My brother and I have inherited some paper share certificates in Grafton and we wish to hold them in electronic form instead. So we thought that we would submit our share certificates and have them converted to electronic records.

However, the share registrars (Capita) say that they cannot do this and we must contact a broker.

We are not investors (neither of us has owned shares in our lives) but nor are we completely naïve. We assume we would have to pay a broker to do this?

We thought that the company would prefer to hold its shareholder certificates in electronic rather than paper form but the registrar isn’t making it easy!

Ms M.MacS., email

This is a classic case of how the system works against the individual and, to be fair, the registrar has no control over this.

Taking it from the finish, you are quite right that companies generally would far prefer that people hold their shares electronically than in paper form.

There are several reasons for this, not least that managing paper-based systems is more expensive for them (well for Capita, in this case, but then Capita will charge them in turn).

That is why all financial services entities are looking to reduce paper-based transactions – just look at the constant chiding of customers for the temerity to want to use cheques and the repeated exhortations of the virtues of card-based payments over cash.

As with their determination to do away with human-based bank interaction by forcing customers online as much as possible, this all has to do with cutting costs and maximising profit.

People and paper cost more than machines, therefore they’re a bit of a nuisance.

It is also much more efficient to keep track of electronic holdings and to do business in them – no waiting for shareholders to deliver paper certs and then complain that the broker missed the best price on the deal.

As an industry, stock brokerages are just as keen as their constituent members to move towards electronic holdings – dematerialisation, they call it. The Irish Stock Exchange has been mulling just such a move for almost a decade now, although it has yet to be introduced.

But, and here’s the catch, individual shareholders cannot personally control their electronic holdings.

There are two options for holding shares in electronic form – a nominee account or a Crest personal account.

The former is an account held through a stockbroker in which all the electronic shares held by that broker’s customers are held.

So, rather than individual accounts for each customer in which, say, their Grafton shares are held, all Grafton shares held by broker A’s customers are held in the one nominee account.

It is very efficient, very anonymous and you have very little control over it, especially if you run into a dodgy broker or a brokerage facing financial problems.

Crest personal accounts offer you a little more personal control although they must still be held through a broker. Not all of them are happy to do this as it is an individual account of your holdings rather than a more cost efficient nominee account.

So, if you want to hold the shares electronically, you will need to do so through a broker and, naturally, this will cost – generally an annual fee on top of transaction charges.

Holding the shares in paper form costs you nothing, although it will be expensive if you lose the certificates, while transaction charges should you wish to trade in the share will also be more expensive to reflect the greater administration costs incurred by the broker. Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara St, Dublin 2, or emaildcoyle@irishtimes. com. This column is a reader service and is not intended to replace professional advice.