two accounts have been opened, and when the sale of the shares has been completed, our brokers will account directly to you, for the net proceeds of sale (we are not authorised to hold client’s monies). They need you to complete a “Terms of Business” Form, and Nominee Account Agreement Form (both of which we will prepare for you to complete and sign).

At the same time that you return the Terms of Business and the Nominee Account Form, can you please send us a copy of the passport of each Executor / Administrator;  and also a utility bill / credit card statement / bank statement (we do not need to see the numbers, so you can blank these out) dated within the last three (3) months for each  Executor / Administrator showing each Executor’s / Administrator’s home address. We also need the same documents for the signer of the instructing law firm / accountant / regulated adviser if a master account is to be opened at our brokers in the name of such Firm.

If such signer has a practising certificate, then a certified copy of that certificate can be used instead of the utility bill etc above mentioned.

            Can you please make sure that each copy of the passport and of the utility bill / credit card statement / bank statement (we do not need to see the numbers, so you can blank these out) is certified as being a true copy by a solicitor or by an accountant or by someone registered with the Financial Conduct Authority or by the post office? As you will understand, this is to satisfy red tape Anti-Money Laundering Regulatory requirements.

 

The Stockbrokers Nominee System

 

As mentioned above, the shares will be in the our Stockbroker Nominee System once everything is completed, and immediately prior to sale; and you may therefore wish to know a little bit more about the Nominee System.

The Nominee System applies when the shares have been converted into electronic form as no paper share certificate will be issued.

The Nominee System applies when the share have been converted into electronic form as no paper share certificate will be issued. This means that your shares will be held by our brokers in their Nominee System until you either ask for the shares to be sold; or for the shares to be transferred – either to your own stockbroker to hold on to the shares; or you can open your account with the share registrars and then our brokers will move the shares into such account if requested. This means that in future the share registrars will send dividends and other communications direct to yourself.

Our brokers can (and will) transfer the shares to your chosen stockbroker, if you prefer to take this course of action, otherwise you can simply leave the shares in our brokers Nominee System until either the shares are sold or transferred at some point in the future. Our brokers will account to you for the dividends received (see below).

There are several advantages in using the Nominee System to hold share in electronic form:

(a)        You can easily buy and sell shares in the US or Canadian (or other world) markets without having to go through the Medallion Guarantee process on each occasion or any of the other problems that have arisen so far; and this avoids the problem that each time you sell shares, the share registrars will have to issue you with a new DRS / Transaction Advice Statement showing your current balance before you can sell some more shares. If this DRS / Transaction Advice Statement is misplaced it can create a problem. There is no initial charge for the Nominee Service, apart from a charge of around £40 every three years if the account is inactive during that time.

(b)        If you die, then on your death our brokers will require little more than a copy of the Grant of Probate and Death Certificate, and they can then transfer the shares to the new owner/beneficiary of the shares without the hassles of additional documentation such as is now being required, or of the need for a Medallion Guarantee (Share Transfer Process) with its related costs. In connection with the US or Canadian markets all of the Medallion Guarantee and other transfer requirements are avoided (although if you own US assets exceeding US$60,000 the Form 706-NA and related documents will still have to be filed with the US IRS). We can do this for you if you so wish, as we are familiar with the process and the Forms.

(c)        The Nominee System removes all the need for a paper share certificate which can get lost or damaged, as all of the shares will be held in the Nominee System in electronic form; and you will receive statements from time to time stating that our brokers are holding the shares on your behalf, and giving you a statement showing how many shares our brokers are holding.

You can have these statements as often as you would like, for example daily, weekly, monthly, quarterly, half yearly, annually. If you wish to use the Nominee System, we need to know how often you wish to receive these statements, and so can you please let us know how often you wish to receive these statements (we suggest quarterly or half yearly unless you wish to have the statements more frequently).

(d)        As you may be aware, many clients simply do not bank dividends when received because they are usually in a foreign currency and the costs of conversion and bank transfer fees make such collection of the dividends prohibitively expensive for the client. The Nominee System avoids such loss (see below).

However, our brokers will account to you for the dividends when they are received from the Canadian shareholdings(s), and one advantage is that our brokers will organise the payment to you in £ sterling (GBP) or in CA$ or in US $, or in whatever unrestricted currency you want. This will save the bank charges and exchange rate risks that you might otherwise run, as our brokers give you the market exchange rate at the time, which rate of exchange we have found to be very competitive and certainly a better rate than you will usually obtain from your own bank.

(e)        All bonus, splits of shareholdings and spin-offs are automatically credited to you by our brokers; and when a rights issue is involved or other decision has to be made by you, a simple A4 size letter is sent by our brokers to you (or to your advisers be they a law firm, accountant, regulated financial adviser or otherwise) saying in simple language that you can understand (instead of being sent the usual verbose documentation that you are unlikely to understand), what are your options, and asking which course of action do you wish to take?

(f)        If you wish to transfer the shares to your own children or to others in due time, this can be easily done by our brokers – you only have to speak to them, and they will tell you what documents they need, unless you wish us to organise such transfers on your behalf.

(g)        On many occasions we find that dividends have not been cashed because the banks charge too much for converting small cheques which are in Canadian dollars (CA$) into pounds sterling (GBP); and the banks also do not give a very good exchange rate.

As a consequence, and because the cheques have not been cashed the Canadian shares registrars start time running before escheating the uncashed dividends and the underlying shares to the local Province’s Unclaimed Monies Department. Please note that Ontario does not have such an Unclaimed Monies Department at this time although it has been on the political agenda for some years. Escheatment usually occurs between 3 – 5 years from the last time that any dividend cheque was cashed. This in turn means that the deceased’s estate and the beneficiaries never receive the shares, but will only receive the monies resulting from the sale of the shares at the time they were escheated to the Province’s Unclaimed Monies Department, as the Province will not hold on to the shares but simply sell the same at the time they receive the shares, and will convert the shares into cash. This means the family lose out on any increases in shares, share splits, bonus shares or shares resulting from take-overs or mergers.

This can result (and frequently does result) in the original shares being converted into monies which are of considerably less value than the current market value of the shares (not including any splits, bonus shares etc as mentioned above).

This in turn means that an application has to be made to the local Province for the return of the monies which can take several months to receive. There are of course the additional costs and notarial fees involved in such recovery.

This whole problem and issue can be avoided simply by having the shares put into the Nominee System.

In any event our brokers Nominees will be legally liable to account to you for the shares that they hold on your behalf in their Nominee System. Our brokers Nominees has to send regular (usually monthly) reports to the FCA setting out the shares they hold and accounting for the same. Our brokers Nominees is separate from the other assets of our brokers , and so that if there is a run or financial difficulties in the stockbroker, your shares will be protected. Furthermore, we are informed that our brokers carry insurance for any lost shares (which we are told is up to £1,000,000 per claim).

The one disadvantage of the Nominee System is that if you have had dividends automatically re-invested in the purchase of more shares, this cannot be done when the shares are in the Nominee System because the Nominee System can only deal in whole shares, and not in fractions or parts of shares. What our brokers will do to solve the problem is accumulate the dividends, and then our brokers will periodically buy a whole number of shares with the accumulated dividends.

 

(C) THE SALE OF SHARES

 

In order for the shares to be sold (if the Executors wish to sell the same instead of simply having them transferred to themselves or to the Beneficiaries entitled to the same), and as the shares will already be in the Nominee System, all you need to do is contact our brokers or ourselves.

We will let you have the contact details at our brokers when the shares have been sold or when the transfer has been completed if the shares are transferred into the nominee system.

Once the accounts have been opened at our brokers (and as mentioned above we will help you open the accounts), and when the sale of the shares has been completed, our brokers (as mentioned above) will account directly to you / to our Instructing Firm for the net proceeds of sale (we are not authorised to hold client’s monies).

You may care to note that once your Firm’s account has been opened with our brokers, then in the future the Executors of your clients will only be required to sign a Nominee Account Agreement which we will send to you in due time. The Nominee Account will be a sub-account of your Firm’s master or main account. This means that your firm will be able to use our brokers without future reference to ourselves if you wish to deal with them directly, whether for UK shares only or for foreign shares.

The brokers will charge on a sliding scale, but it is roughly 1.75% on the first £10,000 and 0.5% on the balance, with a minimum charge of £25. When the sale of the shares has been accomplished the brokers will issue you with a Contract Note which will tell you the net proceeds of sale and the net amount due to be paid to you / our Instructing Firm’s nominated bank account, and it will also state the day on which payment will be made into your or our Instructing Firm’s nominated bank account. We have been finding that it takes the banking system about 3 – 5 days to actually complete the transfer of the monies into your or our Instructing Firm’s nominated bank account from the day that payment is made as set out in the Contract Note, so do not worry if there is a slight delay.

Can you please note, as mentioned above for Form NR301E, that under the UK / Canada Tax Information Exchange Agreement, that the brokers as part of the red tape compliance requirements will need the National Insurance Numbers of the Executors and of the Beneficiaries who are to receive the shares.

If you wish to use our brokers, please let us know, and we will send you the Forms for signature by the Executor(s) (and the signer for our Instructing Firm if the Firm is to open a master account with our brokers ).

 

(D) DIVIDENDS

 

First of all, if possible, please keep open the deceased’s bank account, because you should be able to pay monies into that account, even if you are unable to pay monies out of that account. The bank will be able to advise you in this regard.

If the cheques have not been crossed, then you should be able to endorse the same into your own bank account.

            As regards any uncashed and outstanding dividends, this is becoming something of a problem since the share registrars will only reissue cheques in the name of the deceased and not in favour of the Executor or lawyers acting for the estate.We have raised this issue with several share registrars on several occasions but unfortunately it just falls on dumb ears. We suspect that until the dividends are large enough to justify legal action, the share registrars will continue to adopt their theft of assets that belong to the estate of the deceased.

The above is why if you still have kept the deceased’s bank account open, you may be able to cash any re-issued dividend cheques that are received.

We have found that if you are licensed to handle client’s monies, then your local bank will accept the reissued cheque and bank the same, although some banks appear to be better than others.

We believe this very much depends upon the working relationship with the local bank, and the fact that endorsing cheques is not very common; with the result that many bank managers have no idea what you are talking about, and that endorsing a cheque is perfectly legal especially as the monies are monies belonging to the deceased and which the deceased’s estate is entitled to receive. There is no question of money laundering, since the issue does not and cannot arise in such situations, especially as the Executors are doing their statutory duty of gathering in the assets of the deceased.

We have also found that if the cheques are endorsed by the executors and countersigned by the law firm / accountants / regulated firm, then some banks will allow such dividend cheques to be cashed by the law firm / accountants / regulated firm.

Another suggestion, is for the Executors to open a new account at the local bank into which dividends in the name of the deceased can be paid. You need to make sure that the bank will cash the cheques before opening the account, otherwise it will be a waste of time and effort.

The only alternative is to wait until several years have passed when share registrars are then forced to transfer the monies to the appropriate local unclaimed monies department, (which if the Province of Ontario is involved is only just contemplating such creation) whereupon the Executors will be able to reclaim the uncollected dividends without a problem other than the completion of the appropriate claim form and a Notarised Affidavit of Claim.

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As regards a time frame, you should budget about 6 months at the very least, as it will take 2 – 4 weeks to open the account at our brokers, about 3 – 4 weeks to obtain the Apostille (after the Affidavits have been notarised – say 2 – 4 weeks), and then 3 – 4 weeks to obtain the sealed and certified copy of the Grant; about 4 – 8 weeks for the share registrars to issue the needed Direct Registration (DRS) Statement; and thereafter it will take about 2 – 4 weeks for the shares to be transferred into the stockbrokers central dealing system by the share registrars (we have to wait while the share registrars actually transfer the shares into the brokers central electronic dealing system, but once there the brokers will usually sell the shares within 24 hours) and for the monies to paid into your nominated bank account.

We are sorry it takes so long, but on viewing the above you will see that most of the time delay is outside our personal control.

 

SUMMARY

 

            If you want us to help you, please can you let us have:

(1)        Copy evidence of the shareholdings of the deceased (including copy share certificate(s) if any shares are in share certificate form);

(2)        Copy Death Certificate;

(3)        Sealed copy of the Grant of Probate;

(4)        Copy of the Passport of the Deceased;

(5)        The certified copy passport or driving licence and utility bill dated within the last three (3) months showing the home address of each Executor;

(6)        Cheque in favour of HMCTS for £10 in payment of the Probate Registry fee for the sealed and certified copy Grant;

And we will be able to start drafting the various documents for you. We will be sending these to you with a covering letter in due time.

We hope this is helpful to you, and if you have any questions please contact us.

We await hearing from you when you have had a chance to consider the above.